Lots of people are angry at Goldman Sachs (GS). They are asking how a bank that was in danger of going belly up last September could be paying out $400,000 per employee in bonuses in the first half of 2009.

The anger is righteous and justified. Goldman's ill-gotten gains came in a large part due to the willingness of the U.S. government to give them special treatment, even while other investment banks were gutted or allowed to fail. Don't take my word for it. Economist and former Presidential adviser Paul Craig Roberts told online TV host Max Keiser that Treasury Secretary Timothy Geithner is "working for Goldman Sachs."

Somehow, I don't think Warren Buffett would have let Goldman and other TARP recipients wriggle off the hook so easily. So a modest proposal: Get rid of Geithner and the rest of Government Sachs in Washington. Bring in the boys from Omaha. Let Warren run the show.
Let's recap. Goldman got a $13 billion gift from the U.S. taxpayers via A.I.G. when the toe-tagged insurance giant meekly paid off counterparties with monies sucked out of the pockets of Uncle Sam. A more rational company would have negotiated down to a settlement of less than the owed amount, but A.I.G. probably figured the taxpayer well was bottomless.

Then Goldman got a second enormous gift when the U.S. Treasury, guided by Goldman's agent Tim Geithner, let Goldman pay back its $10 billion in TARP funds without fully exercising warrants that would have given taxpayers a well-earned chunk of the company in return for an investment in a financial service firm that probably would have failed if left to the whims of the market.

Contrast this with the way Warren Buffett beat up Goldman. Last September, the Oracle of Omaha sunk $5 billion into Goldman under terms that would have made Don Corleone whistle. Goldman would have to pay a 10 percent dividend on the investment as long as Buffett held the shares. What's more, Buffett got significant warrants to buy Goldman stock at $115 per share, which was $10 below market rates at the time the deal was struck. This painful medicine is exactly the sort of proper economic incentive Goldman needs to discourage risky behavior in the future.

Unfortunately, it's fairly apparent that Goldman Sachs still believes it will get government backing whenever it needs it. Goldman is risking more of its portfolio now than almost ever before -- a measure called "Value at Risk". Goldman also claims that it's $3 billion exposure to failing merchant bank CIT is well hedged. Gee, I wonder if those hedges are backed by the taxpayer?.

Yes, we need and want healthy banks. Yes, we need and want Goldman Sachs. But let them live by the same rules as the rest of the world. As millions of Americans default on their home mortgages while the Obama Administration can't seem to push through any real aid to the masses, watching Goldman Sachs party on lends more credence to former IMF Chief Economist Simon Johnson's "Quiet Coup" theory -- that government now serves at the beck and call of the banks.

The U.S. taxpayers deserve a better steward for their financial system and for their hard earned investment dollars. They need a man who's lived in the same house in Omaha for his entire adult life, a man so incorruptible and fearless that he'll even put the thumbscrews to the most powerful financial institution on Earth while the U.S. Government blinks. Fire the U.S. Treasury. Bring on Warren Buffett, President Obama. Post haste. Your second term may depend on it.

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