Hank Paulson Gets Away With It
by Deacon Blues
Among the many fictions accepted by the media about the financial collapse at the end of the Bush administration are 1) the problem crept up upon federal regulators, and 2) there wasn't anything that could be done to stop it early enough. In truth, the Bush administration and its appointees already knew about the coming crash and neglected to do anything to stop it, because taking action would have stopped the profits and bonuses for their base, and gone against the GOP's "Wall Street above all else" basic operating premise.
McClatchy ran a story on Sunday that shows Hank Paulson's direct role in letting the crisis happen right under his nose, so as to allow his former employer Goldman Sachs to profit from the crash. As pointed out in the story, contrary to Paulson's self-serving claims that he lacked authority to stop the crisis, he in fact had sufficient control to ensure the Bush administration could stop the fraud and profiteering. He didn't do this, because if Paulson had used the power of the Treasury Secretary to force the Office of Thrift Supervision and the Comptroller of the Currency to ratchet down on these lending practices, it would have deprived Goldman Sachs and the other Wall Street banks of their ability to profit from the packaging and selling of these collateralized debt obligation products.
You would think that an incoming Democratic administration, elected on a reform agenda, would see a golden opportunity to tackle this and force accountability upon Wall Street. You'd also think that an incoming Democratic administration would spend the first half of its first year on saving Main Street from massive foreclosures that we now know are based upon fraudulent documents.
Instead, Larry Summers and Tim Geithner were brought in, and the rest is history.