Bailout Boondoggle Part II

The Face of the 2008 economic bailout belongs to Henry Paulson. He singlehandedly informed the world that the mortgage crisis in US publicly created Fannie Mae and Freddie Mac Corporations threatened the entire worldwide banking system.

Last week in testimony before the House Government Oversight Committee [chaired by the prominent NY member of the Black Caucus, Edolphus Towns], Paulson revealed that he had pressured Bank of America into its merger with Merrill Lynch. Mr. Paulson went on to defend the fact that he had secretly broken the intent of the TARP emergency legislation ten days after it was signed into law by George Bush... because he had to.

So it may be timely to look at the bio of Henry Paulson. A former Chairman of Goldman Sachs, Paulson joined a trio of former Sachs CEOs who became prominent politicians [Stephen Friedman was Chief Economic advisor to George Bush, Robert Rubin was Treasury Secretary for Bill Clinton, Jon Corzine used his millions to become US Senator and then Governor of New Jersey].

Paulson was reportedly an English Literature major at Dartmouth College. After College he joined the Nixon Administration and served as asisstant to John Ehrlichman during the Watergate investigation. He joined Goldman Sachs in 1974 shortly before his mentor was convicted and imprisoned for perjury, obstruction of justice, and conspiracy. Ehrlichman and Paulson were both Eagle Scouts and members of the Christian Scientist Church.

After joining Goldman Sachs, Paulson worked his way through several administrative posts until he finally rose to the position of CEO. It is noteworthy that the two previous CEOs at Sachs were Democrats during Democratic Party control of the Senate, House, and White House. Then when the GOP controlled the legislative and executive banches, Sachs elevated their Republican staffers to the CEO position.

Cynics who have watched several of Paulson's public appearances note that he is not a dynamic speaker and that he punctuates his congressional testimony with blustery self aggrandizement. He rationalizes his seemingly illegal actions as necessary to save the monetary system. But others wonder if he was saving the investments of friends...especially those in the foreign community.

By forcing AIG to honor the fraudulent insurance claims of Fannie Mae and Freddie Mac and doing the same with Bank of America and Merril Lynch some observers believe that Paulson was saving the investments of Chinese banking interests. It is suspected that Paulson has undisclosed investments in China as observers note that it has been reported that Paulson has visited China over seventy times in recent years.

If Paulson is guilty of what Conservative Congressman are suggesting he may well follow in the foot steps of his first political mentor, John Ehrlichman. It might be unlikely, though, since chairman Towns seems more interested in getting to the truth than in prosecution of members of the other party. But if the truth leads to criminality by Paulson, then he may yet be prosecuted.

Conservative Radio host and Fox News analyst Glen Beck has described Paulson's actions as similar to a liquor store heist of the US Treasury.