Goldman Sachs: "Contingency Planning" or the Danse Macabre

Just as the vulture flying above an injured animal signifies imminent death and gluttonous feasting, so the apparition of Goldman Sachs looking over the misery of the Eurozone is really the patient waiting for Goldman's own feast on money and rent from any failures in Europe.  It is fitting that Goldman  leads this Dance of Death because it was partly responsible for it and it will eventually extract profit from the people like never before.

So Blankfein gazes with leaden eyes on the peoples of Europe as they struggle and Goldman leads in their dance to financial death.  Goldman was there at the beginning and you can be sure it will be there at the end.

Danse Macabre 1498 by Michael Wolgemut

Goldman Sachs CEO Lloyd Blankfein:  Company Engaged in Contingency Planning for Defaults in Europe
By D. M. Levine - HuffPost Business

Goldman Sachs is preparing for possible sovereign defaults in Europe, the company's CEO said Friday.

"It's in the nature of contingency planning and we plan for a number of contingencies" including defaults, Lloyd Blankfein said Friday after testifying in federal court at the insider trading trial of former Goldman director Rajat K. Gupta. "If it does happen, it would be irresponsible for us not to engage in contingency planning."

Blankfein did not go into detail about the kind of planning at Goldman Sachs, but said that the firm does not want to be caught by surprise if, for example, a country like Spain defaults on its sovereign-debt obligations. "If there's a shock and awe [situation], there may be awe but there won't be shock."

Read the whole article here

Goldman Sachs and Derivative Regulation

In the wake of the $2 billion (or $4 billion) loss at JP Morgan, the Federal Reserve which regulates the banks is implementing stricter capital requirements and making rules regarding complex financial derivatives.

Derivatives played a key role in the financial crisis but have been protected from regulation.

As Senator Blanche Lincoln said, "in my view, banks were never intended to perform these activities."

If derivatives disappeared altogether from the financial system, the system would be much safer.

Big Banks Double Whammy:  New Asset Management Rules and FHA Subpoenas
By Matt Schilling - Seeking Alpha
. . . .

  When the news broke that JPMorgan Chase (JPM) lost what is now closer to $4 billion in derivatives trading, the Federal Reserve didn't take it lightly. As a result, it has implemented a fresh set of rules that state the banks must maintain a level of common equity equal to at least 4.5% of their risk-weighted assets and also have 2.5% set aside for a capital conservation buffer. The Fed also finalized rules specifically targeting banks that hold at least $1 billion dollars in complex financial derivatives. If JPM had those systematic regulations in place prior to the trades executed by Bruno Iksil the losses may not have been as bad as currently calculated. When the news broke with about an hour left in the trading day, Bank of America (BAC), Citigroup (C), and Goldman Sachs (GS) all fell sharply. The sell-off was due to the fact that these banks won't be able to take as much risk as was once thought and their positions in such places as derivatives markets could become more conservative.

Read the entire article here 

Goldman Sachs Is Right There Lobbying Away Market Protections

We have been wondering about how Gary Gensler, (formerly of Goldman Sachs and presently chairman of the CFTC), was faring in the task of creating the rules that implement and support Dodd-Frank.  Now we are getting a glimpse of what Gensler and the CFTC have to deal with:  lobbying from banks and their sponsors, slashing of budgets, imposing specific requirements--all barriers to creating the new rules.

Goldman Sachs does not like to be regulated as that puts a damper on its huge profits in the OTC markets and on its speculative impulses.

The CFTC has been charged to "prove" its limitations are legal and Goldman and the banks have challenged the authority of that body in federal court.

The battle over who will prevail, the rules or the banks, has not been settled yet.  But without vigilance (and there does not seem to be much vigilance at the highest levels of government), the rules will be too weak to make a difference in preventing another financial crisis.  What is being created is a smorgasbord of loopholes and meanderings of requests which serve to uphold the banks' purpose which is to not be subjected to regulations that limit their profit-making.

It would be easier and more effective to just re-instate Glass-Steagall.

Wall Street and Republicans team up to curb CFTC:  Kemp
By John Kemp - Reuters
. . . .

The subcommittee bill would also require the chairman of the commission to report to Congress within 30 days with "a schedule of implementation and sequencing of all rules, regulations, and orders .. including all Commission cost benefit analyses and studies relied upon in the formulation of any regulations" on selected topics.

The authors seem particularly concerned about CFTC rulemaking in three areas: swap dealers (Section 716 of Dodd-Frank), position limits (Section 737), and the registration of commodity trading advisors (Section 4m of the Commodity Exchange Act).

Position limits are already being challenged in federal court by the International Swaps and Derivatives Association (ISDA) and the Securities Industry and Financial Markets Association (SIFMA) on behalf of Goldman Sachs, JPMorgan, Barclays, Morgan Stanley and other commodity traders.

