Does Goldman Sachs Have Too Much Political Influence?

by JRO on August 21, 2013

  • SumoMe

Goldman Sachs is one of the largest and most influential multinational investment firms in the world. Founded in 1869 by German-born immigrants, Marcus and Henry Goldman, and later joined by Marcus’ son-in-law, Samuel Sachs, Goldman Sachs has grown to a market capitalization of over $70 billion. A company this large is sure to receive attention in every arena, and politics has been no exception. What influence has Goldman Sachs had on U.S. politics over the years, from the time of former employee Henry H. Fowler, who served as U.S. Treasury Secretary in the ‘60s, through the last two administrations?

Goldman Sachs: Alumni and Scandals in Politics

Individuals who have worked for Goldman Sachs over the years have been politically involved in various leadership levels of government and public policy in nearly every part of the world, including Europe, Africa, Canada and the United States. Alumni include finance ministers and national bank governors, as well as former Greek Prime Minister, Lucas Papademos. Papademos had extensive dealings with the firm while acting as Chief Economist for the Bank of Greece. He also was associated with Romano Prodi, former Italian Prime Minister and President of the European Commission, who was implicated in a potential scandal involving the sale of Unilever for a possible conflict of interest.

The Bush Factor

During the administration of the 43rd President George W. Bush, at least five former Goldman Sachs officials served in high positions within the administration. The highest-ranking former Goldman Sachs employee to advise the President was Joshua Bolten, who served as White House Chief of Staff, as well as in the roles of Deputy Chief of Staff and Director of the Office of Management and Budget.

In addition to relying on the advice and counsel of Bolten, President Bush also looked to his Treasury Secretary, Henry Paulson, who served in the role from 2006 until the end of the administration. Paulson, who was the former CEO of Goldman Sachs (having served from 1999-2006 after his predecessor John Corzine, a former Democratic U.S. Senator and Governor of New Jersey), played a leading role in the creation of the bailout program, as well as the Troubled Assets Relief Program (TARP). TARP, in fact, was managed by another former Goldman Sachs employee, Neel Kashkari, the Assistant Treasury Secretary for Financial Stability currently considering a run for the California governorship.

The Obama Influence

When Barack H. Obama was sworn in on January 20, 2009, as the 44th President of the United States, he included six former Goldman Sachs officials and employees in high positions within the administration.

The most prominent member of the new administration was former Chief of Staff and current Mayor of Chicago, Rahm Emanuel. Emanuel’s hard-nose political tactics won him no friends on the other side of the aisle. Others include Larry Summers, former Clinton Treasury Secretary and close Obama adviser; Gary Gensler, who heads the Commodity Futures Trading Commission; Gene Sperling, a Goldman Sachs adviser and now head of the National Economic Council; and William C. Dudley, who oversees the Federal Reserve Bank of New York.

Goldman Sachs officials have been involved in deciding the course of policy not only for the last two administrations, but around the world in such areas as European austerity measures and the global financial crisis. It is easy, therefore, to conclude that a direct link between the company and politics is strong. It appears that few other private financial institutions have as much influence in politics as Goldman Sachs.

About the author

Desmond Carrington is a freelance writer based in Albany, New York. Desmond writes on banking, finance, wealth management, the stock market, accounting and other related topics; those curious about the financial world should check out the banking jobs with moneyjobs.com.

JRO

JRO

Previous post:

Next post: