Mario Draghi and Goldman Sachs, Again

By Simon Johnson

In its previous response to us, the the Bank of Italy pointed out that Mario Draghi (its current governor) did not join the management of Goldman Sachs until 2002 – hence he was not there when the controversial Greek “debt swaps” were arranged.

We agree that he joined Goldman only in January 2002 (this was in our original post).  But the latest revelations regarding the Goldman-Greece relationship (on the Senate floor, no less) clearly indicate that Goldman was a lead manager of Greek debt issues in spring 2002, i.e., when Mr. Draghi was on board.

This raises three entirely reasonable and straightforward questions.

  1. Was Mr. Draghi involved in the Goldman-Greece relationship?  Sources indicate that this was very much part of his set of responsibilities, but this may be disputed.
  2. If Mr. Draghi was involved in marketing Greek debt, did he at that time know the true Greek debt numbers – i.e., was he aware of the “debt swap” arrangement?  Perhaps his Goldman colleagues concealed that information from him.
  3. And when/if Mr. Draghi became aware of the inherent misrepresentation involved this transaction, did he take steps to fully informed investors (and any relevant regulatory bodies)?  Again, it is entirely possible he learned of this matter only recently and from the newspapers.

Keep in mind that Mr. Draghi is still regarded as a leading contender to become president of the European Central Bank – the most important policymaking institution in the eurozone.  It will be hard for anyone to advance his candidacy without clear and public answers to these questions.

22 thoughts on “Mario Draghi and Goldman Sachs, Again”

  1. It should be noted that Simon was an “adviser” to Goldman once upon a time, and that Goldman undoubtedly engaged in transactions during that time that know-nothing pundits some people would consider unsavory.

    Disclosure!

    It’s a good thing no one pays attention to Simon’s mindless rants anymore. (Quick, Simon, say something incredibly provocative — and almost certainly false — so that people will pay attention to you again!)

  4. You’re saying he won’t be able to hold a critical job because of his actions? Like Bernanke and Geithner

  5. Who is this “Grant” person, I wonder. smile….

    Yes: keep at it, Simon. …Lady in Red

  6. pay no mind to this drivel Simon. keep up the honesty. you are and will be rewarded in history.

  7. Agreed. “This raises three entirely reasonable and straightforward questions.” …the Germany – China – Goldman Sachs – Greece interconnectedness as relates to bond holdings and using credit default swaps.

  8. The Greek debt problem will be solved painlessly.

    The ECB will provide funds to the greek banks, and these banks will use this money gobble up all new Greek bonds. They already bought 75% of last issue.

    Then the french and germans get their money back and life can continue as before.

  10. Simon is not the only economist who has a broader view of economics than pure self interest. Paul Krugman, Joseph Stiglitz et al realize that capitalism has to work for everyone. The majority of people need to feel they have a chance to share in the wealth of the economy. The more people who feel they have a piece of the action the better.

    Unfortunately, at this point the rules of finance are being written with the help of Wall Street who payoff legislators; western countries have the best legislatures money can buy to paraphrase a commentator from the past. The current rules favor more of the risk taking that could lead to more catastrophes. Instead of a government of the people, by the people and for the people, we have a government of the few, by the few, for the few who can buy their way into the legislative process.

    We need laws and regulators to limit the influeance of big institutions who have no concern for a more equitable parsing of the economic pie.
    Thank goodness there are people who are speaking out forcefully for scrutinizing the actions of the powerful.

    Keep up the good work Simon!

  11. Perhaps it is time for some wag to pen a fictional account of Draghi’s job interview. “What special skills do you offer that might be beneficial to … etc”

  15. Just an observation: It appears that Simon has a good deal more of substance to say than Grant.

  18. What leads you to believe any of the captured a$$holes have any brains? If so, why are they selling their souls & selling the long term viability of our country & economy down the river for peanuts?

  19. Chas wrote:

    “…why are they selling their souls… ”

    Live long enough, you’ll find out. :-)

    “The moment we begin to fear the opinions of others and hesitate to tell the truth that is in us, and from motives of policy are silent when we should speak, the divine floods of light and life no longer flow into our souls.”

    Elizabeth Cady Stanton (1815 – 1902), 1890

  20. Simon, keep up the good work….you are the only one I trust to tell it like it is!

  22. We need more like you Simon, thanks for this article, will be shared w/ people around the globe. What i fail to believe, however, is that Mr. Draghi will go down regardless his involvement — the fat rockheaded greedmongers revere men like this and will no down create an iconic statue of him on Wall Street, perhaps even cowtowing to it before entry into their gold and diamond encrusted offices in which they do nothing but pillage entire cities’ coffers of their funds for the rotten debt swaps…

Comments are closed.