Amid Record Bonuses Goldman Sachs Enabled Greek Debt

The person who has the gold makes the rules.  I suspect this is the operating mantra at Goldman Sachs even after the bank’s near-death experience (when Solomon Bros stock was taking a hit, Blankfein knew his bank could be next).  As it turns out, the bank was involved in enabling Greece to stealthily spend beyond its means. Just after Greece had been admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means. Additionally, in late November, 2009— three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in Athens with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting. The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.[1]

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

1. Louise Story, Landon Thomas, Jr., and Nelson D. Schartz, “Wall St. Helped to Mask Debt Fueling Europe’s Crisis,” The New York Times, February 13, 2010.

The Revolving Door: A Public-Private Sector Conflict of Interest

In Illinois, at least as late as 2011, state and local legislators could use their position to benefit paying clients. According to The New York Times, fourteen elected officials in Cook County, where Chicago is located, were registered as lobbyists in the 2009-2011 period and had clients who did received government contracts in Illinois. Rep. Fred Crespo observes, “When I see them [the law makers] at a hearing in the Capitol, I often can’t tell of they’re here for their constituents or for their paying clients.” Legislators in Illinois “can legally vote and otherwise act on matters that directly benefit their lobbying clients.”[1] As this involves a conflict of interest, which is inherently unethical, this case demonstrates for us the contention of ethicists that ethics as a field is distinct from law.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. Mike McIntire and Michael Luo, “When Santorum Left Senate, Some He Aided Found Him Work,” The New York Times, January 6, 2011; John Sullivan and Fredric Tulsky, “When Office Holders Also Represent Clients, Collisions Are Likely,” The New York Times, January 6, 2011; and Fredric Tulsky and John Sullivan, “Is It a Conflict? Yes, But It’s Legal,” The New York Times, January 6, 2011.