Contrary to the prevailing analysis, we believe that the Obama and Bush administration insistence on protecting banks at the expense of the taxpayer is the result of a Machiavellian effort by Goldman Sachs and other major banks to influence U.S. economic policy by infiltrating the corridors of power.

Today, we duly note that Goldman Sachs has just hired former Barney Frank staffer Michael Paese to be its top Washington lobbyist. This position was formerly held by Mark Patterson, the current chief of staff at the Treasury.

Pease and Patterson are not the only ones to pass through the revolving door between Washington and Goldman. Bush’s Treasury secretary, Hank “The Hammer” Paulson is a former Goldman CEO. And his replacement, Tim Geithner, was mentored by Gerald Corrigan, a former New York Fed president and current partner and managing director of the Office of the Chairman of Goldman Sachs.

Who else was President Obama considering for Treasury secretary? Former Goldman hotshots Robert Rubin and Jon Corzine (now the governor of New Jersey).

Are other Goldman alumni close to government? Just a few… Ed Liddy, who the government appointed as CEO of AIG was Goldman’s vice chairman. World Bank president Robert Zoellick was a managing director. Neel Kashkari (an appropriate surname for a government bagman if ever there was one), the 35-year-old overseer of the TARP program was a vice president. And Geithner’s replacement as president of the New York Fed, William C. Dudley, is also a former Goldman employee.

Oh… and Robert Rubin was Treasury secretary under President Clinton. And former Goldman senior partner Stephen Friedman headed Bush’s National Economic Council in the first term. And Josh Bolton, another former Goldman golden boy, served as White House chief of staff under Bush.

The former CEO of the NYSE, John Thain, is also a Goldman alumnus. And his replacement, Duncan Niederauer, spent 22 years of his career at the bank.

Of course, these high-level appointments are probably just coincidental. Just as it was probably coincidental that on September 15, 2008, then New York Fed president Tim Geithner pressed for AIG’s biggest counterparty, Goldman Sachs, to help the insurer raise capital after it became clear that AIG was at risk of going bankrupt. And that on the same day Goldman’s current CEO, Lloyd Blankfein, was at the New York Fed. And that Goldman ended up in receipt of about $12 billion in tax dollars thanks to AIG’s wholesale credit-default swap unwinds after the government bailed out the insurance giant.

Oh… and which bank’s employees were among the largest donors to President Obama’s recent campaign, giving more than $884,000? You guessed it…

If it’s a conspiracy to believe that Goldman Sachs gets preferential treatment from White House administrations that are 1) in receipt of major funding from Goldman Sachs employees and 2) populated by former Goldman Sachs insiders, we’d love to know what the official explanation is.

Goldman’s close ties with Washington are important because during the recent “junk-stock rally” that has pushed up the value of bank stocks and taken pressure off a beleaguered White House, Goldman has been by far the biggest program trader by volume on the NYSE (where former Goldman boy Niederauer is CEO). And when we say by far the biggest, we mean by far the biggest.

As you can see from the above chart, last week latest Goldman Sachs traded for their principal account (i.e. using the bank’s own funds) more than the next 14 largest institutions in the world combined! Goldman traded 1,028,100,000 shares versus 953,000,000 for all other reporting institutions.