This bank offers no apparent social value to any community from which it can make a profit. It is a cannibalistic predator on the financial organisms of society.
Goldman Sachs Facing $15.8 Billion in Lawsuits Over Sub-Prime Mortgage Hocus Pocus
What a pleasure it is to see Bank of America running from its fees program and everyone’s favorite investment bankers facing $15.8 billion in lawsuits over the sub-prime mortgage hocus pocus they helped pioneer and from which they derived great wealth even after the 2008 implosion.Goldman Sachs Group Inc submitted a regulatory filing that states the bank is facing lawsuits to the tune of $15.8 billion related to their sub-prime mortgage machinations.
In 2007, with the sub-prime mortgage crisis not long off, Goldman Sachs and hedge funder manager John Paulson teamed up to bundle 3,000,000 sub-prime mortgage loans together into a collateralized debt obligation called ABACUS 2007-AC1, and then shorted mortgages to unwitting investors. John Paulson made $1 billion (Goldman took a $15 million cut) and investors lost $1 billion.
A new SEC proposal would ban these sort of financial instruments, but Goldman Sachs, once triumphant in the spoils of the sup-prime mortgage bonanza, is looking more and more impotent every day. Aside from an SEC assault, they are being hit by investors and foreign banks.
According to Reuters, “Goldman said HSH Nordbank, Norges Bank Investment Management and IKB Deutsche Industriebank AG have threatened to assert claims related to mortgage offerings, in addition to insurance giant American International Group Inc and Manulife Financial Corp’s John Hancock unit, whose legal threats it disclosed last quarter.”
$11.1 billion of the $15.8 billion figure stems from lawsuit filed in September by the Federal Housing Finance Agency, which accused Goldman of misrepresenting the quality of $11.1 billion worth of mortgage-backed securities.
Capitalists eating their own. Priceless.
And for a bank that deals in a great deal of illusion, Goldman Sachs is getting one hell of a dose of reality.
Read the story here
A comment from Peter Burgess following the piece is worth reading also:
It is not so long ago that Goldman Sachs was a private partnership and it was the partner's capital that was at risk. They made themselves into a public traded company only about 10 years ago ... and only became a 'bank' in the run-up to the 2008 meltdown, and as a 'bank' qualified for bail-out assistance. Compared to CitiGroup, Bank of America, JPMorgan Chase and the like, Goldman Sachs is a simple organization. Same goes for the big British based banks and the big Swiss based banks, not to mention other big players in the global banking and financial services space.Read the comment here
Banking and financial services is incredibly competitive, with most of the organization simply having the purpose to make profit. Nothing wrong with taking risks to make profit, but please do it with your own money, and not the money of either taxpayers, depositors, insurance policy holders or even investors who are unaware of what is going on. All the activities that are merely associated with markets ... trading, speculating, market making, etc .... should be separated from the money and banking that are needed to run a prudent real economy. Essentially this is what Glass-Seagall was all about, and something like it needs to come back. But there also is a need to ensure that there is no co-mingling of funds between the risk taking segment of the sector and the prudent banking and financial services sector.
If or when there is an accounting of the performance of these banking system organizations over the past several years, my guess is that there are $trillions of missing money wealth ... which is not that bad in real economic terms because it was 'phony' wealth in the first place. The sad thing is that quite a good number of people have become millionaires simply by making millions of people less well-off and in many cases homeless. The clever white collar banking crooks are several steps ahead of the law and lawyers, the regulators and so on ... but they are going to have a much more difficult task to explain themselves to an activist 99% who now want some answers not based on law and regulations but on ethics, morality and what is right not wrong. The 1% versus the 99% is now a public dialog, a not one that can be ignored with total impunity.
5 COMMENTS:
The Fed’s European “Rescue”: Another back-door US Bank / Goldman bailout?
DateWednesday, November 30, 2011 at 7:53PM
Perhaps at that point, Goldman thought they had it all under control, but Germany's bailout-resistence was still a thorn, which is why its bonds got hammered in the last auction, proving that big Finance will get what it wants, no matter how dirty it needs to play. Nothing from the Fed, except a small increase in funding to the IMF.
Rating agency, Moody’s announced it was looking at possibly downgrading 87 European banks. Still the Fed waited with open lines. And then, S&P downgraded the US banks again, including Goldman ,making their own financing costs more expensive and the funding of their seismic derivatives positions more tenuous. The Fed found the right moment. Bingo.
