Here is letter #5:
My name is Mike Eastwood, I’m just a 20-year-old kid from a small town in Oklahoma, but let me tell you my story. I come from a stable and mostly happy family life. I have two sisters (I’m a middle child) who graduated valedictorians of their high schools. I graduated with a 3.7 GPA from my 3A high school in 2009.
My older sister graduated in 2003 from a state college. She worked for the next five years but has been inconsistently employed and predominantly unemployed since 2008, when she moved to San Diego to join her husband who was stationed there by the Marines. All the while, she’s been trying to pay off the $90,000 in student loans she racked up while trying to get a degree in pharmaceuticals that she is not able to use.
I am still going through college, attempting a degree in history. I decided to go to a community college after high school to avoid debt. I’ve been attending classes that do not challenge me intellectually in any way because, frankly, I was and am too scared of the debt that comes from a decent school. I do this in hopes that I can someday be a teacher, though I know that is a career that will leave me in debt for the rest of my life, regardless of how hard I work. My younger sister just graduated (again, a valedictorian with a 4.0 GPA) and she chose not to go to college after seeing the debt involved in getting a degree, as well as numerous examples of people racking up debt for a degree that doesn’t help them move forward in life. Each of us attempted and qualified for many scholarships but none of us qualified for PELL Grants or FAFSA Student Aid. Our parents combined (my mother is a teacher, my father runs a collating machine) make about $65,000 a year, putting us just out of reach of any federal assistance.
Why do I mention this to you? Goldman Sachs doesn’t have anything to do with school directly and I can’t place the blame for our debts on the shoulders of your corporation, nor would I try to. I tell you this because I want to show the state and cost of education, even at a local level, and far more importantly, I want to bring to your awareness the lives of those people who seem to have slipped beyond the vision of you and your fellow executives. My sister, with $90,000 in total student loans and paying a bit above the minimum payment (minimum payment is $345 a month; she pays $400) and paying against an 8.9% annual interest rate, cannot successfully pay off that student loan during her lifetime, assuming she is forced to continue working for K-Mart. And to perhaps offer a bit more perspective on her situation, she works forty hours a week at the minimum wage of $7.25, which earns her roughly $780 a month. Just repaying her student loans costs her more than half of her total income and it’s a payment that will never end.
Again, this isn’t your fault. She didn’t make the job market for those entering the field of pharmaceuticals plummet. And again, I do not blame Goldman Sachs for these problems. Allow me to give another example. As I said before, I’m only 20 years old. I was diagnosed with juvenile diabetes in April of this year. Type-1 diabetes means I’ll have to take insulin shots for the rest of my life, avoid some foods, and remove other foods from my diet completely. I was diagnosed after attending a local soccer game where I fell unconscious while sitting and watching. My blood sugar had gotten so high that the fact I hadn’t had a stroke was a true miracle (1,115, in case you’re curious.) This serious medical problem and diagnosis cost me $2,470. I will also have to pay nearly $160 a month for all of my insulin and diabetes supplies. I don’t have health care myself, but fortunately, because I’m under 24 and thanks to the new laws passed in 2010, I can remain listed on my mother’s health insurance. Unfortunately, my mother is a teacher and her coverage is not all that great. On top of my now $15,000 in school debt and the $1,045 loan I took out last January to cover the cost of my and my fiancé’s bills for a month when she was out of work, I’m in a lot of debt for a kid who was only in high school two years ago, and it is especially high considering that I live in a one-bedroom apartment with my fiancé, I drive a beat-up Pontiac Sunbird, and try desperately not to exceed my means.
I want to stress that I don’t blame Goldman Sachs for these problems; I’m not trying to insinuate in any way that you are at fault for this debt or these problems in my life or my family’s lives. What I do want to show you is the gap between the lives of everyday Americans and the lives you all lead as the executives of such a prestigious operation. Between your lives and the lives of those of us who have had to struggle and fight for every bit of happiness we have.
You’ve influenced our government elections using more than $11,200,000 for the sake of your own interests, leaving the American people with no other alternative but to watch and pray it all gets better. Your profits in 2010 were about $21,700,000,000. My siblings and I made a combined $31,859 and, with my parents’ income, that’s $96,859. This is barely enough to pay back my older sister’s student loans. My family, with the possible exception of my father, is well-educated, hardworking, and politically involved, and yet there is no light at the end of the tunnel. “Work hard and you’ll have a good life” is a cruel axiom.
