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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

Wednesday, April 28, 2010

Goldman Hearings Followup

Well, the hearings are over. Predictably, Blankfein attempted to dodge all blame. Their strategy of misdirection may have worked for some but that's not gonna fly here.
It is exactly what we expected and with the exception of Levin, it was a dog and pony show. The Automatic Earth (among many others) predicted it as well:

For now, Blankfein et al will be fine, they may just not like all the pesky questioning, but they'll leave confident that they've won the day. That's their default mindset, after all, and an addiction to boot. It could also, however, easily be their undoing.

It seems they followed their strategy well and Levin was none too pleased about it.
From the ABA Journal:

A lawyer reportedly helping Goldman Sachs executives prepare for a Senate hearing today revealed his usual strategy for congressional hearings in an interview last year.

O’Melveny & Myers partner K. Lee Blalack II told the American Lawyer last March that a congressional hearing room is not a forum for divining the truth, according to The BLT: The Blog of Legal Times. The goal, he said, is minimal damage to reputation.

“Long, thoughtful pauses followed by rambling nonresponsive answers can easily devour half of a member’s allotted questioning time,” Blalack told the American Lawyer.

Looks like ole Abe Lincoln is as relevant today as he was back then:
“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question its methods or throw light upon its crimes…....corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Recommended Reading:

I'm only part way through Amped Status' Report "The Economic Elite Vs. The People of the United States of America" but so far it looks to be an excellent and complete article.

I have the "Lost Science of Money" from the AMI on order and I'll post more about that later.


Anonymous said...

Barofsky Says Criminal Charges Possible in Alleged AIG Coverup

Barofsky says he’s battling an entrenched culture of secrecy in the Treasury and elsewhere.

The TARP watchdog has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York.

The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

Janet Tavakoli, founder of Chicago-based Tavakoli Structured Finance Inc., says Barofsky hasn’t been aggressive enough. She says SIGTARP should be running criminal probes of the bankers who underwrote and managed the collateralized debt obligations that were at the center of the financial meltdown.

CDOs are bundles of mortgage-backed bonds and other debt sold to investors.

Tavakoli says the CDO managers sometimes replaced relatively high-quality securities with new ones that were more likely to default.

‘Phony Labels’

“It is securities fraud if you take securities and package them and knowingly pass them off with phony labels,” she says.

Barofsky says he’s battling an entrenched culture of secrecy in the Treasury and elsewhere.

Barofsky says the question of whether the New York Fed engaged in a coverup will result in some sort of action.

“We’re either going to have criminal or civil charges against individuals or we’re going to have a report,” Barofsky says. “This is too important for us not to share our findings.”

Culture of Secrecy

He offers the AIG bailout as an example. For more than a year, the New York Fed kept key aspects of the AIG bailout secret, including details of its own involvement and its decision to have AIG pay the insurer’s bank counterparties 100 cents on the dollar on the credit protection they’d bought against about $62 billion in CDOs.

Anonymous said...

Clients First at Goldman?

Who wants to entrust their money to a Goldman Sachs fund after this?

Ordinary investors around America have more than $50 billion invested in Goldman Sachs mutual funds, says industry specialist Financial Research Corp. That makes the beleaguered Wall Street bank one of the top 25 managers in the country.

And Tuesday many of those investors will have watched, with disgust, the Mark McGwire moment during the Senate hearings at which four Goldman executives, former and current, testified about the firm's role in the collapse of the mortgage market.

(The former major league baseball player famously refused to answer congressional questions about alleged steroid use, instead insisting "I'm not here to talk about the past.")

Just before lunch Maine's Susan Collins (R.) asked the Goldman honchos an equally straightforward question, which should be a slam dunk for any self-respecting professional–namely, whether the firm puts its clients' interests first. And several pointedly refused to give a direct answer.

RobertM said...

Thanks for the links. I don't think they're ready for criminal charges yet and I don't want to get my hopes up because this may very well be yet another 'limited hangout' (which will be discussed in another post tonight).

Anonymous said...

Guess they found something more deadly than a gun?

Goldman Armed Salespeople to Dump Bonds, E-Mails Show

April 28 (Bloomberg) -- Goldman Sachs Group Inc., seeking to reduce assets tied to the declining U.S. housing market, urged its sales force in 2006 and 2007 to sell those products to clients, newly disclosed internal e-mails show.

The e-mails, including communications from Chief Executive Officer Lloyd Blankfein, show that employees discussed how to “arm” salespeople to shed bonds the firm found too risky to hold. The e-mails were released yesterday by Senator Carl Levin in connection with a hearing where current and former managers testified about the firm’s role in the financial crisis.

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