Goldman and the Pension Fund

Editor's note: Let's step through this one at a time...

Former pension chief faulted for Wall Street contacts
By Michael Kranish, Globe Staff

WASHINGTON -- The former head of the nation’s pension insurance agency, who last year pushed through a high-risk strategy that shifted the insurance fund heavily into stocks just before the market crash, committed a "‘clear violation"’ of agency rules by contacting Wall Street firms who were bidding to oversee the new policy, while also seeking the help of one firm in gaining employment, according to a government report released today.

And the name of that one firm is.....wait for it.......Goldman! ding-ding-ding

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Charles E. F. Millard, the former Lehman Brothers managing director who was the Bush administration’s director of the Pension Benefit Guaranty Corp. from May 2007 until President Obama took office on Jan. 20, dramatically changed how the agency invested its $64 billion insurance fund, shifting from a reliance mostly on conservative bonds to a strategy that put 55 percent of its portfolio in speculative investments such as stocks in emerging foreign countries, equity funds and real estate.

Like they say in that Guiness commercial Brilliant! Let's gamble with the insurance fund that backs the pensions of 44 million Americans.

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Shortly after the new investment strategy was adopted in February 2008, Millard began a series of contacts with Wall Street firms that hoped to implement the new policy — even though he was warned by officials that such conversations were not allowed under federal bidding rules, according to a draft report by the agency’s inspector general made public today.

EVEN THOUGH HE WAS WARNED. Silly taxpayer- the laws only apply to people like you.

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After the agency last fall hired the investment-banking firm Goldman Sachs to oversee a $700 million portion of the fund, Millard e-mailed with a Goldman executive about a Wall Street job, according to the report. The Goldman Sachs official responded that he had talked with a person at another firm ‘‘who really likes you and if times were better he would have hired you already.’’ The inspector general reported finding 29 emails documenting the effort of a Goldman Sachs official to help Millard ‘‘in his search for employment.’’

(((Attention Justice Department, time for you to actually do your job.)))
Investigate - Litigate - Incarcerate.


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Goldman receiving 'Hidden forms of Government Subsidiaries'

Editor's note: Nobel Prize-winning economist Joseph Stiglitz speaks on how bad taxpayers are getting ripped off by companies like Goldman. There's a saying- A fish rots from the head. Once again, we have distinguished economists laying out the greatest theft in history and no one in government is going after the heads of these companies. No wonder they feel like they're untouchable...that is... till they go overseas.

Goldman REALLY wants to payback bailout money

Editor's note: Ilargi over at The Automatic Earth, is one the best writers on the net and is a master at connecting the dots in this economic crash puzzle. Today he has a post up that highlights many of Goldman's tentacles.

Excerpts:

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It would be one thing if people were saving the money that's not being spent. but they're not; they simply don't have it, nor can they borrow it. If the US GDP is $14 trillion (though I'm sure that is too high a number by now), a 10% drop in 70% of its make-up would take about $1 trillion out of the picture. That's some serious money, even if we're getting used to big numbers, it's over $3000 for every man, woman and child, or $12.000 that a typical family spends less. For the smile of the day, we turn to Goldman Sachs. Earlier, the firm announced a $5 billion new fund to buy up distressed assets at 1930's style basement prices.

Today its CFO ups the ante a tad: Goldman has a $168 billion chest with which it plans to purchase the strategic places on the continent. Oh, but that's not the part that made me smile. This is: as long as Goldman has not repaid the $10 billion TARP funds, they are not allowed to pay off Warren Buffett's $5 billion loan, and they have to pay the old geezer $1.3 million in interest every single day. Somehow that little fact also made me wonder about Goldman's claims that they never really needed any money. If that were true, why did they ever make that deal, on those terms (10% interest), with Buffett?
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Goldman Sachs: Profits Up. Salaries Also Up. Take That, Treasury!

