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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

Thursday, May 10, 2012

Oh, Goldman Sachs, How Totally Disengaged You Are!

Two articles show how disengaged from reality the bank of Goldman Sachs has become.  First, there is the information on James A Johnson who serves as director and compensation chairman for Goldman

Mr. Johnson is accused of obtaining preferential rates for three home mortgages.  He is a man who believes that executives should have very good compensation packages and serves on several boards (besides Goldman's) that grant lavish pay packages to its executives.

Even when Goldman's profit dropped 47%, the compensation for Blankfein went up.  Blankfein will get $12.4 million for 2011, thanks to Johnson.

On the other hand, the city of Oakland which has already paid off a bond of $187 million has been trying to reach a negotiated deal with Goldman to achieve some relief from paying $4 million annually because of the persistent low interest rates.

Goldman does not seem to be interested in alleviating some one else's pain even though Goldman managed to get a government bailout when it was in trouble after helping to bring down the whole financial system.

You can see how unyielding and unfair Goldman is:
Councilmembers discuss ways to get out of bond debt deal with Goldman Sachs 
By Ryan Phillips - Oakland North

The City of Oakland should find a way to get out of its interest rate swap agreement with Goldman Sachs, a deal that costs the city $4 million annually, according to a city staff report. The problem before the city council now is figuring out the best way to do that without costing the city more money.

The Oakland City Council’s Finance and Management Committee received a report from the city administrator’s office on Tuesday afternoon detailing options for the city’s bond debt deal with the investment bank, and recommending that the city enter into negotiations to terminate the deal “at a below market cost” by the end of the next fiscal year. Under the current terms, ending the deal would cost the city about $15.5 million, the current negative market value of the swap.

The city and Goldman Sachs agreed to a rate-swap deal in 1997 relating to $187 million in city debt. The deal allowed the city to convert floating interest rates on municipal bonds into a fixed rate of 5.6 percent. But when the financial markets crashed in 2008, the city was left on the short end of the deal. The city has already paid out $26 million more than it owed; the underlying bond was paid off by the city in 2008.

The deal, which runs until 2021, has angered community members and city officials because big banks like Goldman Sachs were bailed out with billions in taxpayer money in 2008, yet even with Oakland struggling financially, the bank had been unwilling to renegotiate the deal to give the city some relief.

Last June, Oakland city councilmember Rebecca Kaplan (At-large) wrote a letter to Goldman Sachs CEO Lloyd Blankfein asking to renegotiate the deal because companies like Goldman Sachs have a responsibility to “operate in a manner that would be beneficial to the public” after using “taxpayer dollars in order to salvage private, for-profit corporations.” The union that represents city workers, SEIU 1021, began researching the deal around the same time, and by October a coalition of community groups, now called the “Oakland Coalition to Stop Goldman Sachs” had formed to discuss how the city may get out of the deal.

The discussion finally made it to City Hall on Tuesday, and the Sgt. Mark Dunakin Room on the first floor of the building was packed with members of the Coalition to Stop Goldman Sachs. During the meeting, many in the crowd held up bright signs that read, “Stop the swap, invest in the poor not the rich.” A long line of speakers approached the podium to reject the staff recommendation if it meant paying Goldman more money, and urged that the deal be ended immediately, at no further cost to the city. Many asked councilmembers to examine what other cities with similar agreements have done; for example, in Los Angeles the city government refused to negotiate any new deals with Goldman Sachs if the investment bank didn’t waive a cancellation fee.
Read the whole article here 


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