Putting Clinton’s “Bloodlust” Comments In Perspective

Putting Clinton’s “Bloodlust” Comments In Perspective

Bill Clinton’s advice to then US Treasury Secretary Tim Geithner is more an indication of the Clinton’s attitude towards the big banks than a comment on Geithner.

Clinton calls desire to hold banks accountable “bloodlust”

As reported in the New York Times, Geithner sought Clinton’s opinion on how to address populist unrest that would only grow in the wake of the 2008 financial crisis – a crisis identified by many hedge fund managers as the first crisis caused by Wall Street financial engineering.  Against this backdrop, Clinton said to Geithner:

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“You could take (Goldman Sachs CEO) Lloyd Blandfein into a dark alley and slit his throat, and it would satisfy them for two days.  Then the ‘bloodlust’ would rise again.”

Big Bank Derivatives that imploded in 2008 were deregulated by Clinton near 2000

Clinton’s somewhat snide advice mocked the popular concern that those who created the unregulated derivatives that underlined the financial system that could lead to the ultimate destruction of that system.  As reported in ValueWalk repeatedly, hedge fund managers from Paul Singer, Carl Icahn, Warren Buffett and more are warning the current big bank derivatives — larger and meaner than their little brother who imploded in 2008 — could destroy the world economy.  It is this concern Clinton was mocking.

In order to fully understand Clinton’s comments, one might recall that it was the Clinton administration who cooperated with the large banks near the turn of the century.  The banks were advocating for a roll-back of common sense derivatives legislation and Clinton and a then little known banker named Gary Gensler were more than happy to help.  Further, it was the Clinton administration that sided with the large banks when Brooksley Born was removed from her post at the Commodity Futures Trading Commission because she stood up to the banks over derivatives with improper structure.  Born had requested study of the unregulated derivatives that ultimately imploded in 2008.  The banks were said to have lobbied to de-regulate the derivatives through a Washington DC group known as “The Working Group.”  This group was said to be led by Larry Summers and included Gary Gensler (who later would be named CFTC chairman) and Geithner.  It was the Working Group who was credited with engineering Born’s ouster.

How much cash does the Clinton clan mine from the big bank goldmine?

Clinton’s support of big bank derivatives at the expense of the US economy not only enraged progressives, making the Clinton’s gold mine they have with the big banks perhaps among the most prominent examples of the Wall Street revolving door to date.

After a recent speaking engagement at Goldman Sachs Group Inc (NYSE:GS), Hillary Clinton, who had just received a six figure payment for a few hours of speaking time, took it easy on the banks.  She claimed that all the talk about holding banks criminally responsible for their actions was overblown.  With her poll numbers at all time highs leading into an election, will it have an impact?

The populist anger by those who are inside enough to know who and what was responsible for the 2008 derivatives crash are speaking out.  The big question for the operators of Clinton’s big bank gold mine: are those who help create the crash of 2008 the ones who benefited most in the crash’s aftermath?  It will be interesting to see if this “bloodlust” persists into the Democratic primary.

Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)www.valuewalk.com
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