Bought and Paid For Read Free Page A

and called around to his friends in corporate America to do the same. And it worked. GE Capital, the giant finance arm of General Electric Company, came up with $20 million, and Morgan Stanley threw in $10 million on top of the tens of millions already donated by JPMorgan Chase, Bank of America, and Citigroup.
    Blankfein—who by some accounts was fighting for his job as he struggled against multiple regulatory probes, mounting shareholder lawsuits over the company’s problems, and growing dissatisfaction inside Goldman over his management—had just fought to save a small bank in Chicago that had had a history of unprofitability and no signs of turning itself around. These weren’t exactly the kind of maneuvers that had helped Goldman earn $12 billion in 2009.
    But what if they were? What if the ShoreBank bailout, disguised as an act of charity at best and a desperate attempt to save Goldman’s public image at worst, actually represents just one more example of how Wall Street and the government, namely Big Government, really work?
    The fact of the matter is, when you strip away the name-calling and class warfare coming from the Obama administration, and when you ignore Wall Street’s gripes about the new financial reform legislation that will put a crimp in some of its profits, these two entities are far more aligned than meets the casual eye. They coexist to help each other—in an unholy alliance against the American taxpayer.
    This is why I decided to write Bought and Paid For. I’ve spent much of my career covering Wall Street, and I’ve always had a particular interest in the intersection of Wall Street and politics. My first big story, back in the early to mid-1990s, focused on the major scandal of that era, involving the issuance of municipal bonds, and showed how Wall Street used politically connected consultants, such as the young political operative turned senior White House chief of staff Rahm Emanuel, to win municipal bond business from their friends in government and induce municipalities to take on greater degrees of public indebtedness. (Emanuel left Goldman in the early 1990s to work in the Clinton White House.)
    In the mid-1990s I covered the research scandals, where, according to the SEC, the big firms and their analysts, like Henry Blodget, then of Merrill Lynch and now a business journalist, routinely supplied high ratings to companies so that their firms could win large and lucrative investment-banking assignments that increased their year-end bonuses. These research scandals were the subject of my first book, Blood on the Street. I later reported extensively on the politically motivated prosecution of former New York Stock Exchange chief Richard “Dick” Grasso by then New York attorney general (and later governor) Eliot Spitzer, the subject of my second book, King of the Club . In the fall of 2009, I published my third book, The Sellout , about the financial crisis and how it came to be.
    But now I’ve found a new, perhaps even more urgent topic. This book won’t dwell on the collapse of the big firms, which began with the fall of Bear Stearns and ended with the liquidation of Lehman Brothers, or on how the remaining Wall Street titans survived the 2008 financial collapse through an unprecedented taxpayer-financed bailout. It will, however, dwell on how these same taxpayers suffered the fallout from Wall Street’s demise: persistently high unemployment, massive amounts of debt, and a shrinking currency thanks to the Federal Reserve’s unprecedented policy of keeping interest rates near zero, while Wall Street prospered.
    As I discovered in the course of writing The Sellout , these issues are part of a bigger story: While the unbridled greed and lack of morals of many on the Street played a huge role (as legendary financier Teddy Forstmann told me, “Wall Street never had principles”), a critical part of the story, and one that the