Henry Paulson, former Treasury Secretary, former Goldman Sachs Chairman, is going to appear before our elected officials today. This should be interesting indeed. For those who may not be following this Theatre Americana let me bring you up to speed. A while back the economy was on the edge of a precipice with one foot over and one foot on a banana peel. BSC (Bear Sterns) and LEH (Lehman Brothers) were already at the bottom, vultures picking at their carcasses in a way only the specific genus of Vulturis Wallstreetensis can do. The mothership ( Merrill Lynch) was pierced by the toxic derivative torpedoes and was heading towards Davy Jones Locker. The stock market was in a nosedive and the powers that be were scared, not just a little scared either, I am talking dog in thunderstorm piddling on the carpet scared. I’ll admit it, I was scared too, thankfully the carpet was unstained at the Gobetz household, but when the market began to take GS down that day, I was long, as Barry Ritholtz says, Pitchforks and Torches. Mr. Paulson, with multi trillion dollar bailout plan in hand flew across town in his golden chariot (part of the Golden Parachute he received when he left Goldman) to meet Fed Chairman Bernanke and select members of congress. Word of this meeting was reported on CNBC by Charlie Gasparino ( I went long GS while he was still talking for the best day of 2008 for me) and the market turned around and went back up to close the day up.
The events that occurred at that meeting and over the subsequent weekend are the topics of todays congressional inquiry. BAC (Bank of America) lead by Ken Lewis bought Merrill in a deal rushed through and Merrill was absorbed into B of A faster than a ham sandwich into Rosie O’donnell. Here’s where the fun begins, after the deal Merrill’s CEO and frankenbroker John Thain (himself a former GS honcho) noticed they had forgot to mention a few billion in toxic assets. Mr Lewis could have opted out of the deal at this point but didn’t. Mr Paulson and Mr Bernanke are alleged to have put pressure on Mr. Lewis to suck it up and sign on the dotted line. Mr. Lewis either was incompetent and acted against his shareholders, or was “pressured” into signing, his testimony and public statements has indicated both and neither depending on when and where he made them.
I must admit before I proceed here that I am not a Paulson fan, I worked for Merrill and found it to be a really great place to earn a living and many great people who worked there were clobbered by the fall of the company, and I am a huge fan of Dick Grasso the hero CEO of NYSE who’s actions during the 9/11 events in my opinion define the term hero as far as we in the financial world can aspire to. Mr Paulsons actions in these events, and to the degree he caused these events have given me the impression of a modern day vampire, and I am quite sure he does not cast a reflection.
Previously Mr. Bernanke and Mr. Lewis have appeared before the committee, and it’s been a comedic tour de force as our elected officials have acted in a partisan manner, asked some of the stupidest questions I have ever seen, grandstanded for political points, and in one particularly egregious moment Maxine Waters (D-Cal) asked Mr. Bernanke about his tenure as CEO of Goldman (mistaking him for Mr. Paulson). Equally bizzarre Rep Bachman (R-MN) asked questions so incoherent Mr. Bernanke had to ask WTF she was talking about.
I am hoping for Mr. Paulson, who is a notorious stutterer when under pressure, to melt down and dissolve into a puddle while screaming “I’m m’m’melting, I’m m’m’melting” but more likely he will grow a tail and horns and a lake of fire will appear under the GS logo and the apocalypse will begin.
Let the fun begin.
Aiki14