Part of the challenge centers on whether the commission must prove that limits are "necessary" to diminish, prevent or eliminate excessive speculation. The challengers argue that the commission has not conducted a proper quantitative analysis to justify its decision to impose limits under the law.

Read the full article here 

Goldman Sachs's Deleveraging of Personnel

We know that words can indicate deeper meanings and different agendas.  For example, when drug abuse, terrorism and poverty are defined as "wars" to be fought against then we know we are dealing with a black and white situation that can only be solved with violence and/or competition.  There are only stark losers and few winners as a result.  These "wars" have not been successful ones so far.

When business terms are used to describe the actions of people, then we can perceive an objectification of the human being as a product or an asset or a liability. The following article that describes the financial deleveraging that is necessary for a healthier financial system, gives us an understanding of how banks like Goldman Sachs view people.  The words used in the article can serve to illuminate the character of present-day banks.

Consequently, when employees are viewed as capable of being "deleveraged" as a debt is deleveraged, we visualize the bank objectifying its employees; that is, treating them like a product that can be used and when no longer of value can be discarded.  So a person who works for Goldman Sachs and does not make huge amounts of money for top executives becomes a "debt-burden" and can be eliminated without remorse.  Such people are viewed by banks as little more than "machines."

Wall Street has to be "forced" by regulation to be ethical as it cannot act on its own ethical standards which do not exist except for the benefit of the bank alone.  If banks are seen as "high-income workers collectives" and if the compensation set aside for partners and high level manages is reduced, then someone has to be fired.  There is no thought of sharing in the bad times where the decreasing compensation could be distributed amongst all employees until the good times come again.  It is sort of like getting profit from fraudulent CDOs in good times and getting bailed out by government in bad times!  Only human beings inside the banks profit; those outside the banks lose.

If the banks view everyone as "human debt" then we are all objectified in the same manner and woe betide us when the banks want to deleverage all of us!

Wall Street's (Other) Great Deleveraging
By John Carney -  NetNet


Wall Street has good reason to be rattled by the news that Goldman Sachs laid off senior personnel, including managing directors, last week. It is likely the beginning of a new kind of deleveraging that will occur at every major Wall Street firm.

 It’s well known that Wall Street has been forced by markets and regulators to delever in the wake of the financial crisis. For the most part, this has been a matter of financial deleveraging: reducing debt to capital ratios, reducing dependence on short-term debt, reducing compensation (especially bonuses) to revenue ratios.

But many Wall Street firms, especially Goldman Sachs [GS  93.72    1.51  (+1.64%)   ], have engaged in another form of leverage that has persisted through the crisis but now seems ready to crack. Despite being public companies seemingly dedicated to capitalism, many Wall Street firms remain as high-income workers collectives. Regardless of the legal ownership structure, they are compensation machines for their employees. 

Read the entire article here 

The Obscenity That Is Goldman Sachs

There is a time when a CEO's appearance is especially offensive to us.  Blankfein's presence at Gupta's trial is one of those times.  Blankfein does not want to become too good at testifying at others' trials, he says.  But his hearty laughs; his guffaws; his bantering with the judge (Rakoff); his joking about getting religion; the roar of laughter in the courtroom; Blankfein's relaxed demeanor; his comfortableness with what is going on; all speak of his acknowledgement that he is above the Rule of Law and everyone can lump it.

Except loki in his comments on the article who says:

loki

Better to die fighting, than live on knees 

 

Read this and you will get a better understanding of what we are up against, and why people like this can laugh when they are facing serious situations, or even if they destroy others lives.

http://www.cix.co.uk/~klockstone/spath.htm Inside the Mind of a Sociopath

This excerpt is from: "The Sociopath Next Door: The Ruthless vs. the Rest of Us" by Martha Stout Ph.D. (Broadway Books, New York, 2005, ISBN 0-7679-1581-X). Martha Stout is a clinical instructor at Harvard Medical School

"You have the driving nature and the intellectual capacity to pursue tremendous wealth and influence, and you are in no way moved by the nagging voice of conscience that prevents other people from doing everything and anything they have to do to succeed. You choose business, politics, the law, banking or international development, or any of a broad array of other power professions, and you pursue your career with a cold passion that tolerates none of the usual moral or legal encumbrances. When it is expedient, you doctor the accounting and shred the evidence, you stab your employees and your clients (or your constituency) in the back, marry for money, tell lethal premeditated lies to people who trust you, attempt to ruin colleagues who are powerful or eloquent, and simply steamroll over groups who are dependent and voiceless. And all of this you do with the exquisite freedom that results from having no conscience whatsoever. "

Read other comments here 

Rajat Gupta, Former Goldman Sachs Director, Hears CEO's Testimony At Insider Trading Trial
By D. M. Levine - HuffPost Business

. . . .