Goldman Sachs’s Wall Street rivals were mad at Lloyd Blankfein’s disdain of their bonuses last week — so they must be absolutely livid today. Goldman’s results this quarter seem to include several challenge to lawmakers in a sign that the firm is intent on managing its bonuses and its trading risk without an eye on Congressional approval. Goldman Sachs posted a $1.7 billion profit today — and with it, Goldman set aside $4.7 billion for salaries and bonuses. That $4.7 billion is 50% of Goldman’s revenues for the quarter, a jump up from the same time last year, when salary and bonuses accounted for 48% of Goldman’s revenues. In essence, things are still ugly in the market — but even so, Goldman actually said it would reserve more money for staff salaries in the first quarter than it did last year. Goldman doesn’t actually have to pay those dollars until the fourth quarter, but the expenses estimate how much Goldman expects to pay.
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Goldman Pushes Stock Issue in Plan to Escape U.S. Grip

Goldman Sachs Group Inc., frustrated at federally mandated pay caps, has been plotting for months to get out from under the government's thumb. On Monday, Goldman took fresh steps to break free: It announced, as expected, that it plans to raise $5 billion by selling new common shares to investors, and that it would like to use the money to repay government bailout money received last year. The firm also reported stronger-than-expected first-quarter earnings of $1.81 billion. Goldman managers have a big incentive to escape the state's clutches. Last year, 953 Goldman employees -- nearly one in 30 -- were paid in excess of $1 million apiece, according to people familiar with the matter. But tight federal restrictions connected to the financial-sector bailout have severely crimped the Wall Street firm's ability to offer such lavish pay this year.

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Goldman Claims "We Were Just Trying to Help" in Bear Stearns Murder

If the financial crisis were one bad episode of Law and Order, we would know from the opening scene that the trail of murder and deception leads straight to Goldman Sachs, we'd just have to sit through 58 minutes of poking around to get there. Lying beside Bear Stearns' body, we'd find a thread from a pristine GS suit carelessly left stuck to the bloody carpet. Knowing Goldman, we'd probably also find a business card signed "Love, Lloyd xoxo."

So I am fairly certain that most of us (those that count ourselves on the "sane" side of the crisis, that is, not the "Kool-aid" side) understand that there are bodies lying all over the battlefield and though we do not have definitive proof, it is fairly likely that we are already intimately acquainted with the culprits.

That being said, Goldman is still playing innocent. Isn't that adorable?

Via the New York Post, a "we have no idea what you're talking about" defense from the boys at GS so incredulous it makes me wonder if these guys have any shred of conscience at all. Likely not:

As Bear Stearns careened toward its eventual collapse, Wall Street golden child Goldman Sachs swooped in several times to offer aid -- but was dismissed out of fear the investment bank had an ulterior motive.

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Said a Goldman spokeswoman yesterday: "We went out of our way to be helpful to Bear Stearns and any suggestion to the contrary is either misinformed, intentionally malicious or both."

Lloyd Blankfein throws a hissy fit because he can't suck what little marrow remains in Bear's bones before it curls up and dies and that is going out of their way to be helpful? Oh that's precious.


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Goldman Sachs Shareholders Breakthrough

Editor's note: Goldman's shareholders vote to enact simple majority rules but fail to reel in the excessive pay for the executives.

Goldman Sachs Shareholders Rebuff Firm’s Board for First Time
By Christine Harper

Goldman Sachs Group Inc. shareholders rebuffed the board of directors for the first time since the firm went public in 1999, voting to back a proposal that would let a simple majority enact changes at the company.

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Lloyd Blankfein, Goldman Sachs’s chairman and chief executive officer, faced more than an hour of questioning from shareholders at the company’s annual meeting yesterday after the stock dropped 61 percent last year and the company took $10 billion of U.S. bailout funds.

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A shareholder effort to get such a “say on pay” vote included on the proxy last year was opposed by the board and failed to win a majority of votes.

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Goldman & the collapse of LTCM

Editor's note: Many say LTCM (Long Term Capital Management) was the first shoe to drop in the economic crisis and foretold the things to come. This 90 minute presentation at MIT is by Eric Rosenfeld, formerly of Salomon Brothers, and talks about what went wrong at LTCM. Around 43 minutes in, he mentions the conflicts of interest for the CEO of Goldman Sachs with regards to the potential Buffett bailout.

Check out the video here.