In 1869, a 48-year old Jewish immigrant from the tiny village of Trappstadt in Germany’s Bavaria region hung a shingle outside of his small office in lower Manhattan to officially launch his new business.
His name was Marcus Goldman, and the business he started, what’s now known as Goldman Sachs, has become the preeminent investment bank in the world with nearly $1 trillion in assets.
They didn’t get there by winning any popularity contests.
Goldman Sachs has been at the heart of nearly every major banking scandal in recent history.
The company has settled lawsuits on countless charges, ranging from exchange rate manipulation, stock price manipulation, demanding bribes from their own clients, front-running retail customers, and just about every shady business practice that would put money in their pockets.
Yet throughout it all, Goldman Sachs has been protected from any serious punishment by its friends in highest offices of government.
Four out of the last eight US Treasury Secretaries, including the current one, have formerly been on the payroll of Goldman Sachs.
Three current Federal Reserve Bank presidents are Goldman Sachs alumni.
The current president of the European Central Bank and the current head of the Bank of England are both former Goldman Sachs employees.
You get the idea.
On its face, there’s nothing wrong with government staffing its departments with top executives from the private sector; taxpayers would probably rather have someone who knows what s/he’s doing behind the desk rather than some random guy off the street.
But the consequent favoritism that results from this revolving door is blatant and repulsive.
Case in point: in 2008 when the financial system was going up in flames and most banks were suffering enormous losses, the government orchestrated a sweetheart bailout deal, of which Goldman was the primary beneficiary.
Goldman stood to lose billions of dollars from its bad investments in insurance giant AIG (which was going bankrupt).
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