Blankfein also testified that during a June 2008 meeting in St. Petersburg, Russia, the Goldman board discussed the possibility of purchasing either a distressed commercial bank or the insurance giant AIG -- information that Gupta was heard relaying to Rajaratnam on a wiretapped phone conversation later that summer. That tape was presented to jurors earlier in the trial.

“It was agreed that AIG would be a suitable target” at the St. Petersburg meeting, Blankfein told the jury Monday.

Any such information discussed in board meetings was secret, Blankfein said. “All parts of it were confidential. The fact that anything was discussed in the board meeting is itself a confidential fact.”

Read the whole article here 

Goldman Sachs, Even Your Charm is Offensive

It does not matter how much sucking up to the public that Blankfein engages in; it is still true that Goldman Sachs performs no useful public service.  It serves itself.  Full. Stop.

Grading Goldman's Charm Offensive
By Kevin Roose - NYMag

Smiling for the camera:
Goldman put CEO Lloyd Blankfein under klieg lights this month, granting rare interviews to CNBC and Bloomberg TV. “Obviously it has occurred to us that we haven’t gotten everything right,” Blankfein said during one interview, offering a mea culpa for the firm's tight-lipped tradition.

Blankfein acquitted himself well, but why relegate him to the Nielsen ghetto of business TV? Put him on NBC, ABC, or CBS — or better yet, give him to Jon Stewart. That we'd watch.

Cozying up to the press:
Goldman has been quietly reaching out to journalists who cover the firm in recent weeks, inviting select reporters and columnists from publications like the New York Times (where, full disclosure, I worked until earlier this month) and the Wall Street Journal for intimate meet-and-greets with Blankfein, president Gary Cohn, and other executives.

Offering face time with the C-suite is a good way to get reporters to hear you out, but it’s not clear that the sessions will result in more positive press. One reporter who was invited to 200 West Street this month described the small-group setting as "a little bizarre.”

You can read the rest here

"You Were There," Goldman Sachs

It will probably be quite a few years before the American people learn the many details surrounding the creation and execution of the financial crisis of 2008.  Because there have been no meaningful criminal investigations and because no top executives have been prosecuted for their participation, we do not have much original evidence of the depths to which the banks and their executives plunged in their mad scramble to get indecent profits at the expense of the taxpayers and other ordinary citizens.

In the meantime, Robert Lenzner reminds us of some of the egregious bank behavior that brought us the GFC:

The 2008 Meltdown And Where The Blame Falls
By Robert Lenzner - Forbes

. . . .

Then, there’s the Bear Stearns chairman who did not leave his bridge tournament outside New York to attend to t he crisis of potential bankruptcy. Or the Goldman Sachs director who bought more shares of Goldman in the late fall of 2008 though he was also chairman of Goldman’s chief regulator– the New York Federal Reserve Board.

Or the former  Goldman partner who was acting as chairman of Wachovia, a failing bank,  and  demanded a premium in Goldman shares and the power to succeed Lloyd Blankfein as chairman– though Wachovia was on the verge of filing bankruptcy. Even though the Treasury Secretary had requested  Goldman chairman Blankfein to perform a public service by absorbing the broken bank, the antagonized Goldman chairman told the Wachovia executive to get thee to a nunnery. Some Masters of the Universe have such rotten hubris, such selfish, self-aggrandizing drives they act like primitive warriors from a more violent time.

So, where do we stand today?

The roles of  financial institutions  too big to fail is multiplying from 6 to 30. Take notice taxpayers of America.

The Dodd-Frank bill to regulate Wall Street is an unholy mess.

Read the entire article here

Goldman Sachs Thrives on the Misery of Others

There's a kind of Syrian effect taking place in the financial crisis:  citizens are being attacked by the big banks that must have their "pound of flesh" no matter how many innocent people are harmed. To Goldman Sachs it is the billions they will make at the expense of millions that keeps the glee in their eyes.

There is not enough money in the world to satisfy the greed of Goldman.  Only an attacker who devastates his own people would understand a bank's sucking up all the residual cash worldwide after it has successfully created the conditions that make such an attack possible.

Cold-blooded calculations are present all around--in Syria and in Goldman.

Richard Brenneman says it well:

Goldman Sachs plans to profit from euromisery
By Richard Brenneman - eats shoots 'n leaves

The folks on Wall Street are busily dry-washing the hands in glee at the thought of a massive wave of European bank collapses.

Hyperbole, you say?

No, a statement of harsh, cold fact.

