Round One: Angelides Throws First Punch, Goldman Sachs Unscathed

In the first skirmish of the Financial Crisis Inquiry Commission, Chairman Phil Angelides attempted to nail Lloyd Blankfein, Goldman Sachs CEO with a left hook: "Would your institution have gone under were it not for the bailouts?" Blankfein successfully parried the punches by saying no one knows...that they were doing the best they could...better than most. .

It was an important volley because during his opening testimony Blankfein never once mentioned all the massive government support his institution received and continues to receive. Angelides threw a beautiful volley when he listed a slew of government programs that supported Goldman Sachs –TARP, the AIG pass through of taxpayer money, no-interest loans from the FED, gurantees form the FDIC and more. Blankfein bobbed and weaved. And Angelides missed a chance to pin Blankfein to the ropes – the AIG pass through of government money at 100 cents on the dollar.

This is key because of allegations that Geithner pressued AIG to give Goldman Sachs $12.9 billion dollars on credit default swaps whose market value was about $2 billion. This was clearly a gift of taxpayer money that has gone directly to the bottom line of Goldman Sachs and into their bonus pool. (See GeithnerGate) [1]

But Heather Murren, a former Merrill Lynch analyst chosen by the Democrats for the commission, went at Blankfein: “Did anyone ask you to take anything less than 100 cents on the dollar.” Blankfein said other staff had that discussion but it never really came up him. Unfortunately, she backed off and didn't follow up with the obvious question: "Would you have taken less—yes or no -- since you admitted already that you didn’t really need taxpayer support?"

The answer might have severe consequences for Geithner and for Goldman Sachs's outrageous bonus pool that will be coming up in the next few weeks. Without question Geithner helped Goldman Sachs get taxpayer money it didn't need then and certainly doesn't need now. It would give Obama the basis for taxing it back.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It [2] Chelsea Green Publishing, June 2009.