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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 17, 2011

Goldman Sachs's Failed Citizenship

Andrew Leonard ( concludes in his article, Salon Corporate Challenge: Goldman Sachs, that Goldman deserves a failing grade for corporate citizenship. Blankfein, on the other hand, would attest to how prescient Goldman was to get rid of all its MBSs before the mortgage market utterly failed. The comments point out that Goldman structured those sub-prime mortgage securities so that they would fail and, knowing that failure would occur, sold them to unsuspecting but "sophisticated" investors.

For Blankfein, selling those securities was a golden moment for Goldman which obtained fees for selling the securities and big bucks for betting agains the mortgage market. But Leonard points out it could have been a golden moment for the citizens of the US if Goldman had not acted just in its own interests (emphasis mine) but in the interests of others. Goldman's actions are the byproduct of greed, a very self-centred emotion.

Salon Corporate Challenge: Goldman Sachs
All of Wall Street's big banks are equally guilty of bad citizenship. But some are more equal than others.
By Andrew Leonard -

In the magisterial report released in April by the Senate’s Permanent Subcommittee on Investigations, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” a section recounting how Goldman Sachs profited off speculation in mortgage-backed securities — at the expense of its own clients! — closes with the following j’accuse:

Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high risk, poor quality loans and that magnified risk throughout the U.S. financial system. The investment banks that engineered, sold, traded, and profited from mortgage related structured finance products were a major cause of the financial crisis.

In this formulation, all the investment banks are equally guilty of bad corporate citizenship. But as anyone who has been to an Occupy protest or read a Matt Taibbi Rolling Stone screed or simply scanned the business headlines for the last three years knows, the name Goldman Sachs means something different to the general public today than Morgan Stanley or Citigroup or Merrill Lynch. Goldman Sachs, once lauded as the acme of capitalism, is now, in the popular mind, a watchword for Wall Street greed and irresponsibility. It is the vampire squid. None other can compare.

There are many reasons, large and small, for Goldman’s notoriety. Not least is pure arrogance — perfectly exemplified by the sorry spectacle of Lloyd Blankfein declaring that Goldman was “doing God’s work.” Or we could start with the legacy of one Goldman CEO turned treasury secretary, Robert Rubin, who supported and helped pass many of the deregulatory measures that encouraged Wall Street irresponsibility. Or another, Hank Paulson, who not long after leaving Goldman for Washington orchestrated a massive handout to his own industry, without any strings attached. And then there’s even a third, Jon Corzine, who has spent much of this week disingenuously testifying about his lack of knowledge as to what employees at his most recent firm, MF Global, were actually doing as the company somehow misplaced billions of dollars of its clients’ money.

It has not been an edifying spectacle. Goldman’s political influence has historically been greater than any other investment bank’s. This is no longer a mark in the bank’s favor.

But what singles Goldman Sachs out for special opprobrium isn’t the culpability it shares with other investment banks for helping to create the financial crisis and then get bailed out with taxpayer dollars. It’s the fact that Goldman Sachs figured out, before any of its Wall Street colleagues, that the housing boom was a house of cards and the entire mortgage-backed security market was headed for a crash. Goldman wasn’t caught by surprise by the revelation that the mortgage securities it was creating were toxic junk. Quite the opposite. But instead of sending up an alarm bell and using its political influence and lobbying muscle to try to fend off the coming disaster, Goldman Sachs simply liquidated the positions in which it would be vulnerable to a downturn and started betting, instead, on the likelihood of disaster. As the Senate report acidly notes, in December 2006, “when it saw evidence that the high risk mortgages underlying many RMBS and CDO securities were incurring accelerated rates of delinquency and default, Goldman quietly and abruptly reversed course.”