From the Sydney Morning Herald:

US investment bank Goldman Sachs sees a silver lining in the troubles of Europe’s banks, which may need to sell more than $US2 trillion ($A2.07 trillion) in assets, a top Goldman executive says.

European banks, pressed to bolster their capital cushions, are expected to dispose of $US607 billion in assets this year, the majority of them in soured debt, said Gary Cohn, president and chief operating officer of the prestigious Wall Street bank.

They could divest another $US243 billion in assets in 2013, and $US147 billion the following year, Cohn said at a Sanford Bernstein strategy conference in New York on Thursday.

According to Cohn, Europe’s total bank deleveraging could exceed $US2 trillion and Goldman Sachs is “well-positioned to intermediate these asset sales”.

“We believe that Europe and the growth markets will present compelling opportunities for the firm,” he said.

Read the rest.

“Compelling opportunities”?

There’s some very deep games going on, and a very few very rich people will make billions profiting on the misery of millions.

That’s the way the game’s played.

Time for a change?

Read the article here 

A Broken SEC and a Bloated Goldman Sachs

Matt asks the question about whether the SEC is afraid, unwilling or corrupt (all of them!) when it comes to regulating banks and prosecuting executives who commit fraud.  Goldman Sachs certainly profited from SEC failures:  it never had to admit to wrongdoing thus saving itself from lawsuits; and Goldman, having promised to not do the crime again, has committed the crimes over and over again.

Maybe we should make Goldman Sachs smaller so that the SEC has a better chance of winning its suit!

Matt Taibbi goes over the many failures of the SEC:

SEC:  Taking on Big Firms is 'Tempting,' But We Prefer Picking on Little Guys
By Matt Taibbi - RollingStone

It’s by now been well-established that the S.E.C.’s performance in policing Wall Street before, after, and during the crash has been comically inept. It would be putting it generously to say that the top cop on the financial services beat has demonstrated particular incompetence with regard to investigations of high-profile targets at powerhouse banks and financial companies. A less generous interpretation would be that the agency is simply too afraid, too unwilling, or too corrupt to take on the really dangerous animals in this particular jungle.

The S.E.C.’s failure to make even one case against a high-ranking executive involved in the mass frauds leading to the 2008 crash – compare this to the comparatively much smaller and less serious S&L crisis twenty years earlier, when the government made 1,100 criminal cases and sent 800 bank officials to jail – became so conspicuous that by the end of last year, the “No prosecutions of top figures” idea became an accepted meme in mainstream news media coverage of the economic crisis.

The S.E.C. in recent years has failed in almost every possible way a regulator can fail to police powerful criminals. Failure #1 was that it repeatedly fell down on the job even when alerted to problems at big companies well ahead of time by insiders. Six months before Lehman Brothers collapsed, setting off a chain reaction of losses that crippled the world economy, one of Lehman’s attorneys, Oliver Budde, contacted the S.E.C. to warn them that the firm had understated CEO Dick Fuld's income by more than $200 million; the agency blew him off. There were similar brush-offs of insiders with compelling information in cases involving Moody’s, Chase, and both of the major Ponzi scheme scandals, i.e. the Bernie Madoff and Allen Stanford cases.

Read the entire article here

Goldman Sachs's Revolving Door at Romney's Bailiwick

We know that Goldman Sachs guys have infiltrated government, made policy to suit their own banking interests while there (see Robert Rubin and Hank Paulson) and left government to work in academia (where they can teach all the neat things they learned on Wall Street!) or in finance (Citigroup and as advisor to Obama).

Does government feel we need any more bad advice from banks like Goldman Sachs?

Now we see that Jim Donovan, a managing director of Goldman Sachs, is advising Mitt Romney and supporting his campaign for President with large donations.

The disease that is Goldman Sachs's political influence is all-pervasive.

Goldman Sachs Exec Serves As Advisor To Romney
By FINalternatives

Jim Donovan, Goldman Sachs

Jim Donovan, a managing director at Goldman Sachs, is not only a close business associate of the presumptive Republican nominee for President; he is also Mitt Romney’s good friend and trusted advisor.

Donovan, an investment banker, has handled Romney's relationship with Goldman for years. It has been a lucrative one for both sides: Romney and his wife, Ann, have entrusted much of their estimated $250 million fortune to Goldman. And it is no secret that Goldman has advised private equity giant Bain Capital—where Romney was an executive—on many of its transactions.

The relationship is so close that it even merited extensive unpacking in a January New York Times article.

Read the entire article here

Goldman Sachs's Psychopathic Behavior

There have been many good arguments put forward about why Goldman Sachs should be split into its at least the two parts of investment bank and commercial bank (with its government guarantees).  A reinstatement of Glass-Steagall would accomplish this goal and provide more economic health to the nation.

