Scott Wheeler's Op-Ed

As seen in the Washington Times

and The Daily Caller
The Daily Caller

The Goldman Rule

Thursday, April 22, 2010
By Scott Wheeler & Buckley Carlson

The Man who takes Sach’s of gold is the man who makes the rules. President Obama is that man, and Republicans in Congress should demand an independent, Special Prosecutor to investigate the relationship between gold and rulemaking in the Executive Branch; with nearly a million dollars of Goldman Sachs money in his hip pocket (rendering that institution his most generous ’08 campaign contributor), Obama appears to be ignoring some serious rule-breaking.

Last Friday, news broke that the Securities and Exchange Commission was suing the Wall Street bank of Goldman Sachs.   Conspicuously absent was a corresponding announcement from the Department of Justice that indictments were soon to be handed down.  Curious, and also a major departure from the norm.

President Obama has relentlessly attacked “Big Business” and Wall Street “greed”, and in the process has exhausted every available metaphor from the leftist’s lexicon used to bash, undermine, and delegitimize Capitalism.  Well, according to The Washington Post, the SEC is accusing Goldman Sachs of some pretty nasty stuff.

“The suit asserts that Goldman defrauded investors when it sold them a subprime-mortgage investment in 2007 that was secretly designed to lose value. The agency alleges that Goldman created and marketed the investment without telling its clients that Paulson & Co., a prominent hedge fund, had helped the bank assemble the investment while at the same time was placing bets that it would lose value. The bank received $15 million from Paulson & Co. for its services.”

What a compelling test case this could prove for a devout (when the proverbial pews are full) populist like Obama; Goldman could serve as the stump-speech whipping boy at every rally, especially now, as the administration seeks to “reign in” Wall Street. But Obama has made clear that he wants no part of a criminal investigation that targets his most snuggly bedfellow of the  2008 election. And Sachs of gold are not the only cause of this hesitance. Treasury Secretary Timothy Geithner, one of the most influential, powerful members of Obama’s Cabinet, is notoriously close to many top Goldman officials. In fact, prior to his confirmation, Geithner’s critics were vocal about his many perceived conflicts of interest.

In January 2009, financial risk analyst Chris Whalen gave voice to many of those critics when he told Yahoo Finance, “Geithner is the wrong man for the job because of his decision-making as President of the New York Fed. I believe Tim Geithner only represents part of Wall Street - Goldman Sachs."

Indeed, Geithner was one of the primary architects of the Troubled Asset Relief Program (TARP).  During the closed door, never-to-be-revealed machinations that spawned that unprecedented taxpayer gift to a select few, Geithner engaged in an unusual number of contacts with Robert Rubin, the former co-chairman of Goldman Sachs.  It was also Geithner’s decision to bail out American Insurance Group (AIG), a controversial move that rendered Goldman whole at a time when other banks were left struggling or allowed to fail, Bear Stearns and Lehman Brothers being the two most famous examples.  

President Obama does face potential peril if the SEC lawsuit naturally matures into a criminal prosecution, but he remains ever confident that he has little to fear from his less than independent Attorney General.  And so, he displays his usual hubris by politicizing the affair to his own benefit, using it to declare that this is why congress should pass his Wall Street reform bill.  This is the bill, according to sources, that would permit him to take over any public company that he deems unstable.  Ah, “free markets”, indeed!

President Obama is using the Goldman Sachs case to set a trap for Republicans, hoping that Republicans will revert to form, and do what they always do, and are, in fact, already doing: defend Goldman.  His bet is that it will distract from the real narrative, that Goldman is a consistent, heavy-weight contributor to the Democrats in general, and to his own political fortunes in particular.

Republicans can defend capitalism and repel another Big Government takeover, and still champion justice by demanding a special prosecutor discover the truth that lies at the bottom of this deal that the SEC calls fraud.  And in doing so, Republicans should take it a step further, demanding the investigation include political donations and influence peddling.  This is critical, considering the amount of taxpayer money used to bail out these politically-connected firms.