The reason I sent you this message is so that you might read it and understand that we are frustrated by our lives, by the fact that a huge portion or our incomes are taken away for the sake of supporting federal and state governments that ignore the people they are supposed to represent, and that ignore them because global business juggernauts have the ability to simply buy a vote. Your corporate tax breaks are ridiculous. Your unlimited access to involvement in the affairs of the politics that are supposed to allow the people to improve the quality of their own lives is cruel and unfair. Most of all, your ignorance of the trials and hardships of the average American is unforgivable.
Please understand why we stand in the streets with signs. It is not for handouts, it’s not to taunt or torment the rich, and it’s most certainly not because a bunch of lazy, uneducated hippies want to lay blame on the shoulders of giant corporations. It’s because our lives are in shambles and because you have taken from us our only outlet for change. So we forge a new outlet and we stand shoulder to shoulder in solidarity. Let us change, begin to change yourselves, so that we will again have the American Dream.
Michael EastwoodBartlesville, Oklahoma 74003
* Abby Joseph Cohen (born 1952 in Queens, New York) is an American economist and financial analyst on Wall Street. She is a partner and—as of March 2008—Senior U.S. investment strategist at Goldman Sachs responsible for leadership of the firm’s Global Markets Institute. Prior to that date, she was Chief Investment Strategist. In 2001 she was named one of the 30 most powerful women in America by Ladies Home Journal. (from Wikipedia)
So what is it that you’re doing, and why?
Over the past seven business days, I’ve been meditating for 3 to 4 hours directly outside the entrance of Goldman Sachs headquarters. And I intend to continue sitting silently at Goldman HQ every single business day for the coming weeks and months. Soon this effort will grow beyond me, however. Starting yesterday, we’re holding hour-long group meditations three days per week.
The reason for my meditating at Goldman is that I seek to extend compassion to its employees and demand that they do the same for the worldwide billions affected by the bank’s practices. By meditating, I’m quite literally modeling a technique that cultivates the capacity for emotional states like compassion and empathy. On another level, I’m trying to communicate that I come in peace; I understand that Goldman Sachs bankers are people just like you and me. There’s nothing inherently evil or malicious about them. Like all people, they are the beautifully complicated products of a personal and social history.
Does that mean that we allow them to acquire huge amounts of money, while exacerbating global inequality and its effects? Absolutely not. But we intervene in the way that a family might intervene when their son has a drug addiction. That’s how I think of Goldman Sachs: addiction to greed. And greed, in its various forms, is something that everyone struggles with. The difference with Goldman Sachs is that greed on this scale is causing atrocious human suffering. So we need to put the harmful practices to an end, but with the love and goodwill of a global family.
What drove you to commit to doing this?
The large scale human suffering that is taking place, and the sense that our global trajectory is moving toward even greater amounts of suffering. That, coupled with the realization that our global and national systems of governance are simply not up to the task of preventing such harm. I’ve come to believe that a dramatic shift on inequity issues — like regulating Wall Street — will only result from a mass nonviolent social movement. I see myself as a small, sustained part of that effort.
It’s kind of like the “Standing Man” in Turkey. Has anyone joined you, like people joined him? Do you expect them to?
Yes, exactly. I draw a lot of encouragement from the Standing Man’s passive resistance. He exuded such dignity in his commitment to bearing witness. He seemed to say, “I may not be able to forcibly remove your tear gas cannisters, but I will not gratify you with the act of turning away.”
No one has joined me in the spontaneous way that they joined the Standing Man. However, people did reach out to me after I posted some photos to Facebook and Twitter. Also, from day one I’ve envisioned this Goldman Sachs meditation presence growing beyond me. As a former community organizer, I know that power is in numbers. In this case, we’re seeking to dramatically reign in one of the most powerful institutions in the world, so we must have lots of people as a counterweight.
What kinds of reactions are you getting from Goldman Sachs employees? What about other people?
To be honest, it is very difficult for me to tell how Goldman Sachs employees have reacted. I meditate with my eyes looking down at a 45-degree angle, so I do not know what their facial expressions have been like. No Goldman employees have spoken to me yet, either — well, that’s not entirely true. After the first couple days, the security guards became more and more chummy. Now, when I arrive, they ask me how my day has been. Recently, when my friend came to take a bunch of pictures, they stopped him to make sure it was all right with me.
Most other people have been supportive. They ask me what I’m doing or why, and they respectfully engage with my response. The meanest thing that happened so far was a man yelling, “Get a job!” Little does he know that I work full-time at a Mexican restaurant in Crown Heights. But millions of Americans do not have a job. Does that disqualify them from speaking out — or, in my case, sitting out — against injustice? I think not.
What would be your ideal outcome when you’re done?