Another reason for dividing Goldman into parts has to do with the character of psychopaths whose sole interest is to make money--lots of money by whatever means.  Below is an argument that suggests channeling the lust for money power into an alternative direction that will not harm citizens as they have been harmed in the present financial crisis:

"It is better that a man should tyrannise over his bank balance than over his fellow-citizens." (quoted from Keynes by Wray below)

Randy Wray:  MMT Without the JG?
By L. Randall Wray - Naked Capitalism and New Economic Perspectives

Here’s the problem. Our society does produce a lot of psychopaths, and their behavior can lead to individual success at least on some measures. The rest of us—the 99% or so—have got to protect ourselves from them. However, their relative success makes that difficult not only because they can obtain positions of great power and influence, but also because we emulate them. In Chapter 24 of the General Theory, Keynes remarked that it is better to allow such psychopaths to inflict cruelty over their balance sheets than on their fellow humans. In other words, let them make money, but don’t let them run the show. As we all remember, he advocated policy measures to ensure full employment, to reduce inequality, and to “euthanize” the rentier class:

“dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative”. Of course our 1% psychopaths will oppose these policies, since the psychopaths thrive in the current, unequal, environment.

An editorial in the NYTimes put it this way:

“A recent study found that 10 percent of people who work on Wall Street are “clinical psychopaths,” exhibiting a lack of interest in and empathy for others and an “unparalleled capacity for lying, fabrication, and manipulation.” (The proportion at large is 1 percent.) Another study concluded that the rich are more likely to lie, cheat and break the law…. Accounting fraud, tax evasion, toxic dumping, product safety violations, bid rigging, overbilling, perjury. The Walmart bribery scandal, the News Corp. hacking scandal — just open up the business section on an average day. Shafting your workers, hurting your customers, destroying the land. Leaving the public to pick up the tab. These aren’t anomalies; this is how the system works: you get away with what you can and try to weasel out when you get caught.

Read the whole article here 

Corruption and Fraud Committed by Goldman Sachs

The following excerpt is a quotation found in an interview with Randy Wray regarding the European Union and the financial crisis.  The corruption in China is often taken for granted because of the mixture of authoritarian rule and capitalistic enterprise found in that country.  Wray views the corruption in China in comparison with the corruption on Wall Street:

Interview with Randy Wray, Regarding the Next Crisis (Part 2)
By Inigo Garcia, Fahd Arnouk and James Jasper - Mecpoc

Mecpoc: Since you discussed corruption in China, would you mind making one last comment on frauds and corruption in Wall Street?

RW: It is very much worse. The worst corruption in the world is on Wall Street. People talk about the corruption in Latin America or Africa or China, but it is nothing compared to what is going on. The biggest scandal in human history without any question at all; the whole thing is fraud, everything they do is fraud.

Yes there is corruption in China, and the further you get away from Beijing the worse it is, but the corruption, at least what I hear when I talk to Chinese, comes from the fact that the government owns the land and local governments sell the land to get the revenue. That is a major source of finance for local governments, from the sale of land to developers.

Whenever developers play a big role, there is always corruption. That is true in the United States too–the whole savings and loans crisis was caused by developers and the link between developers and politicians. Because then you favor a particular developer, so they have massive corruption whenever developers and politicians get together.

But what is the purpose of it? It is to get the land developed, largely homes, and then to provide financing to the local government (from the sale of the land), and so they are favoring individual developers who become massively rich, but comparing that to Goldman Sachs, the consequences of the corruption is completely different. Think about it: the fraud perpetrated by Wall Street is kicking millions of Americans out of their homes, destroying financial wealth, jobs, families, and neighborhoods. The relatively minor corruption in China is generating economic development, building homes and putting people into them.

Read the whole interview here

More on the Trial of Raj Gupta (formerly of Goldman Sachs)

The following excerpt is an update on the on-going prosecution of Rajat Gupta for insider trading:

Gupta suffers two big blows in his insider trading trial
By Reynolds Holding - (Reuters) The Globe and Mail

U.S. prosecutors have gained an early edge in Raj Gupta’s insider-trading trial. Judge Jed Rakoff largely adopted their version of a preliminary jury instruction a week after allowing them to introduce wiretap evidence. The former McKinsey & Co. boss and Goldman Sachs director hasn’t put on his defence yet. But he’ll need some breaks soon if he’s going to beat the insider trading rap.

A difficult case for the government got a lot easier when Mr. Rakoff said he would probably permit jurors to hear recordings of jailed insider-trader Raj Rajaratnam bragging about confidential tips from a Goldman friend, allegedly Mr. Gupta. And after just two days of testimony, the mini-winning streak continued with the jury instruction.

