Thursday, February 04, 2010

Why Goldman Sachs Executives Go Into Government

So, we know there's a revolving door between Goldman Sachs and government. We also know that government jobs only pay a couple of hundred thousand dollars at most, and we believe GS people became GS people because money motivates them.

So, what gives?

[O]ne reader writes... “There is a special IRS law/code passed in 1991 that says when someone appointed to a government position needs to sell stock to avoid such a conflict of interest, then the sale will not be taxed. I wonder how many former Goldman employees working in government have used this tax loophole.”

The 5: As you know, we put Ian on the case. In the meantime, here’s a little back-of-the-envelope math turned out by CNNMoney. Paulson owned $480 million in GS stock with a cost basis anywhere between $50-240 million. At the time of his nomination in 2006, the capital gains tax break would have amounted to somewhere between $3-8 million over three years, depending on the cumulative rate of return on his investments.

There's a what? No wonder the American voter handed over control of Congress to the GOP. That's a pretty corrupt move. Can we get a role call vote on that? And did it go into effect under Bush 41?

Huh. This is the Ethics Reform Act of 1989. And it 'passed by voice vote.' It was first used under Clinton. And the New York Times discusses how Paulson could make $48M off it in 2006.

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