Gee willikers, Mr. Treasury Secretary. Somethin's funny. Your firm, Goldman Sachs, is one of the very few survivors.

"Paulson presided over one of the most profitable runs on Wall Street as chairman and chief executive officer of investment banking titan Goldman Sachs & Co. from 1999 until President Bush nominated him on May 30, 2006 to take over the Treasury Department.

"... With Paulson now seeking virtually unfettered authority to administer the largest bailout of the financial industry in U.S. history, many are wondering whether Paulson also doesn't come with enormous potential conflicts of interest."

Gollee, kind of looks that way.  And you got a gigantic payoff when you moved to your new job at Treasury. 

"... There's irony in Paulson being in charge of so large a bailout.  In the last annual report at Goldman that Paulson signed off on in November 2005, a year in which he received $38 million in compensation, investors were clearly told that the federal government wouldn't be there to save them from bad investments."

It's not like Goldman Sachs had clean hands in the 3-card mortgage monte that pushed financial markets into the abyss. Treasury Secretary Henry Paulson, who's now engineering a taxpayer bailout for mortgage profiteers, oversaw a period at Goldman when "its trading division, which included the mortgage bonds and complex financial instruments called derivatives, reported pre-tax earnings of more than $6.2 billion, up sharply from $3.5 billion in 2003."

"The report also shows that Goldman benefited greatly from the wave that is now being deemed a wave of excess.

"Goldman's pre-tax earnings rose from $4.4 billion in 2003 to almost $8.3 billion in 2005. Similarly, its investment banking division had pre-tax earnings leap from $207 million to $413 million.

"Paulson's personal fortunes also zoomed in those years."

Miraculously, in spite of its participation in the derivatives market which pulled down so many others (not to mention homeowners with scam mortgages) Goldman's employees, creditors and shareholders are going to make out just fine, thanks to Mr. Treasury Secretary/CEO Paulson!

Cherry on top?  Goldman Sachs and Morgan Stanley, the two big surviving investment banks, will become bank holding companies, moving, as the Washington Post notes, towards the European business model.

"... The two investment banks agreed to transform themselves in an effort to escape the financial turmoil that last week put their existence in jeopardy. The move, approved by the Fed with unusual haste, gives Goldman Sachs and Morgan Stanley greater latitude to borrow from the Fed and access to stable sources of funding -- namely, deposits from ordinary people and businesses. ...

"...The change is likely to make easier, and could intensify, both companies' efforts to link up with commercial banks. Now that Goldman Sachs and Morgan Stanley have committed to using deposits to fund their operations, they have a tremendous incentive to gain access to the largest possible networks of bank branches."

This move erases the difficulties created when Goldman Sachs and its CEO profited so royally from derivatives.  It gives them the support of the federal government while giving their investors a regulatory safety net.  And who okayed this significant conversion?  Well, gee willikers, it was Henry Paulson, Goldman CEO and Wall Street Week in Review commentator turned Bush Treasury Secretary.

Just how smart is our Henry Paulson?  You'd be among millions if you were to assume that he wouldn't be where he is (or where he was) if he didn't have some sense of economics.  You'd be wrong.  Here's the Treasury Sec'y's take on the economy during the 12 months leading up to the current debacle. OUCH!

As for any telltale stock market reactions to federal government intervention in the crisis, a lower opening is expected.  Oil prices are rising.

Yup, in the first 15 minutes, the Dow has lost 1%.