John Crudele: Influence is in the bag for ‘Government Sachs’

By John Crudele, New York Post

When I last wrote about Goldman Sachs in late March, the most politically-connected and luckiest firm on Wall Street was in the middle of rigging the stock market — again.

“Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs,” is the way I put it in that March 28 column.

Well, a lot has changed in just the past few weeks. And I’d like to put it all together for you, and for the rest of the media should it choose to follow what is shaping up to be the most incredible financial story ever.

Back in March I noted that the rally occurring in the stock market had the indisputable fingerprints of Goldman all over it. There were numbers to back it up.

Despite the fact that regular investors seemed to be pulling their money out of the market or — at best — investing conservatively, stock prices were zooming. The reason was simple: Big investors were pouring money into equities.

And Goldman Sachs was the biggest of the big.

According to the New York Stock Exchange figures for the week of April 13 that I quoted, Goldman executed twice as many big trades — called “program” trades by the industry — as any other firm. And the bulk of the 1.234 billion shares bought by Goldman that week were paid for with the firm’s own money.

Of course, Goldman would have to be mighty confident that stock prices were going up to risk so much of its own capital. Or, perhaps, it knew stocks would be rising.

This was the time, remember, when banks were trying to recapitalize by selling shares to the public. Goldman, you’ll also recall, had turned itself into a bank holding company so it could take $10 billion in government money under the Troubled Asset Relief Program.

Goldman also sold billions worth of new stock to the public while all this was happening.

How much harder would it have been for banks to sell stock to nervous investors if the market was swooning rather than booming?

Goldman’s sudden and inexplicable optimism about stocks was incredibly opportune for the banking industry in general, for Goldman in particular, and — here’s where the conspiracy starts to unfold — for the government.

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