Read the full article here

TBTF and Goldman Sachs's Investment in Energy

When banks are as large as Goldman Sachs is (in its present TBTF state), we find that not only is Goldman guaranteed support from the taxpayer if it makes stupid mistakes that could lead to a financial crisis but also that Goldman with its billions in revenue and profits can count on having a major say in how energy is managed now and in the future, always with profits as its main concern.

Goldman is interested in buying into oil (see here) so that it can gain some control over oil production and/or sales (and of course make a profit).  It would be better to break up Goldman who now seeks to buy chunks of a Swedish oil firm.

Then to make sure it gains some influence over alternative energy sources, Goldman is investing $40 billion over 10 years in "solar, wind, hydro and biofuels" (see here).  There may not be anything sinister about Goldman's interest in energy but what is dangerous is the power that one bank can exert in determining future energy sources.  It's Goldman's disproportional size and consequent financial influence that makes its stake in future energy a real concern.

See the articles here and here

Another Lawsuit Against Goldman Sachs

Here's an instance of how Goldman Sachs makes money and pays the consequences (maybe!):

Hagens Berman Files Securities Class Action against Facebook, Zuckerberg and Underwriters:  Continues Insider Trading Investigation Against Selling Shareholders
By Hagens Berman Sobol Shapiro LLP - The Sacramento Bee

The complaint, filed May 24, 2012, in the United States District Court for the Northern District of California, as Chang et al. v. Facebook, Inc. et al.,  case number 12-cv-2680,  alleges that Facebook, Inc., Mark Zuckerberg, David A. Ebersman, David M.Spillane, Marc L. Andreesen, Erskine Bowles, James W. Breyer, Donald E Graham, Reed Hastings, Peter Thiel, Morgan Stanley & Co. LLC (NYSE: MS), J.P. Morgan Securities LLC (NYSE: JPM), Goldman, Sachs & Co. (NYSE: GS), Merrill Lynch (NYSE: BAC), Peirce, Fenner & Smith Incorporated and Barclays Capital Inc. (NYSE: BCS) violated Section 11, 12 and 15 of the Securities Act of 1933. The complaint can be accessed here.

Hagens Berman's investigation continues. "We anticipate the facts may warrant further claims also against several of these defendants, and additional selling shareholders for insider selling in violation of Section 20A of the Securities Exchange Act of 1934," said Hagens Berman partner Reed Kathrein. "While such claims are unusual, this is an extremely unusual situation to catch issuers and their bankers in what we have long suspected to be a hidden practice." The largest reported selling shareholders include Zuckerberg, Breyer, Accel Partners, DST Global Limited, Goldman Sachs, Tiger Global Management, Mail.ru Group Limited and Peter Thiel. 

Read the entire article here 

ore here: http://www.sacbee.com/2012/05/25/4516352/hagens-berman-files-securities.html#storylink=cpy

Goldman Sachs and Its Tainted Talent

Goldman Sachs finds it difficult to select board members who do not have a taint of scandal associated with their names.  For example, James A. Johnson was a former chief executive of Fannie Mae during its "corporate governance debacle."  He has been selected as director and compensation chairman.  Mr. Johnson is a great believer in large pay packages for CEOs.

Then there is Lee Scott who was CEO of Wal-Mart in Mexico when claims of bribery by Wal-Mart arose.  He served on the business standards committee on the board at Goldman but left soon after.

At the present time, Rajat Gupta, former Goldman board member, is being investigated for insider trading. 

Goldman is having a hard time finding board members who do not exude a whiff of scandal.  Soon there may be no other choices but the tainted ones.

Goldman's bad board seat
By Beth Kowitt - CNN Money

FORTUNE – In times like these, companies might need a scorecard to keep track of the alleged misdeeds and missteps of those at the top. Take, for example, an especially problematic seat on the Goldman Sachs (GS) board. On March 19, 2010, Goldman put out a press release announcing the nomination of a new board member -- former Wal-Mart CEO Lee Scott. Goldman was still feeling the heat in the aftermath of the financial crisis, and Scott had the right résumé and experience. After all, he had led Wal-Mart through its own public relations troubles.

Two months later Goldman CEO Lloyd Blankfein announced that he was launching a business standards committee; Scott would be one of four board members on it. But Scott stayed on the board for just a year. When he left, in 2011, he said it was because of time constraints.

Read the entire article here

Goldman Sachs and Dodona: "A Plague on Both Your Houses"

After having read the following article, one is tempted, as a distant observer, to say "A pox on both your houses."  Someone should pay more than a fine (usually done without having to admit wrongdoing) and someone should be behind bars for bringing down the financial system with these illustrated displays of unethical and immoral behavior.

