RJ Eskow has a excellent post up examining “Meg Whtiman’s shady Goldman Sachs past” and what it might portend for California’s future if she were to get elected.

Whitman was a Goldman Sachs board member from 2001 to 2002, when she resigned under a cloud of suspicion for her role in an IPO scandal:

Whitman has said she did nothing wrong by accepting the IPO shares and that the offerings did not help Goldman Sachs win additional business from eBay, which has paid the Wall Street firm $8 million for investment banking services since 1996, the Wall Street Journal reported.

In October, Congressional investigators disclosed that Goldman allocated shares of more than 100 IPOs to Whitman since 1996 and she then quickly sold those shares for a profit, in a practice known as “spinning.”

Whitman’s connections to Goldman Sachs are quite relevant, as Eskow explains, showing that Goldman Sachs has a long record of screwing California taxpayers:

What kind of business relationship can Californians expect their state to have with Goldman Sachs and firms like it if Meg Whitman becomes governor? Here’s a clue: In a report called “Corporate cash boosts Whitman,” the Associated Press reported that “The biggest donations came from New York investment bankers, hedge fund managers, attorneys and others.” If there’s one thing these guys know it’s how to prime the pump.

Not that Whitman’s old pals at Goldman haven’t already been profiting off California’s misery. They were hired to manage some multibillion dollar state bond offerings but, as reported in the Los Angeles Times, millions in fees didn’t stop Goldman from secretly undermining California’s credit rating. That hurt the very sales they were hired to manage. As the Times states, the firm “urged some of its big clients to place investment bets against California bonds” by “proposing a way for … clients to profit from California’s deepening financial misery.”

Goldman Sachs’s role in serious government debt crises is getting greater scrutiny over in Europe, where they appear to have played the leading role in hiding Greek debt levels in order to massively profit off of Greece’s heavy borrowing in preparation for the Athens Olympics. This unsustainable lending has spawned a European Union investigation while the EU works to deal with the crisis Goldman Sachs helped create with the Greek debt. Eskow cites reporting that indicates Goldman Sachs has screwed around with California debt, in this case undermining state bond sales for their own profit.

As it turns out, it’s not just Goldman Sachs that is screwing with Californians and their debt sales. JP Morgan, Lehman Brothers (before their collapse) and UBS have all been implicated in an alleged conspiracy to cheat municipal governments by paying below-market interest rates to those governments. Remember that, as Eskow noted, many of Meg’s donors are investment  bankers.

The picture this all paints is extremely clear. California has been cheated out of millions – at least – by Goldman Sachs and its fellow investment banking houses. Meg Whitman represents them and their interests, and will almost certainly enable this misbehavior to continue.

It’s also further evidence of the need for California to develop its own state bank, as was done by North Dakota nearly 100 years ago, in order to remove as much state borrowing as possible from the greedy clutches of Goldman Sachs and its fellow henchmen.

UPDATE: An op-ed by Faith Bautista and Preeti Vissa at Capitol Weekly draws more attention to the issue and calls for a legislative investigation.