The ideal outcome is the formation of a massive meditation protest that helps create political space for the dramatic reform and regulation of the finance industry — especially the megabanks like Goldman Sachs and Morgan Stanley. I know this is a lofty goal, but it’s so terribly important. I envision a perimeter of meditators around the entirety of the gigantic Goldman Sachs headquarters. How incredible would that be?
Are you doing any support work to make your action part of a broader campaign, to make it more effective? Or are you focused on this act of witness?
Yes, I’m most definitely doing support work. As I said, I come from a community organizing background; so I know the importance of coalition building, outreach and trusting relationships. I also know that this kind of organizing is a slow process.
Your sign says “Begin Anew With Compassion.” Why that? Do you really think what Goldman Sachs lacks is compassion? Is meaningful compassion even possible in these institutions of hyper-capitalism?
The sign “Begin Anew With Compassion” is directed toward the employees of Goldman Sachs, not the bank itself. I’m not naïve enough to think that compassion can overcome the structural forces and financial incentives that dictate Goldman’s practices. In that sense, I think it’s absolutely valid for you to speculate about whether “meaningful compassion is even possible” within the constraints of a megabank like Goldman.
However, what I would say is that Goldman’s policies — as with all policies at all institutions — are enacted by people. And those people make a choice about whether or not to extend ethical consideration to those affected by their choices. That’s what we saw with Goldman Sachs Vice President Greg Smith in 2012. He realized that his actions were unethical, and he chose to resign from the firm.
What has the quality of your meditation been like, so to speak? Better or worse than at home?
To answer this, I need to describe my meditation a bit. My meditation practice is following the breath, which means that I focus on the sensations of a single body part — usually the belly — as air comes in and out. The challenge is that when thoughts arise, you simply notice that you’re thinking and immediately return your attention to the breath.
At Goldman, it has been a lot more difficult to sustain continuous attention on the breath. The noise of the street corner — combined with the personal and political significance of the location — makes for an extremely distracting environment. So, if we think of meditation as the practice of focus, then I would say the meditations are worse. But another crucial component of meditation is the practice of acceptance. The more and more I’ve meditated over the years, the more I’ve been willing to be nice to myself when I get distracted. And I think for that practice of compassion — for myself as a struggling meditator and for bankers as human beings — I think my meditations have been significantly better.
Letter #4 to Goldman Sachs‘s Lloyd Blankfein
Posted: 25 Jun 2013 07:18 AM PDT
In this book of letters written by ordinary people affected by the fallout from the financial crisis is a chapter devoted to Goldman Sachs starting on page 91.
The fourth letter is from page 95 in The Trouble is the Banks: Letters to Wall Street, edited by Mark Greif, Dayna Tortorici, Kathleen French, Emma Janaskie and Nick Werle, printed in paperback edition by n +1 Research Branch Small Books Series #4, 2012, New York, NY.
Here is letter #4:
To: Lloyd C. Blankfein, Goldman Sachs
Dear Mr. Blankfein,
We are writing to you to interest you in a fantastic new opportunity for you and your loved ones. We are offering you the once in a lifetime opportunity to refinance all of your many homes and/or jets for the wealth–oops, did I say wealth–equity that you are holding in them.
Did you know that the property you bought for millions is actually worth gazillions of dollars under this plan? Yes! Gazillions! With our excellent and trustworthy panel of advisors we can help you truly capitalize on your investments and really make the most of what life has to offer.
What we do is: take the money you “earned” during those fantastic boom years, and invest it in schools, hospitals, housing and jobs for the poor, educate feed and clothe people before their brief yet worthy lives extinguish.
There really is nothing to lose from your side: just take the money backed by the assets of the houses, jets, boats and jewelry, sign your name, and we can provide you with short-term aspirations! It really is that simple. And don’t take our word for it, talk to many of our other customers in the 1% base range. Plenty of satisfaction all round!
With Such Sincerely Tepid Regards,
In this book of letters written by ordinary people affected by the fallout from the financial crisis is a chapter devoted to Goldman Sachs starting on page 91.
The third letter is from page 94 in The Trouble is the Banks: Letters to Wall Street, edited by Mark Greif, Dayna Tortorici, Kathleen French, Emma Janaskie and Nick Werle, printed in paperback edition by n +1 Research Branch Small Books Series #4, 2012, New York, NY.
Here is letter #3
Hello Edith–Wow, Now I Know a 1 Percenter!
To: Edith W. Cooper*, Goldman Sachs
I hope this message finds you well. Gosh, I am thrilled to meet you, even though we haven’t met face-to-face…yet!
I mean, wow, I actually know a 1 percenter now! How cool is this?
Of course, you probably don’t have much to worry about even if you’re not feeling well, because I trust that you have great health insurance–thanks to me helping pay for it.
