Rewriting History: Architects of the Financial Crisis Recast as Saviors by Corporate Media

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Published on Tuesday, 18 February 2014 10:20

Written by editor

Kerry-anne February 16, 2014 Class Warfare Exists

“The press is so powerful in its image-making role, it can make the criminal look like he’s a the victim and make the victim look like he’s the criminal. If you aren’t careful, the newspapers will have you hating the people who are being oppressed and loving the people who are doing the oppressing.”

~ Malcolm X, In a speech at the Audubon Ballroom in Harlem on 13th December 1964

Since the Financial Crisis of 2007/8, efforts have been made to rewrite a crisis of greed and corruption in the Financial Services industry, it’s regulators and government – into a crisis of over generous welfare systems, or lazy unemployed people, or immigrants. Worse, the wealthy architects of the disaster are using the media to recast themselves from chief villains, into heroes. There is no better example, than that of Former Secretary of the Treasury and Goldman Sachs disaster banker Henry ‘Hank Paulson’.

Goldman Sachs played a key role in the crisis, making huge profits in the derivatives trades which busted the global financial system. The CEO at the time of this egregious behaviour was one Hank Paulson. Mr Paulson oversaw the sale of dodgy derivatives to pension firms, local governments and other misinformed investors. The bank also, appearing to foresee the crisis, sold more than $3bn in Collateral Debt Obligations (bundles of toxic debt repackaged as a credit worthy investment product) in the first half of 2006, immediately betting against them (see: Charles Ferguson, Predator Nation: Corporate Criminals, Political Corruption and the Hijacking of America).

That same year, Paulson left to become Treasury Secretary of the US and in doing so was able to sell his Goldman shares without paying Capital Gains tax. He made $485m. If he had held onto the stocks, they would have been worth just $278m. In his new position, Paulson lead meetings with world leaders and become the chief architect of a taxpayer funded bailout of the crash he helped create.

He also used this privileged position to tip off a room full of Hedge Fund Managers (five of whom where alumni of Goldman Sachs) that US mortgage giant Fannie Mae was to receive a government bailout.

He spent previous, and subsequent days and weeks assuring the press and public outside the room, that Fannie Mae would not receive a government bailout. On 13th July he stated:

“If you have a bazooka, and people know you have it, you’re not likely to take it out,”

On the 21st July, he proceeded to reveal, in detail, his plans to bailout Fannie Mae. This amounts to insider trading. The sharing of non-public information, with those who could financially gain from such knowledge.

“You just never ever do that as a government regulator — transmit non-public market information to market participants…There were no legitimate reasons for those disclosures.” Said William Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco, and Associate Professor of Economic and Law at the University of Missouri.

Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., was more blunt:

“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”[3]

Paulson now sits on a personal fortune estimated at over $700m, is a senior fellow in University of California’s Harris School of Public Policy and still an opinion former on the economics world stage. Meanwhile, Goldman Sachs dished out £8.3bn in bonuses in 2012/13, working out at an average £250k a year for each employee. This is higher than the pre-crash bonus pool in 2007.

Yet Paulson had the audacity to publish a whitewashed version of events called “On the Brink: Inside the Race to Stop the Collapse of the Global Financial System” in 2010. This was greeted with fawning reviews, such as this by Roger Lowenstein in the New York Times, where Paulson was characterised as some sort of humble farmer’s boy who grew into Wall Street’s answer to John Wayne. He writes:

Born in 1946 and bred on a farm in Illinois, he milked cows and baled hay as a boy. Even when he was the highest-paid executive on Wall Street (a fact he omits when taking credit for an enlightened approach to pay), Paulson wasn’t the flashiest; his idea of entertainment was a documentary on the ivory-billed woodpecker.

Worse than this, Lowenstein actually spots the about-face behaviour of Paulson in spouting neoliberal, self reliance for his entire career, until it was his community that found itself broke…but fails to point to the hypocrisy.

Abandoning the laissez-faire principles he espoused during his more than 30 years at Goldman, Paulson bailed out Fannie Mae, Freddie Mac, A.I.G. and Citigroup, among others.

And now we have the release of a new documentary “Hank: 5 Years From the Brink,” where Paulson once more enjoys the honour of retelling the story of the Crisis in his own words, where once again he is placed in the role of hero and savior. So, is the US media questioning allowing the poacher to turn gamekeeper and then town cryer? No. This LA Times review works best if you crank your irony sensors up to max:

This focused, taciturn man doesn’t exactly come to life in the film, but he does become more real as we see how deeply that time in the pressure cooker affected him. Paulson’s decisions will no doubt be debated for decades, but what comes through is his singular focus on ensuring the U.S. economy did not collapse. When Wendy (Hank’s wife) says Paulson had nightmares of a 1930s-style depression with bread lines, you believe it.

The core mission of a plural and independent media is to perform as the Fourth Estate, acting as a check and balance on state and corporate power. We are witnessing the merger of state, corporate and media power to distort our reality and, as Malcolm X stated – make the criminal look like the victim and the victim like the criminal. The party is still kicking for the men who caused the crisis; men like Paulson, Blankfein, and Dymon. The party is over for senior citizens, the working poor, the sick and disabled, and the young people buried under student debt or flipping burgers for $8 an hour. If we are not careful, the media will have us thanking the architects of our own destitution. http://iacknowledge.net/rewriting-history-architects-of-the-financial-crisis-recast-as-saviors-by-corporate-media/