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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

Saturday, December 11, 2010

Goldman Sachs and Super Duper Bailouts!

It's too bad that Eliot Spitzer wasn't able to continue his crusade against securities fraud (including Goldman Sachs) and predatory practices of mortgage companies and investigations into AIG in 2008. It is plain to see that a lot of fraud lies beneath the financial meltdown and some fierce steamrolling is needed to reveal the abuses of institutions, including the banks.

A list of the companies that took monies from the Fed are listed in this article. Even a hedge fund received bailout money! How could that be?

Subpoena Everything!
The Democratic House should use its final weeks to demand every single document about bank bailouts.
by Eliot Spitzer - Slate

We've learned much this past week about the magnitude of the bailout of our financial institutions and had many of our worst fears confirmed by recent economic data. It turns out that the Federal Reserve delivered an astonishing $9 trillion in short-term loans during 2008-09. That is not a misprint. Trillion. Goldman Sachs: $590 billion; Citibank: $1.8 trillion; GE: $16 billion. The magnitude of these wealth transfers has not been fully grasped or even fully discussed in the public arena.

Yet despite the enormity of this Fed rescue, our economy has stalled. As many predicted, bailing out the banks is not the same as improving the economy. While capital is making huge sums watch the size of this year's Wall Street bonuses—unemployment is stuck at 9.8 percent and our core sectors are suffering. Meanwhile, IPOs in Asia have raised about three times as much as IPOs in the United States this year. As an indicator of future growth, this does not bode well.

In addition to the other crises that surround us, we have a crisis of transparency. What's shocking about the bailouts is what we still don't know about them. We don't know what the banks knew about impending risks as the events unfolded. We don't know what the government officials who extended these loans asked before they handed over trillions of your dollars.

Just as I have little confidence anymore that we are given accurate information about the reality of conditions in Afghanistan, so I lack any confidence that the government officials in charge have been anything close to honest about the reality of the bailouts. Remember, part of the reason we passed fundamentally inadequate financial reform legislation is that the folks at the center of these events—Fed Chairman Ben Bernanke, Treasury Secretary Tim Geithner, Goldman Sachs CEO Lloyd Blankfein, and GE CEO Jeffrey Immelt—fought vigorously to keep from the public the critical information about the loans and support they received.

So here is my proposal: In the waning days of the Democratic majority in the House, the relevant committees should require testimony from each of these individuals and subpoena every company that received more than $50 billion of loans and require that all their relevant accounting documents—sufficient to understand their condition at the end of each quarter in 2007, 2008 and 2009 be made public. The House should also subpoena and make public all e-mails between these companies and any government agency, about the need for financial support and the prospects for the company absent federal assistance. (I should note that the equivalent documents about the AIG bailout have still not been made available.)

These central figures have been given a free pass about the events surrounding one of the largest, most secret wealth transfers in history. The lines of inquiry are obvious, and the information provided by the release of this data will be fascinating.

Do not forget: Virtually all the major players who brought us into the crisis are still there: the government officials, the CEOs, the investment bankers. The permanent plutocracy has survived unscathed. At a minimum, American citizens are entitled to know what happened.

Read the article here


Anonymous said...

Wall Street Bonuses Show `We Still Have a Problem,' Obama Aide Warren Says

Wall Street banks reaping profits and paying bonuses while the rest of the country struggles shows “we still have a problem” with economic disparity, said Elizabeth Warren, the Obama administration adviser responsible for setting up the Consumer Financial Protection Bureau.

“This just staggers me; I mean, I just don’t have words to describe what this means,” she said in an interview for Bloomberg Television’s “Conversations With Judy Woodruff” that will be broadcast this weekend. “For me, what an economic recovery is about is about what happens to American families. It’s what happens in the real economy. It’s whether or not families are building up wealth in their homes or whether or not their homes are dragging them over an economic cliff.”

Anonymous said...

Might not agree with everything but good interview:

On the Edge with Paul Craig Roberts

Anonymous said...

But even if Weidner is in no mood to take advantage of this opportunity handed to him on a platter by National Title, raising the visibility of these depositions, which are a matter of public record, hardly seems a good PR move. Recall how Goldman’s efforts to shut down backfired spectacularly.

Joyce said...

Thanks all for the above links. (I've already posted the Paul Craig Roberts video.)

Anonymous said...

A Secretive Banking Elite Rules Trading in Derivatives

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

Anonymous said...

I guess the country should just accept these guys operate outside the laws:

The Economy Cannot Recover Until the Big Banks Are Broken Up

Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:

"The main problem that Goldman raises is a question of size: 'too big to fail.' In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information."

Further, he says, "That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that's why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you're going to trade on behalf of others, if you're going to be a commercial bank, you can't engage in certain kinds of risk-taking behavior."

The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets - making up more than 70% of stock trades - but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).

Goldman also admitted that its proprietary trading program can "manipulate the markets in unfair ways". The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government's blessings.

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