Wall Street Biggies Visit Washington but not for a Bailout
In recent weeks, Washington has had visits from Wall Street biggies Maurice “Hank” Greenberg, former Chairman of bailout poster child AIG, and Lloyd Blankfein, current chairman of bailout poster child Goldman Sachs.
What were they doing here? With little doubt about their time management skills, there must have been something in it for them. As far as could be determined no bailouts were requested.
Greenberg lunched with a turn away crowd of the great and the good. Many were so “former” that they were no longer lobbyists (though their “former-ness” began before the path to K Street was quite so well-worn).
Blankfein, on the other hand, sat under the hot lights with Politico’s Chief Economic Correspondent, Ben White, before an audience of marginal journalists and interns.
Should you be imagining a Venn diagram that put me in both rooms, you would be correct in concluding that the overlap is very small.
Greenberg is doing really well for an 88-year-old thanks to a tireless regimen of self-promotion and opponent bashing. In one sentence, he accomplished both: “I built AIG from $300 million-$180 billion before Spitzer turned on me.” Update: a few weeks later he sued Spitzer for libel.
His hook to the audience of “formers” was that AIG and C V Starr Companies, which he now heads, are national assets that are useful to the government. Gauzy references to lost Soviet submarines, Glomar Marine, redefining the World Trade Organization mandate to include services, Iran, Pakistan, China and the OSS (he nailed the audience demographic on that one) pretty much covered the self-promotion.
His lineup of punching bags included Sarbanes-Oxley, the New York Stock Exchange, Dick Beatty (a lawyer who served as counsel to the Board of Directors of AIG), Warren Buffett, Eliot Spitzer (jogging buddy of Beatty), Martin Sullivan (an incompetent whom he curiously failed to fire during a 25-year run at AIG), Hank Paulson and various successors after he was fired. “Me-great-them-suck” was pretty much the theme.
About 25 minutes into his remarks, he got to AIG Financial Products, the division that required the bailout and caused Greenberg to be fired by the Secretary of the Treasury. For ease of reference, here is the spin: FP (the in-the-know acronym for Financial Products) was great for every instant during Greenberg’s tenure and dreadful for every instant thereafter.
Only three countries have tried to nationalize AIG assets: Iran, Pakistan and the United States (because of the bailout). Thanks to Greenberg, the first two did not succeed. He remains a bit peeved about the third.
In interviews, unlike speeches, there is a questioner who, if he has any concern for the esteem of his peers, its not supposed to get caught lobbing marshmallows at his guest. (Note the distinction between lobbing and getting caught lobbing.)
Here are some of Blankfein’s answers. Unlike Carnac the Magnificent or Jeopardy, the questions are obvious.
Washington is a hindrance to the economic recovery, especially the partisanship and opposition to compromise. Opportunities include infrastructure, energy (US becoming a net exporter has all sorts of fun geopolitical implications) and immigration.
We have not done enough on debt and deficits and sequestration might actually be helpful.
Government paralysis, Europe and a downturn in China are three things that keep Blankfein up at night. The risk of the US slipping back into recession is low but not zero.
Goldman is not too big to fail but, if it were liquidated, many other institutions would go down with it. There is no appetite for bailouts anyway and a future extension of liquidity would only protect counterparties not shareholders.
Capitalism did a better job over the last 30 years of creating wealth than allocating it.
Neither speaker had a book to sell and neither audience seemed especially influential. Warmer and fuzzier images might have been a goal and, if so, Blankfein won. Or maybe it was just visiting their capital (small “c” or large) or just seeing that their donations and lobbying fees were having the desired effect. There were no reports of bailouts.