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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, January 26, 2010

The New York Fed's Real Crimes

Editor's note: This is tangentially related to Goldman Sachs, of course, because they were paid out 100% on exposure to AIG. Only now are we beginning to see the true details of what happened in those days and who played pivotal roles in the act that put American taxpayers on the hook to save AIG. I remind dear reader that Goldman Sachs received $13 billion from this. - JDA

Indictments or it didn't happen, stop pretending to be hard on crime. The regulators are on it, what kind of sick joke is this? Oh, sorry, the SEC was totally in on it, I must have misheard the statement when I thought they said they would be preventing (not participating) in financial crime.

Email disclosures by AIG, responding to subpoenas from the House Oversight Committee, have revealed that the New York Federal Reserve requested that information about the AIG bailout be kept secret as if it were connected to national security.U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

The request to keep the details secret were made by the New York Federal Reserve — a regulator that helped orchestrate the bailout — and by the giant insurer itself, according to the emails.
I put together a lot of links on this issue that you can find at Jr Deputy Accountant. In case you still don't get it after reading that, this is the point where you are supposed to get completely outraged, America. Come on, turn off the TV and look at what they're doing to you.

In somewhat related news, I don't want anyone to miss this Bernanke classic (while his confirmation is still hot news) in video form. It includes such smash Bernanke hits as "fundamentals are strong" and "I don't believe house prices can fall". Don't miss "Speculation? Nah, what speculation? A few folks are buying condos in hot spots, it's cool."

4 more years!


Anonymous said...

Federal Reserve Moral Hazard Smoking Gun: In August 2008 Goldman Was Willing To Tear Up AIG Derivative Contracts, Offered To Take Haircut

The implications of this discovery are huge as they essentially destroy all the arguments presented by the FRBNY about an inability to extract concession out of Goldman (which being the largest AIG CDO counterparty, was the critical negotiating factor). It also casts doubt on the veracity of any arguments presented in Congress by Goldman representatives discussing the potential to take a haircut on their AIG exposure. What this means in plain English is that, in the month before the Fed entered the scene, GOLDMAN SACHS ITSELF OFFERED TO TEAR DOWN THE CDS ON AIG'S CDO PORTFOLIO (we don't use caps lock lightly). This is basically a smoking gun on the moral hazard issue perpetrated by the FRBNY when it got involved, and indicates that through their involvement, Tim Geithner, Sarah Dahlgren or whoever, not only did not save US taxpayers' money, but in fact ended up costing money, when they funded the marginal difference between par (the make whole price given to all AIG counterparties after AIG was told to back off in its negotiations) and whatever discount would have been applicable to the contract tear down that had been proposed by Goldman a mere month earlier. This, more so than anything presented up to now, is the true scandal behind the New York Fed's involvement.

Larry Rubinoff said...

The NY Fed seems to have the most "power" of the entire Fed system. You hear little over the years about the other Fed banks, why is that?

Who are these guys? Who do they represent? What do they represent? How can they operate in secret in what is supposed to be a free and open democratic society - or is that just a myth we have been led to believe since 1913 when the Fed was created?

These are not "moral hazards" they are hazards to democracy. Democracy, the ideal our men and women of the military have been fighting for and giving their lives for. The concept under which we go to war to promote democratic societies around the world. We do not practice what we preach. We are kind of like the parent that says, "do as I say not as I do".

We must continue to head the words of Thomas Jefferson.

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