Hedge fund manager in Goldman Sachs case is major Democratic donor

The billionaire hedge fund manager at the center of an alleged fraud hatched at Goldman Sachs, a leading investment bank, has given tens of thousands of dollars to both parties.

 Campaign fundraising records show that John A. Paulson, founder and chairman of the hedge fund Paulson & Co., gave $30,400 to the Democratic Senatorial Campaign Committee in June, qualifying him as a major Democratic donor.
 
He also gave $2,300 to Senate Majority Leader Harry Reid’s (D-Nev.) reelection campaign in February of last year and $4,800 to Senate Banking Committee Chairman Chris Dodd (D-Conn.) last April, according to records filed at the Federal Election Commission. 

But Paulson has also given thousands to Republicans and
supported several GOP candidates for president in the 2008 election cycle.

{mosads}Jim Manley, Reid’s spokesman, accused Republicans of promoting the issue behind the scenes to distract from the need to pass Wall Street reform.
 
“While I appreciate the fact that Republicans are trying to divert attention by raising this, and kudos to their oppo team for reacting so quickly, but I have one simple question myself,” Manley said. “Are these same Republicans prepared to vote for Wall Street reform next week or not, because Sen. Reid, for one, is going proudly vote to protect consumers instead of the big banks.”

“Needless to say, this goes to show that Sen. Reid does what he thinks is right,” Manley added. “The American people can judge what the effort by Republican to protect Wall Street says about them.”

Paulson’s support of Democrats, however, may give Republicans ammunition when Democrats bring their financial regulatory reform bill to the Senate floor next week, as planned. 

But the argument will gain them only
so much political traction because Paulson has poured tens of thousands into
Republican coffers.

He gave $28,500 to the Republican
National Committee in 2008, raising him to the level as major donor. He also
gave $4,600 to Sen. John McCain’s (R-Ariz.) 2008 presidential campaign, as well
as separate $2,437 checks to the Republican Parties of Minnesota, New Mexico,
Colorado and Wisconsin.

These states were expected to be presidential
battlegrounds when he made the contributions in the late spring of 2008.

 
Paulson & Co. was mentioned prominently in a fraud action the Securities and Exchange Commission filed against Goldman on Friday.
 
The SEC alleged that Paulson & Co. participated in a scheme in which Goldman sold subprime residential mortgage-backed securities to investors, such as foreign banks and pension funds, that were expected to lose value.
 
Paulson & Co. bet heavily against the value of the fund, named Abacus 2007-AC1, which included mortgage bonds it viewed as overvalued, earning millions at the expense of Goldman clients who invested in it.
 
Paulson & Co. was not named as a defendant in the suit, which was filed against Goldman and a Goldman vice president, Fabrice Tourre.

GOP aides on Friday were insisting the charges against Goldman were a serious problem for Democrats.

“It’s going to be tough for the president and other Democrats to brand others as they have while the Wall Street behemoth that has lined their pockets with millions is being investigated for fraud without looking like complete hypocrites,” one GOP aide said.

Goldman earned between $15 million and $20 million to create and market the fund to investors who did not know that Paulson helped select its holdings and then bet it would lose value, according to the SEC.

Reid seized on the allegations to argue that the Senate should pass a Democratic Wall Street reform bill.

“This is also why we need to pass strong Wall Street reform this year,” Reid said in a statement responding to the SEC suit against Goldman. “When we clean up Wall Street, we will establish clear rules of the road to help keep Nevada families in their homes while protecting consumers, investors and financial institutions. 

“We will stop banks from becoming ‘too big to fail’ and end taxpayer bailouts,” Reid said. “Republicans should stop obstructing our efforts to hold Wall Street accountable so that Main Street can once again prosper.”

Paulson gave thousands to other senior Senate Democrats in previous election cycles. He gave $4,600 to Sen. Carl Levin (D-Mich.) and $4,600 to Sen. Max Baucus (D-Mont.) in 2008, according to FEC records.

Paulson also supported two other Republican candidates for president that cycle.

He gave $2,300 to Rudy Giuliani’s presidential campaign and $2,300 to Mitt Romney’s presidential campaign in 2007. 

He gave $5,000 to House Republican
Whip Eric Cantor’s (R-Va.) leadership PAC in 2009 and a $1,000 contribution to
Republican Rep. Virginia Foxx (N.C.) in 2008. 

Democrats insisted the charges against Goldman would not make more difficult the effort to move legislation.

“This crackdown is the product of years of Bush administration and congressional Republicans cozying up to Wall Street and ignoring the interests of Main Street,” said Nadeam Elshami, a spokesman for Speaker Nancy Pelosi (D-Calif.). “This is why we need a strong bill to rein in the abuses of Wall Street to protect American jobs and pensions, and Republicans will either stand with the special interests or the American people.”

This story was posted at 4:34 p.m. and updated at 6:06 p.m.