Wow, Edith, how great is that! 🙂
Since I hope we get to know one another better, here’s a little bit of info about me: I have a degree in journalism and my hubby has a double Master’s in music, but since we’re over 50 years old, our premiums climbed, so we were faced with a slippery slope choice…Do we eat, or do we pay for health insurance? It was a toss-up, but we decided that food was more important.
Oh wait–you haven’t heard about our foreclosure? Law enforcement came to our door and gave us one hour to vacate! Oh, that morning was so much fun–I wish you could have been there! Yes, we were in that first wave in ’08, after putting down a down payment of…wait for it…$300,000.
We totally qualified, you see…hubby had a great business, until his clients could no longer pay him…Our lender told us “don’t worry, we want to work with you! We can see you have never been in trouble before!”–and well, it’s a long story.
I’ll save the rest of this story for next time, because I am so looking forward to writing back again..very, very soon.
Your new pen pal,
P.S. I can’t wait to hear about the beautiful clothes you must wear. I buy all of my clothes these days at thrift stores, but maybe we can compare notes?
*Edith W. Cooper is Executive Vice President and Global Head of Human Capital Management for Goldman Sachs
“It’s been about five or six years since we last crippled every major market on the planet, so it seems like the time is right for us to get back out there and start ruining the lives of billions of people again,” said Goldman Sachs CEO Lloyd Blankfein.
The nation’s major banks and investment firms say they are ready to give utterly decimating the world’s economies “another go.”
NEW YORK—Claiming that enough time had surely passed since they last caused a global economic meltdown, top executives from the U.S. financial sector told reporters Monday that they are just about ready to completely destroy the world again.
Representatives from all major banking and investment institutions cited recent increases in consumer spending, rebounding home prices, and a stabilizing unemployment rate as confirmation that the time had once again come to inflict another round of catastrophic financial losses on individuals and businesses worldwide.
“It’s been about five or six years since we last crippled every major market on the planet, so it seems like the time is right for us to get back out there and start ruining the lives of billions of people again,” said Goldman Sachs CEO Lloyd Blankfein. “We gave it some time and let everyone get a little comfortable, and now we’re looking to get back on the old horse, shatter some consumer confidence, and flat-out kill any optimism for a stable global economy for years to come.”
“People are beginning to feel at ease spending money and investing in their futures again,” Blankfein continued. “That’s the perfect time to step in and do what we do best: rip the heart right out of the world’s economy.”
According to sources, the overwhelming majority of investment bankers are “ready to get the ball rolling” by approving a host of complex and poorly understood debt-backed securities that are doomed to quickly default, as well as issuing startlingly high-risk loans certain to drive thousands of companies into insolvency.
Top-level executives also told reporters that when it comes to depleting the life savings of millions of people and sending every major national economy into a tailspin, they feel “refreshed and raring to go.”
“The other day I actually overheard someone on the sidewalk utter the words ‘I’m saving up for retirement,’ and right away I thought to myself, ‘Well, time to get down to work,’” said Morgan Stanley chairman James P. Gorman, adding that the increasing number of individuals entertaining ideas of starting their own businesses or buying houses was the financial sector’s cue to set off another devastating global recession. “We’re definitely thinking on a huge scale again, because we all really enjoy toying with the livelihoods of millions of people overseas and forcing them to wonder why reckless, split-second decisions made thousands of miles away dictate their whole country’s socioeconomic future.”
“Plus, it’ll be nice to finally wipe out the Euro once and for all this time,” Gorman added.
While most private equity firms, investment banks, and hedge funds are reportedly still undecided on the precise route to take in order to torpedo the job market and crash all international stock exchanges, sources confirmed they are nearly in position to resume gambling away trillions of dollars belonging to the American populace.
“We’ve got a lot of options on the table; it’s just a matter of picking which one we want to use to paralyze every single sector of the world economy,” said Capital One executive vice president Peter Schnall. “We already burst the dot-com and housing bubbles, so this time we can maybe mix it up by popping the education bubble and shattering the lives of everyone with outstanding student loans. Or maybe we’ll artificially inflate prices of stocks in social media companies and then pull the rug out, bankrupting every investor tied to companies like Facebook and Twitter. Or do both.”
“On second thought, maybe we’ll wipe out the housing market again too, just for the hell of it,” Schnall quickly added. “Might as well, right?”
According to a recent survey of Wall Street officials, 82 percent said they were “excited to shake off the rust” and send the Dow and NASDAQ into another freefall. Additionally, 75 percent of respondents admitted they have been “champing at the bit” for months to wholly undermine the nation’s local banks and money market accounts, leaving Americans too terrified to leave their savings anywhere.
