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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

Monday, April 18, 2011

Who Would Miss Goldman Sachs If It Weren't Around?

It makes my blood boil when I read an opinion article like the one Robert Lenzner (Streettalk, Forbes) wrote entitled, "There Can't Be A Criminal Prosecution Of Goldman Sachs." Oh, yes, there can be; there just isn't the will to follow the rule of law and prosecute where corruption occurs. To my mind, it is corrupt not to prosecute.

According to Mr Lenzner, a criminal prosecution of Goldman Sachs would threaten Goldman Sachs's status as a dealer in government securities. To which I reply, GSs's status already threatens the work of the government, and in the future that may include securities. We still do not know what the end will look like.

Mr Lenzner says that a criminal case would hinder Goldman Sachs's ability to borrow money in global markets. To which I reply, there are other banks who can do the borrowing. TARP money alone could have created a bank in each state that would have performed the borrowing and lending role that was needed (an idea obtained from the videos on Geithner by Khan Academy). Another idea put forth by Khan Academy is that the big six banks should have been wound down and the TARP money paid to Main Street for the Wall Street losses (in pension funds, insurance companies, municipalities, university endowments, small business, savings, etc.).

Mr Lenzner says that Goldman Sachs would suffer when other banks do not want it as a counterparty. To which I reply, knowing what I do now about Goldman Sachs's actions before the financial crisis, I wouldn't want the risk of having GS as a counterparty or the risk of being one of its clients.

Finally, the zinger, If Goldman Sachs were accused or found guilty of criminal acts, "the entire fabric of the global financial system would be threatened." To which I say, it has already happened and but for a few well-placed people objecting to any prosecutions (Geithner?), many people should have been prosecuted already for all the illegal, immoral and unethical behavior of banks like Goldman Sachs. And the penalty should have been paid in time, not cash.

It is not the "wiser heads" that will prevail when Goldman Sachs escapes any censure for its fraudulent, criminal or corrupt actions. It is the stupider ones--the banks, including Goldman Sachs, share a large share of the responsibility for the collapse of the financial system and now they play the role of The Great Transfer-or of Wealth to the richest members of society which, of course, includes Blankfein and all his partners.


Anonymous said...

Lenzner's arguments are lame...basically IF there is a rule of law it should be applied equally...if there are consequences they should fall on goldman and all their associates..a clawback like RICO...with no exceptions..offshore and onshore...

Tell Lenzner to read this...

Bill Black: Fiat Justitia Ruat Caelum (Let Justice be Done, Though the Heavens Fall)

By Bill Black, an Associate Professor of Economics and Law at the University of Missouri-Kansas City. He is a white-collar criminologist, a former senior financial regulator, and the author of The Best Way to Rob a Bank is to Own One.

It is one of the paradoxes of life that the most practical means to ensure that the system does not collapse is to insist on justice for all and to ignore demands for special treatment premised on claims that justice places the system at grave risk of collapse. Nietzsche argued that the ubermensch (generally translated as “Superman”) transcended the normal rules. The elites claim impunity from normal rules on the basis of their purported superiority and because they claim that they are so important that applying the normal rules to them will harm society. Some pigs are more equal than others. What any competent financial regulator learns is that the best way to destroy a financial system is to refuse to hold the elites accountable. Regulators that insist on doing justice prevent the heavens from falling.

Joyce said...

Thank you for the link above. I read the article and agree wholeheartedly. I lament: Where are the Bill Blacks to do battle in today's corrupt world?

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