Now, consider this: the top four US banks (JPM Chase, Citibank, Bank of America and Goldman Sachs) control nearly 95% of the US derivatives market, which has grown by 20% since last year to $235 trillion. That figure is a third of all global derivatives of $707 trillion (up from $601 trillion in December, 2010 and $583 trillion mid-year 2010. )
But, Goldman has something the others don’t – a lot fewer assets beneath its derivatives stockpile. It has 537 times as many (from 440 times last year) derivatives as assets. Think of a 537 story skyscraper on a one story see-saw. Goldman has $88 billon in assets, and $48 trillion in notional derivatives exposure. This is by FAR the highest ratio of derivatives to assets of any so-called bank backed by a government.
http://www.nomiprins.com/thoughts/2011/11/30/the-feds-european-rescue-another-back-door-us-bank-goldman-b.html
Thursday, December 1, 2011
David vs. Goliath
This is just more evidence that is piling up which points the fact that
this country is deteriorating into a large-scale banana republic. I can
vividly recall in the 1970's reading countless stories about the way in
which Governments and businesess operated in Central and South American
"banana republic" countries. If you were wealthy and owned your own
politician, you could essentially operate your enterprise with
absolutely no regard for the laws or fear of prosecution. All it took
was big "donations" to the politicians. How is that any different from
what is now happening in this country? Seriously. Why does Jon Corzine
get wait a month before he has to appear before Congress to answer
questions about MF Global? Why is he not in District Court right NOW
answering questions from a judge? He hasn't even issued any public
statements? Leads me to wonder if he's hiding in the closet of his good
buddy Barack Obama and peeling bananas to feed to the politicians...
http://truthingold.blogspot.com/2011/12/david-vs-goliath.html
Att Gen asks Americans to report IP violations on their neighbors but not 1 prosecution of Wall Street
Seriously? Not a single prosecution against Wall Street for the collapse of 2008 but he wants people to give a damn about IP violations for Hollywood and the recording industry? Instead of boot-licking for the 1%, maybe he could find some time to prosecute the real trouble makers. Wake me up when there's a Democrat who is significantly different from a Republican so I can vote for real change. What we're getting now is not change and not worthy of support.
http://www.americablog.com/2011/11/ag-holder-asks-americans-to-report-ip.html
Wall Street Journal: Corzine and his regulators
MF Global customers are still waiting to be made whole, but the
larger importance of this story relates to the effectiveness of the
Dodd-Frank, Sarbanes-Oxley regulatory model. Americans have been told
that, in response to the 2008 financial crisis that regulators failed to
predict or prevent, regulators needed to have vast new powers to
prevent the next crisis. But in MF Global the regulators failed the
law's first serious test.
MF Global also shows how this new era of regulatory power puts a
premium on political connections. Mr. Corzine was named CEO of the
company in part—maybe in substantial part—because he had close ties to
regulators and could help MF Global navigate the many new rules. This is
the new financial crony capitalism, and it also failed its first test.
The mistake is to believe in regulator prescience, as opposed to
simpler, straightforward rules on, say, leverage or capital.
Mr. Gensler, for his part, has a response to the cronyism charge.
Since the firm went bankrupt he has announced that he will recuse
himself from issues affecting MF Global.
Now?
Congressman Randy Neugebauer sent a letter to Mr. Gensler this week,
and Wednesday night Senator Richard Shelby contacted the CFTC's
inspector general seeking an answer to the question of how and when Mr.
Gensler decided that recusal was appropriate. This is another answer Mr.
Gensler should bring to today's hearing.
http://gata.org/node/10726
How do you think the money managers tipped off by Paulson were positioned?
I'd like to take Paulson to task in the strongest possible way for
dereliction of duty, violating the public trust and for generally
screwing over the American taxpayer.
As reported by Bloomberg,
Paulson's meeting and alleged comments did not violate insider trading
laws; technically it was legal. But just as insider trading by sitting
members of Congress is wrong and offensive, Paulson's gift to his hedge
fund buddies - including several alum of Goldman Sachs, where he was CEO
prior to becoming Treasury Secretary -- is so grotesque and wrong it
boggles the mind; more especially considering what Paulson told the
press about Fannie and Freddie that same week was in stark contrast to
what he told the money managers.
http://finance.yahoo.com/blogs/daily-ticker/taken-task-capt-cronyism-hank-paulson-124007702.html
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