The quid pro quo culture
Clinton’s response to the question about being paid 625,000
dollars for giving three speeches to Goldman Sachs stirred up some interest,
and a lot of vitriol from Sanders supporters. While I understand the vitriol, I
think it is important to broaden the response. Clinton didn’t invent this
culture. She simply floats in it.
It is a matter not so much of being bought, but of being
cognitively captured – which by easy degrees effects the career arc. Instead of
using Clinton as an example, lets use Bernanke.
In 2009, the Fed, along with Treasury, engineered a
controversial bailout of AIG. AIG was the party to financial instruments – bets
– made, on a tremendous scale, by numerous counterparties. Among those
counterparties was Citadel, a Chicago based hedge fund.
Now, Citadel was hit by the meltdown in 2008. According to
Bloomberg Business:
“Investors in Citadel
Investment Group’s two main hedge funds can take solace in the fact that 2008
has finally come to an end. Of course, that won’t ease the pain of seeing those
two porfolios lose about 53% of their value going into the final week of the year.”
Thus, there is every reason to believe that Citadel was on
its last legs in 2009. But it survived. One of the bright spots in that year
was that AIG, far from dealing with Citadel as a bankrupt insurance firm and
thus paying out a penny on the dollar, dealt with Citadel as a company with the
infinite resources of the U.S. Government behind it and paid out a dollar on a
dollar – 200 million of them.
Thus, Citadel owes its continued existence, in no small
part, to the decisions of Ben Bernanke.
And now Ben Bernanke is making a considerable sum – probably
in the millions – working for Citadel.
Do I think that Ken Griffen, Citadel’s Daddy Bucks, sat down
with Ben B. and said, you get us that 200 million and you have a job with us,
wink wink? No, of course not. Rather, in the course of time, as Bernanke was
feeling his way to the exit at the Fed, an offer to a highly respected figure
in the financial community was perhaps made by some intermediary that led to
Bernanke taking his job with Citadel. That’s how the revolving door works.
This is the problem that Sanders is hammering on. Clinton
was not bribed to do anything in particular for Goldman Sachs. But it is very
likely that Goldman Sachs will get a very respectful hearing when she is
president. I expect she will be president, in fact. I am hoping that Sanders
shrill denunciations make the relationship between the Clinton administration
and the banks much less comfortable.
No comments:
Post a Comment