Moreover, the chief financial officers from Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo unanimously told reporters that it has been “way too long” since they last saw the utterly dejected faces of American families whose homes had just been foreclosed on due to circumstances totally beyond their control.
“Now that the public’s efforts to curtail questionable Wall Street trading practices have all but ceased, it’s time for us to bring the world to its knees again,” said AIG CEO Robert Benmosche. “There are still plenty of opaque financial derivatives, high-frequency trading operations, and off-balance sheet transactions out there, all with virtually no federal regulation. Trust me, we can definitely work with that. And if anything, we can always just lobby for further concessions and deregulation in Washington—which, by the way, is so, so easy to do—and then we can cause as much damage as we want.”
Added Benmosche, “And while we’re at it, we’ll make sure we once again come away from this whole thing scot-free and far wealthier.”
Letter #2 to Goldman Sachs‘s Lloyd Blankfein In this book of letters written by ordinary people affected by the fallout from the financial crisis is a chapter devoted to Goldman Sachs starting on page 91. The second letter is from page 93 in The Trouble is the Banks: Letters to Wall Street, edited by Mark Greif, Dayna Tortorici, Kathleen French, Emma Janaskie and Nick Werle, printed in paperback edition by n +1 Research Branch Small Books Series #4, 2012, New York, NY.
Here is letter #2: $9,165 an hour–Wow Lloyd, You’re a Big Earner To: Lloyd C. Blankfein, Goldman Sachs
So I just read online that your salary in 2010–including all of those delightful perks that just put a smile on one’s face–is $19.06 million. And your hourly wage is $9,165. That’s great! Do you even collect that much when you take lunch? Do you realize that by working a mere two hours you earn as much as someone who works full-time at minimum wage earns in a year? Wondering if I could have your job for say, three hours a week. Would that be too much to ask? You can leave the stuff that you don’t like about your job to me: talking to the press about Occupy Wall Street, testifying at hearings about board members who are charged with insider trading. You know, all that icky stuff. You can still wheel-and-deal and be your macho master-of-the-universe self. I’ll just do the three hours of grunt work you don’t like each week. What do you say, Lloyd? Deal?
Susie Meriden, CT
A Letter to Goldman Sachs‘s Lloyd Blankfein
An Open Letter to Goldman Sachs CEO Lloyd Blankfein
To: Lloyd C. Blankfein, Goldman Sachs
So, I’ve been writing these letters to bank CEOs where I gently rib them about stuff like “being abysmally terrible at their jobs” and “openly stealing from the general populace” and “having the morality of a supervillain” and stuff like that. You know. The usual. And so I was writing one to you about what a terrible businessman you are, and how you had to get your old boss to give you $64 billion because of how badly you suck at being a CEO. Ha, ha. It was going to be funny.
So I was doing research to find more things to make fun of you about. But I kept reading more and more about what a hive of scum and villainy your company actually is, and the more I read the less I felt like being funny. Because, you know, whatever. Any jackass can illegally accept naked short sales or underwrite bonds and encourage people to short those bonds or help Greece hide the true nature of its debt in order to make some extra cash, causing long-term damage to not just Greece but the whole Eurozone and therefore the world economy–which is at risk of going under (again!) partially because of your nefarious deeds (again! I guess you can fool people twice!). Hell, I could do that.
But really it was in finding out that your company’s creation of the Goldman Sachs Commodity Index helped literally starve millions of people that I stopped feeling jokey and started actually feeling pity for you.* That’s the worst thing to feel for somebody, Lloyd, because it means I consider you less than me. You know what? I do!
I’m asking this honestly: How do you sleep at night? I know that sounds all melodramatic, but when I’ve, you know, inadvertently hurt somebody‘s feelings, I have trouble getting any rest at all. I can’t imagine ever getting a bit of shut-eye again if I found out I helped artificially drive up the price of wheat in the greatest year of plenty the world had ever known, pushing 250,000,000 more people to the breaking point and causing food riots in thirty countries.
You must either have a really comfortable bed or a metric boatload of Ambien. Or no conscience whatsoever, and such broken morality that you don’t realize what damage your little money games are causing the planet
No, I’m just playing, I’m sure you’re a great guy. Ha, ha.
New York, NY 10039
Richard Sharp has been chosen as a regulator of the financial system in the UK. He has been a big contributor in the past to the Conservative party in power. Now he has been appointed to help protect the public from another financial crisis.
And, by the way, Mr Sharp worked for Goldman Sachs for 22 years. Should the public be worried? Should the fact that Goldman has direct access to influencing financial reform put a pall on the success of reform?