Smart for Goldman — in 2007, the company had one of the best years any investment bank has ever enjoyed. CEO Lloyd Blankfein alone earned $68.5 million that year. But not so smart for the rest of us. We despise Goldman Sachs more than we despise any other Wall Street institution because Goldman was smart enough to know what was happening to the economy, smart enough to mint billions in profit while the world headed toward the worst economic disaster since the Great Depression, but not smart enough to share the news. A responsible CEO of one of the nation’s most influential corporations should have been testifying before Congress every week warning of imminent disaster. But that might have ended up negatively influencing his compensation.

The article goes on to talk about compensation, lobbying and taxes here


JEHR said...

Dear Mr. Blankfein

Wouldn't you like to be the CEO of a bank that has a sterling record; a bank with a history of good performances; a bank that does not have to set aside billions of dollars for anticipated legal actions against it; a bank that treats its clients fairly rather than as a source of inside information; a bank that does not push the boundaries of the rules; a bank that doesn't try to influence regulators; a bank that does not need to lobby politicians for special considerations; a bank that actually supports community rather than trying to suck up all the money that communities offer?

If you were that CEO (but, unfortunately, you are not), you would then sleep the sleep of the just.  You would be proud of your ethical stance .  You would be admired for your moral courage and incorruptible ways.  We would admire you!

No conscience said...

The weakest got hit they're working their way up the wealth chain...

Trustee to Seize and Liquidate the Customer Gold and Silver Bullion From MF Global

The bottom line is that it seems that some warehouses are not a safe place to store your gold and silver bullion, even if you have a warehouse receipt for a bar of silver and gold.

Through fraud, you hold counter-party risk if you hold that gold and silver through another party, even if they are a Primary Dealer.

If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and liquidate it, you will have to accept whatever paper settlement that they give you.

For many this would have been 'unthinkable' only a few months ago. They had been warned, but chose to trust the financial system. And now they are suffering loss and anxiety, and the misappropriation of their wealth.

Get used to such revelations as the system continues to unwind and new and greater frauds come tumbling down.

Greed kills everything said...

Richard Russell continues:

“Nobody in America under
the age of 70 has ever seen truly hard times.  Most under 70 have never
even heard stories from their parents about hard times (their parents
had never experienced hard times).  Ever since World War II Americans
have sipped at a punch bowl that was a mixture of borrowing, greed,
impatience, debt and inflation.  I believe we are now on the path to
once again see really hard times, times that force us to think about our
current dire situation.

For years America was the
shining beacon that allowed the world to see what freedom and free
speech and wealth and democracy were all about.  America was the
dream-land, the ideal.  In the years since WWII, that has changed. 
America is now seen as the meddling, fat, money hungry, war-loving
immoral land where you can do what ever you want, and if you have a good
lawyer you can get away with it.

Bill of frights said...

Indefinite Detention of American Citizens: Coming Soon to Battlefield

The really galling thing is that this act specifically
envisions American citizens falling under the authority of the bill. One of its
supporters, the dependably-unlikeable Lindsey Graham of South Carolina, bragged
that the law "basically says … for the first time that the homeland is part
of the battlefield" and that people can be jailed without trial, be they
"American citizen or not." New Hampshire Republican Kelly Ayotte reiterated that
"America is part of the battlefield."

Officially speaking, of course, the bill only pertains to:

"... a person who was a part of or substantially supported al-Qaeda, the
Taliban, or associated forces that are engaged in hostilities against the United
States or its coalition partners."

Glenn Greenwald notes, the key passages here are "substantially supported"
and "associated forces." The Obama administration and various courts have
already expanded their definition of terrorism to include groups with no
connection to 9/11 (i.e. certain belligerents in Yemen and Somalia) and to
individuals who are not members of the target terror groups, but merely provided
"substantial support."

Here’s another way to ask the question: On which side of the societal fence
do you think the McCains and Grahams would put, say, an unemployed American
plumber who refused an eviction order from Bank of America and holed up with his
family in his Florida house, refusing to move? Would Graham/McCain consider that
person to have the same rights as Lloyd Blankfein, or is that plumber closer, in
their eyes, to being like the young Muslim who throws a rock at a U.S. embassy
in Yemen?

Read more:

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