The political fallout for Obama here could be devastating; after publicly chastising our country’s  Supreme Court for a decision that he claims will allow “Big Business” to exert undue influence over elections, he would be forced to defend himself for taking nearly one million dollars from a huge banking institution that faces probable indictment.  All the while Republicans could take the high road and lecture Democrats about the evils of big banks, Wall Street and tainted campaign donations.  What a novel turn of events that would be.

In a speech at George Mason University last Friday, President Obama told a captive crowd that health care reform will henceforth mean insurance companies can't cancel an insured's coverage when they have a claim. "This year, they will be banned from dropping your coverage when you get sick. Those practices will end," he declared.

Pretty bold stuff. Also, an outright lie. According to attorney Richard Giller, a leading expert on insurance coverage, it is currently illegal in all fifty American states to cancel an insured's coverage for getting sick. In fact, this column spoke with an actuary for a state insurance commission. Requesting anonymity, the government actuary stated unequivocally that Obama's claim was completely untrue. "These policies cannot be cancelled, they are guaranteed renewable and have been for over twenty years." "Guaranteed renewable" means the insurance company can't cancel the coverage for anything except nonpayment of premiums.

President Obama wove his Americans-are-pathetic-victims narrative with abandon: "They will continue to jack up premiums 40% or 50% or 60%, as they have in the last few weeks without any accountability whatsoever."

Mr. Giller also informs this column that in more than half the states, insurance companies are strictly accountable to the government of the state in which they operate, forbidden from raising rates without specific approval. Furthermore, insurance companies are bared from raising one person's health insurance policy premium without first raising the premium for the entire underwriting category to which that person belongs. Additionally, "most states review all rate increases according to the loss ratio standards," (which means that the state not only reviews to make sure the rate is not too high, but also to ensure that the rate is high enough to pay the expected claims), confirms this government actuary.

"Because if this vote fails, the insurance industry will continue to run wild in America," said Mr. Obama. But the reality is that the insurance industry is among the most regulated business sectors in America. The only species "running wild" in this country currently is the Democrats in Washington, so intoxicated with power, so consumed with their own importance, so recklessly devoted to their far left agenda that they believe they are accountable to no one. And so far, they haven't been held accountable; very few in the press corps have been willing to request supportive evidence of their outlandish claims.

Obama also accused insurance companies of doing what he, Speaker Pelosi, and Senate Majority leader Harry Reid have been doing all along…engaging in fear mongering. "That's why their lobbyists are stalking the halls of Congress as we speak. That's why they're pouring millions of dollars into negative ads. That's why they're doing everything they can to kill this bill." No, they weren't. This health care bill is forcing millions to buy health insurance from the very companies Obama says don't want the bill.

Among the other outrageous claims by Obama is that there is half a trillion dollars lost in "waste, fraud, and abuse" of Medicare. But if there really is half a trillion dollars of waste, fraud and abuse in Medicare, then why didn't Obama find it last year and use those funds instead of the piles of taxpayer cash that were consumed by his failed stimulus bill?

Obama's health care bill includes funding for over sixteen thousand new Internal Revenue Service agents to make sure everyone is covered. Think about that for a moment. Seem a little strange to you? If Americans really needed his brand of "healthcare reform," why does Obama think he would need the IRS to enforce it?

Now that it has passed, Obama is prepared to spend millions more in taxpayer dollars touring the country to convince us just how lucky we are that he got his bill through congress.

Stay tuned for more great policy initiatives; Obama has now turned his attention to his Cap and Trade tax bill, which will attack the energy industry on the basis of saving us from global warming. By design, it will make energy a vastly more expensive commodity for all Americans. And really, in this recession, who could ask for anything more?

If anyone believes Obama's willingness to tell any lie – no matter how outrageous or divorced from fact – will be restrained by the mounting evidence that global warming as a man - made issue is a hoax, need look no further than his just concluded successful campaign to distort a debate as black and white as insurance law.

Scott Wheeler

Scott Wheeler is a former investigative journalist, television producer/reporter and the Executive Director of
The National Republican Trust PAC, the nation's third largest PAC dedicated to preserving and promoting limited government, free enterprise and traditional American values.


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