The information below is quoted from a pdf document (page 5) called Doing God’s Work: How Goldman Sachs Rigs the Game (March 2011) by Spinwatch. The report traces the many connections that Goldman Sachs has within the UK and in the EU through revolving door politics and lobbying against reform of the financial system in Europe. Page 6 has a chart of the web of relationships of Goldman with various politicians in the UK:
Jumping through the revolving door
Ex-Goldman people have also walked into key public positions in the UK: former chief economist at Goldman, the late David Walton, was handed a seat on the Bank of England‘s interest-rate setting Monetary Policy Committee (MPC), and Paul Deighton, a former chief operating officer at Goldman, now runs the London Olympic Games organising committee. In March 2011, Ben Broadbent, an economist from Goldman Sachs joined the MPC.
Funding the party
Over the last decade, senior Goldman Sachs and ex-Goldman Sachs bankers have donated £8.8 million to Britain’s political parties.
* Richard Sharp £404,000 donated to the Conservatives since 2002. Ex-Chairman of Goldman Sachs’ Principal Investment Area in Europe spent 22 years at the firm (he left in December 2006). Sharp is also a supporter and funder of Tony Mayor, Boris Johson’s Fund for London, both personally and through his Sharp Foundation. (from page 5 of report by Spinwatch)
Goldman Sachs‘s Predations Redux
“The clear theme is that Goldman Sachs loves its clients with the same lip-smacking love that any predator has for incautious prey. If Blankfein is right that Goldman Sachs is doing God’s work it follows logically that God hates Goldman’s clients.” (quoted from William K. Black, New Economic Perspectives)
What kind of predation does Goldman Sachs engage in? Here’s a brief list from Black’s article:
1. Goldman used derivatives to help the Greek government hide its deficit;
2. Goldman was sued for assisting in Enron‘s control frauds which helped Enron avoid paying taxes;
4. Goldman has had numerous regulatory actions and investigations that culminated in their paying $550 million to settle SEC charges in 2010;
5. Goldman settled with regulators and paid fines for illegal foreclosures and robo-signing forgery;
6. The FHFA had evidence of “pervasive” appraisal fraud by Goldman during its securitiations of subprime mortgages;
7. Goldman disregarded underwriting guidelines in order to increase profits;
8. Goldman purchased fraudulent mortgage originators’ loans and resold them to Fannie and Freddie;
9. Goldman leveraged information in its warehouse lending business to increase its profits;
10. Goldman forced lenders to repurchase defective loans that were still on Goldman’s books;
11. Goldman realized that the securitizations they had helped create were no longer safe and began to “short” the “junk” mortgages;
12. By shorting the market, Goldman profited from its clients’ losses;
13. Goldman knew about the devastation that its securitizations would inflict on the economy but, rather than warn everyone against the coming crisis in the mortgage market, it stayed quiet and profited enormously by shorting the market!
IT’S not all bad news. Sometimes, it’s like the country is on a downward spiral into permanent stagnation. But, occasionally there’s some really good news. For instance, have you heard that Goldman Sachs, the controversial cabal of international bankers, is pulling out of the International Financial Services Centre? Reliable sources say Goldman Sachs doesn’t want to do business in this country anymore. Whoopee!
Why are they leaving? Well, that’s something we should be shouting from the rooftops.
And they’re not the only bankers buggering off, I’m pleased to report. Several others are “handing back their licences”, according to Michael Somers, deputy chairman of AIB. And, he says, some of them have told him privately that it’s because of heavier regulation of their activities.
Not surprisingly, for a banker, Somers is dismayed. “I’m dismayed,” he told RTE’s business programme.
And this was reported sympathetically throughout the media, as though it’s a bad thing that various senior bankers, including the Goldman gobshites, are leaving. Sometimes, I wonder about this country.
The fighting Irish. The raging anger when the bankers crashed capitalism in 2008. The demands that bankers be fired, shamed, jailed – or worse. The anger at the light-touch regulation that allowed all sorts of cowboys to prosper, running their own banks into the ground. The insistence that there must be banking reform – this, we were told, Must Never Happen Again.
Well, folks, the notion that the banks should be kept on a tight rein is going out of fashion. Effective regulation is now dismissed as short-sighted. Support for regulation is caricatured as mere anti-banker rhetoric.
During the Celtic Bubble, bankers had a free hand. They acted with disregard for anything except their own interests. That’s not because they’re bad people – though some of them had the morals of jackals and the brains of peat briquettes. It’s because people who are paid massively, lauded as geniuses and given the run of the country will act accordingly.
Now, the pleas are mounting for lighter regulation and bigger salaries for bankers. And there’s no sign that this Government strongly disagrees.
