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A ‘sitting man’ at Goldman Sachs – Waging Nonviolence


(WNV/Max Zahn)

Max Zahn, founder of the new website Buddha on Strike, is currently on strike in front of Goldman Sachs. I asked him a few questions about what he’s up to.

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. 

(WNV/Max Zahn)

(WNV/Max Zahn)

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.

via A ‘sitting man’ at Goldman Sachs – Waging Nonviolence.

Goldman Sachs and the Revolving Door in the UK


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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.

Conservative payouts

*  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)

Other Goldman guys mentioned in the above report include Simon Robertson, Christopher French, Paul Ruddock, Michael Hintze, Jon Aisbitt and Lakshmi Mittal.

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs and the Revolving Door in the UK.

Goldman Sachs’s Predations Redux


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;

3.  Goldman helped spread the subprime mortgages fraud (under Hank Paulson‘s leadership) that led to the 2008 financial crisis and The Great Recession;

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!

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs’s Predations Redux.

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs’s Predations Redux.

Where will we be without the bankers?


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”.

The Greek government deceived the EU in 2001, borrowing billions in an off-the-books deal, while appearing to meet the EU’s deficit rules. They didn’t do it alone.

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.

But the wind seems to be blowing in the opposite direction. The Government’s defence of regulation is luke-warm. It refused to oppose the €843,000 salary of Richie Boucher of Bank of Ireland.

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.

via Where will we be without the bankers? – Independent.ie.

via Where will we be without the bankers? – Independent.ie.

Goldman Sachs Wins Even When Muzzled by the Feds


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.

SEC Accusations

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.

Warren’s Query

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.

(Jonathan Weil is a Bloomberg View columnist. The opinions expressed are his own.)

To contact the writer of this article: Jonathan Weil in New York at jweil6@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.

via Goldman Sachs Wins Even When Muzzled by the Feds – Bloomberg.

via Goldman Sachs Wins Even When Muzzled by the Feds – Bloomberg.

One Can Only Hope That Goldman Sachs Would Vaporize!


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.

via Goldman Sachs: Information, Comments, Opinions and Facts: One Can Only Hope That Goldman Sachs Would Vaporize!.

via Goldman Sachs: Information, Comments, Opinions and Facts: One Can Only Hope That Goldman Sachs Would Vaporize!.

Goldman Sachs: Goldman Sachs is Ring-Fenced From Criminal Prosecution


Goldman Sachs is Ring-Fenced From Criminal Prosecution

An investment bank (Goldman Sachs) can commit fraud and the executives do not have to admit to wrongdoing;

An investment bank is allowed to forge foreclosure documents and the executives just have to promise not to do that again;

When an investment bank gets into trouble by taking huge risks, it becomes a commercial bank so that it can obtain liquidity from the Federal Reserve and the executives keep their lucrative positions;

When an investment banks commits fraud, it pays a fine;

When an investment bank commits criminal accounting control fraud, it pays a fine;

No matter what fraud, or unethical, or immoral action an investment bank commits, the executive compensation continues to increase year after year after year;

Investment banks are pathologically unable to see or understand the harm that their frauds cause even when pensions, wages and salaries, and savings of the middle- and working-classes are decimated because of the actions of investments banks like Goldman Sachs.

Goldman Sachs’s Alchemy

Goldman Sachs are alchemists who turn gold into base metals: they turn handshakes into corruption. Take the situation in the UK where Goldman Sachs shook hands with Dave Hartnett of the HMRC, to get a reduction in the taxes owed by Goldman.  Goldman Sachs sought to cheat on taxes and the Head of Tax agrees.  Then the exchequer secretary to Treasury seeks to discredit the whistleblower who exposes the deal that will cheat taxpayers of needed revenue and he assures others that he desires to protect the reputations of others and himself.

We are aware of the tenuous positions of whistleblowers who report on the nefarious actions of captured governments and rotten bankers who cheat the public with impunity.  Then there is the media that can be co-opted by government or business to carry out such actions as the discrediting of whistleblowers.  So individual whistleblowers are vulnerable to the corruption and might of the state’s structures.  From government department to government department–Hartnett, Gauke, Haydon and Morse–few honest men can be found.

Only the whistleblower, Osita Mba, is shown in all his bravery while the cowards that cheat in government and in banking show themselves as undignified and base, the creations by the alchemy of Goldman Sachs.

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs is Ring-Fenced From Criminal Prosecution.

Goldman Sachs must face fraud claims from insurer – New York court – The West Australian


NEW YORK (Reuters) – Goldman Sachs Group Inc must face fraud claims brought by CIFG Assurance North America over insurance it provided for $275 million (177 million pounds) in mortgage-backed securities, a New York state appeals court ruled on Tuesday.

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CIFG claimed in a 2011 lawsuit that the investment bank fraudulently induced it to provide insurance for a portfolio of more than 6,000 subprime residential mortgages by concealing the shoddy quality of the loans.

A trial judge in Manhattan threw out that claim last year, ruling that CIFG would have uncovered the alleged misrepresentations had it performed proper due diligence.

The New York State Supreme Court‘s Appellate Division, First Department, reversed on Tuesday, finding that CIFG had done enough by having an outside consultant analyze the loans.

“There is a question of fact as to whether plaintiff reasonably relied on defendants’ representations,” a five-judge panel wrote in a unanimous decision.

Michael DuVally, a spokesman for Goldman, declined to comment.

The ruling also revived fraud claims against M&T Bank Corp , one of several originators that sold the loans to Goldman. An M&T Bank spokesman did not immediately respond to a request for comment.

The decision could have implications for similar lawsuits brought by monoline insurers against banks, including one filed by Assured Guaranty Ltd against JPMorgan Chase & Co in 2012.

