Trump Adds Another Goldman Sachs Alum to His Administration
James Donovan’s area of expertise, like most Goldman Sachs folks, is not economics or finance, but law – because that’s how Goldman Sachs makes its money: by evading, controlling and writing the laws
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
President Trump named James Donovan, a long-time Goldman Sachs executive, to be Deputy Treasury Secretary on Wednesday. This means that there are four former Goldman Sachs managers in senior positions of the Trump Administration. The other three are Treasury Secretary, Steve Mnuchin, Director of the National Economic Council, Gary Cohen, and the White House Chief Strategist, Steve Bannon.
Joining us today to talk about the significance of this latest appointment is Bill Black. Bill is a professor of Law and Economics at the University of Missouri, Kansas City. He’s also a former financial regulator. He’s also the author of the book titled, “The Best Way to Rob a Bank is to Own One.” Thanks for joining us, Bill.
BILL BLACK: Thank you.
SHARMINI PERIES: So, Bill, previous administrations, such as those of Bill Clinton, and George W. Bush, had significant Goldman Sachs influence. How does the Trump Administration compare to those earlier administrations?
BILL BLACK: They are even more Government Sachs than their predecessors, and you’re right, the bad joke is that the United States holds an auction every four years to see who will control economic policies and administration. And of late, Goldman Sachs has consistently been winning that auction. In addition to the fact that this will be the fourth senior person directly employed by Goldman, we need to remember that the new designee to become Chairman of the Securities and Exchange Commission, a New York lawyer, well by far his biggest client was Goldman Sachs.
And his firm has represented Goldman Sachs for over 100 years, to give you an idea of the closeness of all of this. A couple of other things that are escaping attention, mostly when people talk about this: first, as you mentioned, Gary Cohen is running the National Economic Council. But on top of that, the normal place where you would get your economic advice as President, the President’s Council of Economic Advisors, well, Trump has down-graded that to below Cabinet level. And instead, put all the power of economic advice in this National Economic Council.
Now, the National Economic Council is a recent creation. It was a creation by Bill Clinton, and it was created specifically to put a Goldman Sachs guy in charge. Because that Goldman Sachs guy wasn’t really someone who was an economic expert, or had any academic credence — that guy’s name was Bob Rubin. And of course, then he becomes Treasury Secretary, and becomes the overwhelmingly dominant public official.
So, this is all a practice of not, you know, we don’t want to listen to facts — we want to make up our facts, very Trumpish, and academic economists, even if they’re very conservative, they might not be so willing to make things up. So, first we’re going to downgrade the academic economists. Second, we’re going to make them all business folks. Third, we’re going to make them almost exclusively Goldman Sachs folks. And fourth, you know when you look at these Goldman Sachs folks, like the most recent one, what does he also do? Well, he’s a law professor.
His area of expertise, like most of these Goldman Sachs folks, is not economics. It is not finance. It is law. Because that’s how Goldman Sachs makes its money, by getting around and evading and controlling and writing the laws, right? So, the expertise here — that your Trump is looking for — it’s not people that actually understand the economy; it’s people that understand how to gut and pervert the laws, so that the kleptocrats can make a ton of money.
And you know, it is just plain wonderfully humorous that the most recent appointee allegedly teaches ethics. (laughs) So, who do you have to teach ethics in your law school? — The Goldman Sachs guy. Who says law schools don’t have a sense of humor?
SHARMINI PERIES: According to some reports, Bill, one of Donovan’s main tasks will be to reform the corporate and individual tax codes, as well as restructuring the mortgage guarantor Fannie Mae and Freddie Mac. What would you expect from someone like Donovan, with regard to particularly, these policies?
BILL BLACK: Well, first we should purge that word “reform,” because, you know, reform actually meant to fix things. That was its original meaning, and now it just means to change things, but to give it a positive gloss. And second, that’s exactly what he’s going to do, and why he is a lawyer, not somebody whose expertise is economics or finance.
This is how, you know — how do the Trumps of the world pay so little tax? How, if they can get rid of the alternative minimum tax, will they go down to paying tax rates in the 3% type range as multi, multi-millionaires? It’s because, not of economic expertise; it’s because the tax lawyers write the rules, and then they interpret the rules to shield the incredibly wealthy people. And so, that’s who they put in charge. This isn’t the fox, right, this is like a whole castle of foxes brought together, and you know they’re just going to slaughter the chickens.
And remember, Trump ran against these people, and used in his campaign images — as the personification of evil — the head of Goldman Sachs.
SHARMINI PERIES: Yeah, important point, Bill. Bill, given that Goldman Sachs is now — it’s almost occupying the Administration — give us a sense of what the rivalry, or jealousy within the financial industry might be, about having so much control of the Administration.
BILL BLACK: Right, so the other folks hate it, but there aren’t that many big investment banks left. Of the big five investment banks before the crisis, there are only two that survived independently. Bear Stearns and Lehman Brothers collapsed, and Merrill Lynch had to be bailed out through an acquisition.
So, Goldman really doesn’t have much of a rival. Goldman’s strategy, for a very long time, has been to put its people into the highest positions of power, not just in the United States government. I mean, they had Goldman Sachs folks running the economies of much of the Western world. And of course, they… the key thing you do, when you have control of the government, is rewrite the rules, to get rid of things like the alternative minimum tax. You call that a reform, right?
So, you slash Donald Trump’s tax rate from an already pathetic 24%, to a bit more than 3%, right? You make billions for your clients. Actually, you make hundreds of billions for your clients. You keep tens of billions for yourselves, and it’s all a great world. And again, this is why they are literally called, in Washington D.C., “government Sachs”.
SHARMINI PERIES: Yeah.
BILL BLACK: Because they’ve been doing this for decades.
SHARMINI PERIES: Yeah, and also it’s very convenient this policy that Trump is governed by, one regulation in, two regulations out. That allows them to deregulate a whole lot of stuff about the financial industry.
BILL BLACK: It’s important for people to understand that it isn’t simply a metaphor, to say the system is rigged. The system is quite literally rigged. Goldman Sachs knows that, because Goldman Sachs rigged it. And Goldman Sachs folks have become incredibly wealthy, and powerful, because they put themselves into positions, and their cronies in the political world — the Donald Trumps of the world — put them into these positions of the power, so that they can work full time.
And 99.9% of this is behind the scenes where nobody sees it — unless there’s a whistle-blower — to rig the system in favor of the uber-wealthy.
SHARMINI PERIES: Bill, thank you so much for joining us today.
BILL BLACK: Thank you.
SHARMINI PERIES: And thank you for joining us here on The Real News Network.