An outsider was appointed Financial Regulator – Matthew Elderfield. Saviour of capitalism, a stickler for the rulebook, we were told. Best of all, he had no connection to the usual cronies.
And when Elderfield quit recently, after just three years on the job, to take a position with a UK bank, many were surprised.
Is his move just personal ambition or is there something more going on? Has Elderfield seen straws in the wind and did this make him decide to move to more solid ground?
Last week, Elderfield made a speech warning that the cost of lax supervision was many, many times the cost of proper regulation. Bizarrely, the media reported this as just another view – balanced against the view of the bankers, that regulation has gone too far.
I’ve had goldfish with better memories than some media folk.
Goldman Sachs, throughout this global crisis, epitomised the morals of the banking business. In Matt Taibbi’s memorable phrase, the bank is like “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
According to The New York Times, Goldman helped that government manoeuvre and the deal was “hidden from public view because it was treated as a currency trade, rather than a loan”.
Why would Goldman do that? Because the Greek politicians “paid the bank about $300m (€230m) in fees for arranging the 2001 transaction, according to several bankers familiar with the deal”.
When Greece imploded, Goldman had moved on to other things, its executives fattened on their notorious bonuses.
The fact that Goldman Sachs and others are leaving the IFSC – well, an active, concerned government would have ministers fanning out across the globe, gleefully welcoming this news. Yell it from the pages of the Financial Times and the Wall Street Journal.
Take a bunch of Reuters and AP reporters to dinner, send Michael Noonan into the Bloomberg TV studios with a big grin on his face.
“We’re glad to see the back of those bastards,” he would say.
And it would ask the question: what are Goldman Sachs hiding? What are they up to that can’t stand the light of effective regulation?
An active, concerned government would use the flight of such people to advertise a financial-services system that won’t be allowed do the kind of things that destroyed economies.
The departure of such types would be a platform from which to promise a financial-services set-up that you can trust.
The framework of regulation – including Elderfield’s position – remains in place. The bankers find this restrictive – so, the pressure is on.
Yesterday, John Bruton, a former Taoiseach, now a hired mouthpiece for the banking business, rebuked President Higgins’s call for an end to the policy of austerity (pushed by banker-friendly types, such as Mario Draghi, a Goldman Sachs old boy). Attack unemployment, Higgins suggested.
Stay the course, Bruton says. He’s on a Dail and ministerial pension of €140,000, on top of his reported six-figure salary for bigging-up the bankers. And he says: “Austerity is always painful.”
The lesson of the banking crisis seemed for a while to be obvious to all. We need banks that serve the economy – not the bankers.
We need boring banks, banks that assess risk, support customers and serve the wider economy – not banks that are fixated on spectacular deals that feed the egos and the wallets of elite layers of hustlers.
Two distinct models of banking. An old one, that kept capitalism relatively stable for decades. And a casino model that emerged from Thatcherism, tied to bloated rewards for the few.
That cut-throat model, which placed the welfare of banks above that of the people, led to the crash. And to the ruinous bank guarantee.
And to the subsequent policies of forcing the debts of bankers and bondholders on to the people. And the costly, disastrous attempts to balance the books through austerity.
Remarkably, the cut-throat model has survived. We needed a clear-out of senior bankers, not as a punishment or as revenge, but to evict a type of specialist we don’t need, who subscribes to a model of banking, and a model of society, that has massively damaged us.
Many of the those who ran the banks into the ground have gone, but their values remain – and are lauded in the highest circles of government, business and the media.
Who replaces Elderfield, and the ground rules under which he or she works, will matter. There will be no sweeping disposal of regulation – we on the outside won’t even see the screws loosened.
Should those bankers now leaving in a huff return in a year or two, we’ll know then that we’re in even bigger trouble.
Almost three years ago, when Goldman Sachs Group Inc. (GS) paid $550 million to settle fraud accusations by the Securities and Exchange Commission, one of the claims was that Goldman misled the bond-insurer ACA Financial Guaranty Corp. in a horribly complex deal named Abacus.
Goldman settled without admitting to the accusations. The terms also prohibited Goldman from denying the SEC’s allegations in its public statements. Then, this week, a funny thing happened. A New York state appeals court, in a 3-2 ruling, dismissed ACA’s lawsuit against Goldman. ACA said Goldman misled it. The court said the insurer’s claims didn’t hold up.
The case captures perfectly why much of the public detests “neither admit nor deny” regulatory settlements. We don’t know whose facts to believe. Without trials or admissions of liability, the government’s allegations remain unproven. Sure, Goldman paid a big fine. That doesn’t establish anything. For all we know it paid the money just to make the SEC go away.