Fraud is fraud and should be prosecuted, Goldman most of all.

Goldman blames hedge fund victim in Hudson CDO fraud case
By Alison Frankel - On the Case (Thomson Reuters)

Remember the case over Goldman Sachs's Hudson CDOs, in which U.S. District Judge Victor Marrero wrote a scalding opinion in March? Marrero refused to dismiss fraud claims against the bank, in a ruling that detailed Goldman Sachs's alleged scheme to shed exposure to subprime mortgages by dumping toxic collateralized debt obligations on an unsuspecting public. This week Goldman had a little something to say about the case, and -- surprise! -- it's not an apology.

On Monday the bank's lawyers at Sullivan & Cromwell filed Goldman's answer and counterclaims to the securities fraud suit brought by the Dodona hedge fund. (Hat tip to Brune & Richard's new must-check website, S.D.N.Y. Blog.) The most interesting part of the filing comes 40 pages in, when the bank outlines why (in its view) Dodona -- and not Goldman -- is the real wrongdoer in the Hudson CDO scenario.

According to Goldman, the hedge fund and its founder, former Salomon Brothers asset-backed trader Alan Brody, knew exactly what they were getting when they bought Hudson CDOs. The fund explicitly marketed itself as an expert in the "structural complexity" of "mortgage-related CDO equity and structured credit products." Dodona told investors it was "uniquely qualified to make informed and sound investment and hedging decisions" about CDOs because Brody and company were savvy about evaluating underlying collateral.

Read the whole document here

Goldman Sachs: Is This the New PR You Were Touting?

So Goldman Sachs has already forgotten that in order to create a new public image GS will have to actually act as though it has changed its old fraudulent ways.

Kurt Nimmo of Infowars thinks that the Facebook IPO was designed to enrich its big clients such as Goldman Sachs and that the SEC should be investigating the IPO.  Besides which Nimmo believes Facebook is a "data-mining" tool where users of FB readily reveal large amounts of information about themselves and others to be used by--whomever.

Henry Blogget of Business Insider has his own take on what happened to cause Facebook's value to tumble.  He says "selective disclosure" unfairly guaranteed large clients had information that small investors did not.

In any case, Morgan Stanley, Goldman Sachs and JP Morgan are being sued by investors who claim "they were misled in the purchase of the social network firm's stock."  What a lot of misleading we hear about when Fraud should be the word.

Goldman Sachs raised $1.09 billion selling stock in Facebook's IPO and, immediately after the IPO, it cashed out some of its holdings making $235 million.

So what happened to Goldman's attempt to improve its reputation?  Nothing!

Facebook IPO:  CIA and Goldman Sachs Take the Suckers for a Stroll
By Kurt Nimmo - Infowars.com 

The fact Morgan Stanley was the lead banker on the Facebook IPO should have set off alarm bells for investors in the NASDAQ casino. The deal had SUCKER’S BET spray-painted all over it. But like the infamous dot-com bubble and any other number of pump and dump schemes rolled out by the banksters, the Facebook IPO was designed to enrich a small number of insiders like Goldman Sachs and take the clueless horde on the outside to the cleaners.

Even cynical observers are willing to give the trendy stock time to “perform” when it is obvious the Facebook “offering” is simply more toxic waste proffered by people who specialize in multi-billion dollar scams and snake oil tours.

“Maybe I am a grouch,” writes the New Yorker’s John Cassidy. “But it all sounds suspiciously like an inside job, in which the last ones in, the ordinary investors, are the saps. At the very least, this entire issue is something that the authorities – the S.E.C., but also the Nasdaq and other stock exchanges – should be looking at closely.”

Read the entire article here 

The Parasitical Relationship of Goldman Sachs and AIG

So the Federal Reserve is having a (delayed) asset sale of the Maiden Lane III Portfolio acquired from AIG.  Goldman Sachs is one of the dealers who has been invited to participate in the auction.

It is passing strange to have Goldman Sachs able (nay, invited) to buy AIG's once toxic assets especially when you consider Goldman's fraught relationship with AIG before the crisis.  Goldman Sachs preyed upon AIG in very specific ways--by pushing AIG "to the brink of bankruptcy." 

". . . Goldman in the two years preceding AIG's bailout, worked to undermine investor confidence in the insurer, then the biggest seller of credit default swap contracts, and drive down the market value of mortgage-backed securities."  (By Barry Grey - WSWS)

Then, Goldman made a huge profit by betting against the mortgage market.  It is an ugly but true fact that Goldman has always profited in its dealings no matter how fraudulent and unethical its behavior both before and after the GFC.  Goldman should not now profit through buying AIG products.  How twisted is injustice!

