Goldman Sachs- "front-runner" of a criminal syndicate

"Goldman Sachs has become the "front-runner" of a criminal syndicate defrauding US taxpayers."

Evil Syndicated By James Howard Kunstler
.... By now, everyone in that fraction of the world that pays attention to something other than American Idol and their platter of TGI Friday's loaded potato skins knows that Goldman Sachs has been caught at another racket in the stock market: front-running trades. What a clever gambit, done with the help of the markets themselves - the Nasdaq in particular - in which information on trades is held back a fraction of a second from public view, while the data is shoveled to the computers of privileged subscribers who can execute zillions of programmed micro-trades before the rest of the herd makes a move. This allows them to vacuum up hundreds of millions of dollars by doing absolutely nothing of value. The old-fashioned method used by brokers was called "churning," in which stocks were bought and sold incessantly (by phone) from the portfolios of inattentive clients merely to generate commissions. In any sensible society - i.e. a society with an instinct for self-preservation - it would be against the law and the people doing it would be sent to prison.
I'm not a lawyer, but I've got to think that the actions at the Nasdaq end - shoveling the data to the privileged subscribers a fraction of a second early - is patently illegal in the first place, since the whole purpose of an exchange is to create a fair trading space. Where both parties are concerned, it should amount to a plain vanilla criminal conspiracy to commit stock trading fraud. Maybe the larger question is: since when did we become a society lacking the instinct for self-preservation - that is, a society bent on suicide? Or maybe the question is better put to Goldman Sachs's CEO Lloyd Blankfein.

.....

Read the rest here.

Goldman Sachs and Derivatives Risk

First-quarter financials mark the first time comprehensive derivatives disclosure was mandated for all U.S. companies.
David M. Katz - CFO.com US
July 24, 2009

Members of Congress probing threats to the global financial system — especially the threat of concentration of risk — will have a lot to ponder in newly mandated disclosures highlighted by a Fitch Ratings report issued last week. While derivatives use among U.S. companies is widespread, an "overwhelming majority of the exposure is concentrated among financial institutions," according to the rating agency's review of first-quarter financials.

Concentrated, in fact, among a mere handful of financial-services giants. About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Those five banks also account for more than 96% of the companies' exposure to credit derivatives.

Read Full Article - Click Here

Goldman Sachs was on the brink of going under...

Editors note: It looks like, if not for the grace of the American taxpayer, Goldman Sachs would have gone under . . . and for this, they think they deserve huge bonuses.

. . .If it had gone on another week or two, Goldman would have failed, they would have gone the way of Lehman, and you’d be talking about Lloyd the way you talk about [Lehman CEO] Dick Fuld.”

. . .

Joe Hagan’s new piece in New York magazine brings out a lot of excellent new information, but the most interesting from my point of view is his insight about the period after the AIG bailout and before the announcement of the new FDIC lending program. It seems things were worse than even I thought at the bank, with then-COO John Winkelreid putting up his Nantucket house for sale in order to raise quick cash and management discussing taking the company private to avoid catastrophe. Hagan describes a bank that was in crisis, its share price plummeting to $47, one that was really rescued by the FDIC program, which made bank holding companies (which Goldman had just become, thanks to a hurried conversion) eligible for billions in government-backed lending.

More on this story here

Goldman Sachs Recent VaR Trend: Gambling with Taxpayer Money?

The Huffington Post, in an article detailing a congressional group's 27 Jul 2009 letter to the Federal Reserve, questions whether recent trends in Goldman Sachs's Value-at-Risk (VaR) in fact indicate the company's more general and sinister willingness to "gamble" with taxpayer funds.

Goldman Sachs is using its new taxpayer-subsidized status to bring increased risk to the financial system, a group of House members charged Monday. They... sent a letter to the Fed asking for an explanation of why Goldman Sachs is being allowed to speculate wildly even while officially redesignating itself a bank holding company, which theoretically means stricter regulation... [T]he new designation [allows Goldman Sachs]... access to a host of valuable taxpayer subsidies; they are required to reduce the risk associated with their investment activity... [A risk exemption] was granted in February -- and Goldman went on to take even greater risks...

The new designation becomes quite important within the context of Bloomberg's Christine Harper's note regarding Goldman Sachs's capital costs:

Goldman Sachs’s value-at-risk, or VaR, has climbed in tandem with the buffer of capital the firm has at its disposal.

By most accounts (see bloomberg links above), the Goldman Sachs's increase in risk appetite so measured now stands at roughly 33% higher than May 2008's pre-bailout levels. This trend has held since the February exemption, despite competitor MorganStanley's explications that it will "scale back" trading risk.

It certainly seems like Goldman Sachs's has been unofficially granted a license to operate without regard to regulation or common sense. As such, it is good that congress appears interested in such operations.

The letter to the Federal Reserve Bank was signed by ten United States Congressmen, including eight Democrats and two Republicans, primarily from states on the country's eastern and western coasts, and it references a number of issues that have been circulating in the financial blogosphere of late:

Despite its exemption from bank holding company regulations, Goldman Sachs has access to taxpayer subsidies, including FDIC-backed bonds, TARP money (since repaid), counterparty payments funneled through AIG, and an implicit backstop from the taxpayer that allowed a public equity offering in a queasy market. The only difference between Goldman Sachs today and Goldman Sachs last year is that today, the company is officially gambling with government money. This is the very definition of "heads we win, tails the taxpayers lose."...[G]iven Goldman Sachs's last quarter results and public statements that it is not changing its business model, we are worried that the company is using its regulatory freedom to evade capital requirements and take outsized risks with taxpayers on the hook for losses.

I am nonetheless inclined to think that such a letter, regardless of how strongly worded, will have little or no effect on daily operations at the Fed, SEC or Goldman Sachs. More likely, real change might be effected as a result of President Obama's recent call for SEC investigation of Goldman Sachs, but if in fact this investigation comes to full fruition, it will be a lengthy and obscure procedure.

To read the congressional group's letter to the Fed (2009-07-27) in its entirety, click here.
To read the full Huffington Post article (2009-07-27), click here.
To read the full Bloomberg article (2009-07-15), click here.

Break Up Goldman Sachs

Editors note: Finally, the mainstream media has someone actually making sense. I'm guessing hell is starting to freeze over.

Break Up Goldman Sachs

The country and investors would be better served by smaller financial companies.

If we agree on a few basic things that we all want, breaking up Goldman Sachs and most of the other big Wall Street banks makes a lot of sense. Let's start with the wants: The taxpayer should never again be asked to save the banks from the costs of their own investment decisions; American consumers and businesses should have access to financial products, credit and financing; bank shareholders deserve a chance to make some money.

Read the rest of the article here.

Goldman Sachs- A license to steal

Editors note: Do you think the New York Stock Exchange would let ME plug my computer into their network? I wish they would...the taxpayer would be getting their money back pronto and the thieves would be broke. At least Goldman's crimes are getting coverage now although this will be, as always, something for the public at large to ignore.....ho hum...what's on American Idol tonight? If our vastly overpaid executives continue to try and bust unions and move our wages to equal that of the Chinese, they should be aware of what that change brings about.

Stock Traders Find Speed Pays, in Milliseconds

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

Read the full story here