The result is surreal: Goldman still isn’t allowed to deny the agency’s claims that it misled ACA. However, a court has thrown out ACA’s claims that Goldman did, in fact, mislead it.
To make matters more confusing, there may not be anything factually inconsistent between this week’s court ruling and the SEC’s earlier allegations. To win a fraud suit as a private litigant, ACA needed to show that it justifiably relied on Goldman’s misrepresentations. (The court said the insurer failed this test.) The SEC, by contrast, doesn’t have to prove that an investor relied on a defendant’s misstatements. Plus, the SEC said Goldman defrauded multiple parties, not just ACA.
Let’s back up a bit. Abacus was a financial product known as a synthetic collateralized debt obligation. The SEC’s suit accused Goldman and a junior executive, Fabrice Tourre, of making false and misleading statements to investors about the deal, which the SEC said was designed to fail.
Goldman’s main offense, allegedly, was telling a German bank that ACA had picked the mortgage-related investments underlying the deal — when actually the selection process was heavily influenced by a hedge fund, Paulson & Co., which later made $1 billion betting against Abacus. As part of its SEC accord, Goldman said it was “a mistake” not to disclose Paulson’s role, but it didn’t admit violating the law.
Echoing the agency’s allegations, ACA accused Goldman of misleading it into believing that Paulson would take a long, or bullish, position in the equity portion of Abacus, aligning it with ACA’s interests. In its majority opinion, the appeals court said it dismissed ACA’s claims because “such misrepresentations were specifically contradicted by the offering circular’s disclosure that no such equity position was being taken.”
In other words, ACA should have known Paulson wasn’t long when the insurer sold credit protection on a $909 million slice of the deal in 2007. ACA had acknowledged in writing that it wasn’t relying on any representations other than those in the circular and in written agreements, the court said. ACA said it will appeal this week’s ruling. The company is being wound down and isn’t writing new policies.
Although Goldman settled with the SEC, Tourre, 34, is still fighting the agency. He’s now pursuing a doctorate in economics at the University of Chicago. Should his case ever go to trial, we may find out what really happened here.
The usual criticism of “no admit” settlements is that they suggest the government is soft on corporate crooks. No doubt this is often true. But there is also a flip side. Settling without admissions of liability may tempt regulators to pursue weak cases, knowing that some defendants would rather write a check than spend years battling in court.
This week, U.S. Senator Elizabeth Warren asked this question in a letter to SEC Chairman Mary Jo White, Federal Reserve Chairman Ben Bernanke and Attorney General Eric Holder: “Have you conducted any internal research or analysis on trade-offs to the public between settling an enforcement action without admission of guilt and going forward with litigation as necessary to obtain such admission and, if so, can you provide that analysis to my office?”
Back in February, Warren put the same question to Comptroller of the Currency Thomas Curry. His agency, which regulates the country’s largest banks, replied last week that it had no such research or analysis.
Warren, a Massachusetts Democrat and former Harvard Law School professor, wrote in her May 14 letter: “I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial — either because it is too timid or because it lacks resources — the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer.”
Perhaps, too, the regulator would try harder to make sure it brings only strong cases if its goal were to actually prove its allegations. As for the SEC’s claims in the Abacus suit, we can only wonder. Did Goldman rip off ACA? This week a court ruled no.
To contact the writer of this article: Jonathan Weil in New York at email@example.com.
To contact the editor responsible for this article: James Greiff at firstname.lastname@example.org.
We all now know that no executive of a bank will ever be investigated or prosecuted for the accounting control frauds he committed that resulted in the financial crisis of 2008. Human beings have a craving for justice to be rendered to those who commit fraud and especially to those who have become super-rich by poaching the savings and pensions of others. The human mind is fully capable of making up a recipe to remedy that injustice.
Take, for example, the story from Norse mythology about the father who decided to divide his sons’ shares of his inheritance by the amount of gold each son could hold in his mouth (from The Globe and Mail, Saturday, May 11, 2013, p. R12). Gold as a “mouth-tale” is an effective metaphor and suits our fantastical purposes.
We are often told by the world of commerce that we are all “consumers” no matter what we buy even if it is not digestible as food: we consume resources; we consume products; we consume wealth–all very involved with the mouth and its greedy ingestion of “things.”
What better way for the gods to reiterate their rating of Goldman’s value (long-term avoid) than by how much gold Blankfein can literally hold in his mouth and consume! What better way to depict the character of Blankfein than by his “consuming his own gold.”
A yearly salary of $21 million for 2012 is a lot of gold to “mouth!”
Thus the fantasy world, where there is justice, metes out the painful digestion of justice on those who deserve it.