Goldman Sachs made billions by pushing AIG to bankruptcy
By Barry Grey - World Socialist Web Site

. . . .
 
By means of the unregulated multi-trillion-dollar credit default swap market, banks and corporations purchase insurance against the default of bonds issued by other banks, companies and governments. If a seller of swaps—AIG was by far the biggest—goes bankrupt, its counterparties stand to lose billions.

By the fall of 2008, AIG was vastly over-leveraged and hemorrhaging cash due to demands from its counterparties, including major banks and financial firms in the US and internationally, that it fulfill its guarantee to make good on mortgage-backed CDO losses. Its failure threatened to tip some of the biggest banks, including Goldman and Morgan Stanley in the US, into bankruptcy.

The Times article suggests that Goldman was using its close relationship with AIG to manipulate the housing market and encourage a panic selloff of mortgage-backed assets, in part by pressing the insurer to make billions of dollars in collateral payments based on Goldman’s “low-ball” estimates of the value of mortgage-backed CDOs it had insured with AIG.

The article notes that Elias Habayeb, an AIG accounting executive, testified before Congress in January that Goldman’s payment demands were a major factor in AIG’s downfall.

The implication is that the financial crash was not simply the result of disembodied “market forces.” Highly conscious profit-driven calculations by financial giants such as Goldman played a critical role.

Read the entire article here 

Goldman Sachs Is Part of a Destructive System

Rob Urie of Counterpunch writes about the true costs of the recent financial crisis brought to us by the banks.  The cost to Goldman Sachs, for example, was minuscule compared to the costs for the rest of the world.  The economic system is environmentally unsustainable.  The current financial system that supports predatory banking is unsustainable.  The models that banks use to create profit are broken and therefore unreliable.  The unequal distribution of wealth upwards continues apace.

The True Costs of Bank Crises
By Rob Urie - Counterpunch
. . . .

The challenge for reformers and re-regulators is that the system is the problem. Companies pollute because they individually prosper while we collectively pay the costs. Banks take risks that are internally rational while they are systemically catastrophic. Environmental and financial crises cannot be solved with capitalism intact. In fact, when global warming and bank crises are considered, there is little evidence that capitalism ever produced any profits net of externalized costs. And the consolidation of wealth that capitalism produces undermines all attempts at remediation. Capitalism itself is a suicide machine.

What made J.P. Morgan’s loss news is the recognition that the financial crisis hasn’t been resolved. And again, this crisis isn’t from without. It is endemic to the system we are being told we must save. As Mr. Haldane has it, even if the crisis had been resolved, we would still collectively be out more than $60 trillion anyway. And the only way toward those trillions is through increasing environmental catastrophe. By appearances, the current order is in the process of imploding of its own weight. And while dislocations create fear, they also create openings for other possible futures.

Read the entire essay here

Goldman Sachs and Facebook

Here's one person's take on all the Facebook IPO hoopla.  (The greedy banks in paragraph three include Goldman Sachs):

Facebook Dashes Faith
By Al Lewis - The Wall Street Journal Blog

I overestimated the ordinarily reliable powers of greed and unbridled hyperbole.

When some people predicted Facebook stock would rocket up 50% on its initial public offering on Friday, I did not laugh. I had faith that the Facebook storyline would overcome:

A greedy move by investment bankers to jack up its offering price to $38 a share and expand the offering by 25%, just one day before the IPO, taking most of the juice out of the deal.

General Motors' announcement that it would no longer advertise on the social-networking site because its ads weren't effective.

Reports of all the billions Morgan Stanley and Goldman Sachs would make dumping their shares on the public.

Silicon Valley punks unloading their shares to become obnoxious million- and billionaires.
Co-founder Eduardo Saverin's decision to defriend America, renouncing his U.S. citizenship and moving to Singapore to cut his tax bill.

Chief Executive Mark Zuckerberg's refusal to ditch his hoodie.

A tough stock market that continues to suffer a stalling recovery in the U.S. and a slow-motion meltdown in Europe, not to mention J.P. Morgan Chase behaving like MF Global with billions in largely unexplained trading losses.

The Nasdaq stock market, which appears to have bungled Facebook's opening by mismanaging order flow. (Next time, try the NYSE.)

I thought Facebook's IPO would overcome this folly because I was betting on America's often unwarranted optimism. I saw the IPO as a Rorschach test that people would read into whatever they wanted.

"It is one of the most interesting companies that ever existed," Duke University's Dan Ariely told me. "So there's the freedom to create any story you want."

How's this for a story? Nearly one out of every seven people on the planet is hooked into the social network, so it can basically do anything: Facebook will end all wars once everyone on the planet becomes "friends;" Facebook will replace fossil fuels since we never have to meet anyone in person anymore. 

Read the entire piece here