Monday, October 19, 2009


"Public officials "if in league with market manipulators and speculating in Wall Street should be compelled by law to forfeit the office which they thus prostitute to private gain."
Franklin C. Keyes 1902

BANZAI7 NEWS--Money Morning reports: Financial disclosure forms revealed last week that some of U.S. Treasury Secretary Timmy Geithner's closest aides earned millions of dollars a year working for top Wall Street firms.

That finding alone would not likely be enough to cast doubt over Geithner's ability to take the lead in reforming the financial system. But this isn't the first time the Treasury Secretary has come under fire for maintaining close ties with Wall Street, while failing to look out for the interest of the average American.

Indeed, disclosure of Geithner's phone records showed that the Treasury Secretary has had Wall Street firms on speed dial for the duration of the crisis, and a government watchdog group recently blamed him more than any other government official for the oversized bonuses that were paid out to financial firms that received taxpayer bailouts.

Together, these revelations have undermined confidence in Geithner's ability to be a dynamic force in pushing for the financial regulatory reform he's promised

The advisors who came under scrutiny last week included Lewis Alexander, a former chief economist at Citigroup Inc., Mark Patterson, a former lobbyist for Goldman Squid Inc. (NYSE: GS), and Matthew Kabaker, who earnings millions of dollars at private equity firm Flintstone Group LP.

Because these advisors work as so-called consiglieri, they don’t require Sydicate confirmation, yet they still help oversee the $700 billion banking bailout and influence financial regulatory reform, including limits on executive pay.

Critics, including those in President Obama’s own cabinet, contend that this presents a conflict of interest. (WB7: How can that be?)

"The influence of money and lobbies on Washington has reached a shameful level,” Paul Volcker, chairman of the newly formed Economic Recovery Advisory Board, told the financial daily Il Sole 24 Ore. “Not to mention the fact that, since many Treasury nominees have not been confirmed by Congress, Geithner is surrounded by private advisors. Eight months into the new administration, the Treasury does not yet have a staff of [its own] officials. And this raises the question of using informal advisors who come from Wall Street. It should not happen."

Note: Other high level financial positions held in the Obama administration by former Goldman Sachs executives are Neel Kashkari, heading the TARP bailout; Mark Patterson, Chief of Staff for Treasury Secretary Timothy Geithner; Gary Gensler, top executive at the Commodity Futures Trading Commission; and finally Goldman has its top lobbyist, Michael Paese, Rep. Barney Frank's top aide, who is the chair of the House Financial Services Committee.

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