Ties between the US government and the business world date back to 1776 (several of the Founding Fathers were from wealthy plantation-owning families). The revolving door has been spinning ever since, regardless of whether a Democrat or a Republican was in the Oval Office. The difference with Trump, as is so often the case, is one of volume, and shamelessness.
As of this writing, Donald Trump has appointed five current or former Goldman Sachs executives to senior roles in his administration, including Steve Mnuchin as Treasury secretary, James Donovan (formerly a Goldman Sachs managing director) as deputy Treasury secretary, Gary Cohn (formerly Goldman’s chief operating officer) as director of the White House National Economic Council, and Dina Powell (formerly Goldman’s head of impact investing) as the White House senior counselor for economic initiatives. Even Steve Bannon once worked at Goldman. And that’s not counting Trump’s pick to lead the Securities and Exchange Commission, Jay Clayton, who served as Goldman’s lawyer on multibillion-dollar deals, and whose wife is a wealth manager with the company.
Making all these Goldman appointments is particularly brazen given Trump’s invocation of the bank to attack his opponents. In a typically vicious salvo at his GOP rival Ted Cruz, he claimed the Goldman guys “have total, total control over him. Just like they have total control over Hillary Clinton.”
It’s also extremely worrying for what it says about the administration’s willingness to exploit the economic shocks that may well reverberate on their watch. Of all the major Wall Street investment banks at the center of the 2008 subprime mortgage crisis, Goldman Sachs was among the most predatory. Not only did Goldman do a huge amount to help inflate the mortgage bubble with complex financial instruments, but it then turned around and, mid crisis, allegedly bet against the mortgage market and earned billions. In 2016, the bank was ordered by the United States Justice Department to pay a settlement of $5 billion—the largest settlement Goldman had ever paid—for these and other malpractices. In 2010, it agreed to a further $550-million fine, the largest ever paid by a Wall Street firm in the then 76-year history of the Securities and Exchange Commission, for its role in the financial crisis.
Democratic senator Carl Levin, who headed the 2010 Senate subcommittee that investigated Goldman Sachs following the financial crisis, summarized their misdeeds:
The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities…. Goldman Sachs didn’t just make money. It profited by taking advantage of its clients’ reasonable expectation that it would not sell products that it didn’t want to succeed, and that there was no conflict of economic interest between the firm and the customers it had pledged to serve. Goldman’s actions demonstrate that it often saw its clients not as valuable customers, but as objects for its own profit. This matters because instead of doing well when its clients did well, Goldman Sachs did well when its clients lost money.
Even among Goldman alumni, Steven Mnuchin has distinguished himself by his willingness to profit off misery. After the 2008 Wall Street collapse, and in the midst of the foreclosure crisis, Mnuchin purchased a California bank. The renamed company, OneWest, earned Mnuchin the nickname “Foreclosure King,” reportedly collecting $1.2 billion from the government to help cover the losses for foreclosed homes and evicting tens of thousands of people between 2009 and 2014. One attempted foreclosure involved a ninety-year-old woman who was behind on her payments by 27 cents.
These predatory practices drew fire during Mnuchin’s confirmation hearing for Treasury secretary (though not enough for Republicans to vote against him). Oregon Democratic senator Ron Wyden said during the hearing that, “while Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the streets faster than just about anybody,” and charged “OneWest churned out foreclosures like Chinese factories churned out Trump suits and ties.”
Profiting from Natural Disasters
And then there’s Vice President Mike Pence, seen by many as the grown-up in Trump’s messy room. Yet it is Pence, the former governor of Indiana, who actually has the most disturbing track record when it comes to bloody-minded exploitation of human suffering.
When Mike Pence was announced as Donald Trump’s running mate, I thought to myself, “I know that name. I’ve seen it somewhere.” And then I remembered. He was at the heart of one of the most shocking stories I’ve ever covered: the disaster capitalism free-for-all that followed Katrina and the drowning of New Orleans. Mike Pence’s doings as a profiteer from human suffering are so appalling that they are worth exploring in a little more depth, since they tell us a great deal about what we can expect from this administration during times of heightened crisis.
The Katrina Blueprint
Before we delve into Pence’s role, what’s important to remember about Hurricane Katrina is that, though it is usually described as a “natural disaster,” there was nothing natural about the way it impacted the city of New Orleans. When Katrina hit the coast of Mississippi in August 2005, it had been downgraded from a Category 5 to a still-devastating Category 3 hurricane. But by the time it made its way to New Orleans, it had lost most of its strength and been downgraded again, to a “tropical storm.”
That’s relevant, because a tropical storm should never have broken through New Orleans’s flood defense. Katrina did break through, however, because the levees that protect the city did not hold. Why? We now know that despite repeated warnings about the risk, the Army Corps of Engineers had allowed the levees to fall into a state of disrepair. That failure was the result of two main factors.
One was a specific disregard for the lives of poor Black people, whose homes in the Lower Ninth Ward were left most vulnerable by the failure to fix the levees. This was part of a wider neglect of public infrastructure across the United States, which is the direct result of decades of neoliberal policy. Because when you systematically wage war on the very idea of the public sphere and the public good, of course the publicly owned bones of society—roads, bridges, levees, water systems—are going to slip into a state of such disrepair that it takes little to push them beyond the breaking point. When you massively cut taxes so that you don’t have money to spend on much of anything besides the police and the military, this is what happens.