The article is entitled, "Hank Paulson's Inside Jobs," emphasizing the fact that this wasn't some one-off lapse of ethics on Paulson's part, but instead a disturbingly regular practice.
For those who are unaware, Paulson was the CEO and chairman at Goldman Sachs from 1999-2006 and he clearly provided them with actionable information that epitomizes the plague upon our economy, and the greater global economic system, that is crony capitalism.
However, this isn't quite a brand new revelation given the fact that in October of 2009 Andrew Ross Sorkin exposed that Paulson met with the entire Goldman Sachs board in a hotel suite in Moscow at the end of June 2008.
Salmon covered this at the time, after Sorkin's book was released, which detailed the meeting held after the Goldman Sachs boys had dinner with Mikhail Gorbachev.
At the time the Treasury chief of staff Jim Wilkinson told Goldman Sachs chief of staff John Rogers, "Let's keep this quiet," indicating that despite the fact that the Treasury's general counsel Bob Hoyt claimed "it wouldn't run afoul of the ethics guidelines," they were well aware that wasn't the case.Hoyt said that it was acceptable so long as it was solely a "social event", but unsurprisingly, Paulson didn't record the so-called "social event" in his official calendar.
It is undeniable that these individuals knew very well what they were doing, and clearly they had no misgivings whatsoever.
During the Moscow meeting Paulson spoke of "the need for the government to have the power to wind down troubled firms, offering a preview of his upcoming speech," according to Sorkin.
This wasn't just a friend going over a speech with some old pals, as everyone knows the words of the Treasury Secretary heavily affect global markets almost instantly, just like speeches by the likes of Ben Shalom Bernanke, the Chairman of the Board of Governors of the private Federal Reserve.
Getting this kind of information ahead of time is critical, and through Sorkin's writing it is clear that Paulson enlightened them as to the situation with Lehman Brothers, giving Goldman Sachs an unfair advantage over those who didn't happen to have someone on the inside.
Paulson spoke of the possibility that Lehman Brothers very well might collapse, along with giving the Goldman Sachs board other insights into how he was viewing the economic climate and what was to come.
As Salmon points out, "Maybe it's not so surprising that Goldman Sachs turned out to be so well positioned when Lehman did indeed [blow up] a few months later."
This egregious breach of ethics is a perfect example of the corporatism that pervades Wall Street and has brought us to the brink of collapse where we are precariously perched today.
Paulson's Moscow meeting with Goldman Sachs wasn't an isolated incident as just a few weeks later on July 28th, 2008, Paulson met with what Salmon characterizes as "a who's who of the hedge-fund world" in the Eton Park Capital Management headquarters.
Unsurprisingly, Eton Park Capital Management was created by Eric Mindich, formerly of Goldman Sachs as well.
In a Bloomberg article published yesterday, Richard Teitelbaum details the meeting between roughly a dozen hedge-fund managers and Wall Street executives, including no less than five former colleagues of Paulson's from Goldman Sachs.
Others in attendance were Stephen Mandel of Pine Capital LLC, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.
During the meeting Paulson, "went on to describe a possible scenario for placing Fannie and Freddie into 'conservatorship' - a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets."
Teitelbaum writes, "The fund manager says he was shocked that Paulson would furnish such specific information - to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information."
While he points out that "law professors say that Paulson himself broke no law by disclosing what amounted to inside information," it is hardly arguable that it is ethically acceptable for the Secretary of the Treasury to furnish information to certain people which would give them an advantage over everyone else.
As Salmon points out, "Given that it's taken two years since the release of Sorkin's book for the Eton Park meeting to be made public, it's fair to assume that there were other meetings, too - possibly many others."
Indeed it is impossible to know how much trading of insider information occurs amongst the financial elite, as we only get a glimpse when sources choose to disclose this information to reporters like Teitelbaum and Sorkin.
It is quite unfortunate that this is such a rare occurrence, especially when we look at how the ultra-rich continue to profit at record rates while the rest of us struggle to pay the bills.
Surely these meetings did not occur only a couple of times, given the tight connection that Goldman Sachs - or more accurately, as is now painfully clear - Government Sachs enjoys with Washington.
Salmon sums up this issue in pointing out that the so-called conspiracy theorists have been right all along.
Salmon writes, "Paulson was giving inside tips to Wall Street in general, and to Goldman types in particular: exactly the kind of behavior that 'Government Sachs' conspiracy theorists have been speculating about for years. Turns out, they were right."
Now if only the derisive label of "conspiracy theorist" would be lifted from these issues when it is far from a conspiracy theory and is indeed a conspiracy fact.
I won't be holding my breath, because so long as governments criminally conspire with multinational corporations and others, the label of conspiracy will be denigrated in order to keep people from discussing and investigating these facts and issues.