In that case, JPMorgan had asked a New York judge to dismiss similar fraud claims but agreed to hold off until the First Department ruled in the CIFG case.

Other insurers, including Ambac Financial Group Inc and MBIA Inc , have also filed lawsuits claiming banks misled them into insuring toxic mortgage-backed securities before the housing market meltdown by concealing major risk in the underlying loans.

Tuesday’s ruling also let stand breach of contract claims against Goldman.

CIFG is seeking compensation for claims as well as buy-backs of defective loans.

“We’re very pleased with the decision, and we look forward to proving our case,” Michael Vogel, a lawyer for CIFG, said.

The case is CIFG Assurance North America, Inc., v. Goldman Sachs & Co., New York State Supreme Court, New York County, No. 652286/2011.

(Reporting by Joseph Ax; editing by Noeleen Walder and Alden Bentley)

via Goldman Sachs must face fraud claims from insurer – New York court – The West Australian.

via Goldman Sachs must face fraud claims from insurer – New York court – The West Australian.

The Goldman Diary


We are led to believe that the world is in recession but these bailed out bankers are still able to make huge profits and pay themselves vast sums of money.

You know a long time ago well maybe not so long the old Imperial powers looted their colonies without showing a drop of remorse.

Today the Imperial powers are dormant and have been overhauled by the financial institutions. These dragons of fiscal matters are today’s new colonists. These people care not a whit for countries or international borders they will rob and plunder wherever the treasure lies.

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Goldman Sachs’s Jon Corzine –8th April

The FBI report on the MF Global collapse that was sent to the bankruptcy trustee paints a damning picture of former Goldman Sachs chief executive, Jon Corzine.  Investors in MF Global lost $2.1 billion–a sure indication that these high-priced executives do not live up to their hype.  Why Corzine is not in jail is not a mystery but certainly alludes to fraud that goes unpunished in a corrupt justice system.

Corzine’s spokesman prefers to blame everyone else except the guy in charge.  Meanwhile, the wreckage of the economy and the bad faith in justice continues apace.

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THURSDAY, APRIL 11, 2013

How Many Ways Does Goldman Sachs Get Preferential Treatment?

Let me count one of those ways:  Goldman Sachs (accidentally) obtained preferential treatment when it received the Federal Reserve FOMC minutes, which give important information regarding intended monetary policy, before the public did.The comments at the end of the following article show how little credence the “accidental” leak has with the public some of whom consider information leaks a feature of the system rather than a bug in the system.  There is a lot of cynicism from the public regarding all banks and their relationship with the Federal Reserve.
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The Guardian, Friday 12 April 2013 19.49 BST

Goldman Sachs paid its chief executive, Lloyd Blankfein, $21m last year – and granted him a further $5m in bonus shares in January.

The Wall Street bank handed Blankfein $13.3m (£8.7m) in restricted shares and a $5.7m cash bonus on top of his $2m annual salary last year.

His total 2012 pay was $9m more than in 2011, and the highest since the $68m he received in 2007, before the financial crisis struck.

The payout, disclosed in a filing with the US regulator the Securities and Exchange Commission (SEC), makes Blankfein, 58, the world’s best paid banker.

On top of his annual pay Goldman granted him long-term incentive plan (LTIP) shares worth an additional $5m at today’s share price. But he will have to meet performance targets in order to collect the full amount, and the value of the shares could go up or down.

Blankfein’s top four lieutenants collected a total of $72m in annual pay, bonuses and share options last year.

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More Preferential Treatment for Goldman Sachs
Posted: 12 Apr 2013 09:20 AM PDT
When Goldman Sachs became a commercial bank in 2008 (in order to save itself from insolvency), it apparently came under commercial bank regulations. However, in 2010 Goldman bought warehouses of aluminum products as an investment even though “[u]nder US banking regulations, banks are barred from owning the physical commodity assets that they operate.”

But, of course, the Federal Reserve gave Goldman 5 years of grace (until autumn 2013) while it decides if Goldman is exempt from the rules. This is another instance of the two-tier system of justice in the US–one for banks and the other for the rest of us.

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Payments

Goldman Sachs bankers to reward themselves a staggering £8.3billion in bonuses- jan 2013
The bank will be first to unveil its rewards – an average of £250,000 a person
Increase, up from £230,000 last year, comes as families are struggling to make ends meet
Calls for restraint by politicians, who used taxpayers’ money to bail banks out, have fallen on deaf ears

Goldman Sachs paid its chief executive, Lloyd Blankfein, $21m last year – and granted him a further $5m in bonus shares in January. -April 2013

The Wall Street bank handed Blankfein $13.3m (£8.7m) in restricted shares and a $5.7m cash bonus on top of his $2m annual salary last year.

His total 2012 pay was $9m more than in 2011, and the highest since the $68m he received in 2007, before the financial crisis struck.

Cash bonanza anticipated for Goldmans workers as firm sets aside £2.75bn pay and bonus pot- April 3013

Bankers at Goldman Sachs – including its 6,000 London staff – are in line for another bumper year as results this week are forecast to show average pay packets of £85,000 for the first quarter alone.

==============================================================================

Goldman Sachs is Caught In Its Own Web of Deceit 18 Apr 2013 
A federal judge, District Judge Susan Wigenton, has upheld Prudential’s $270 million lawsuit against Goldman for fraudulent RMBS it sold to them.

A little bit of justice goes a long way when complete justice is denied.

=================================================================================

What Is Goldman Sachs Really Like?
19 Apr 2013
First, Goldman Sachs has paid its latest fine for RMBS fraud to Stichting Pensioenfonds ABP and according to the Bloomberg’s article:

“ABP sued New York-based Goldman Sachs in New York State Supreme Court in January 2012. The company alleged that it purchased certain mortgage-backed securities in reliance on false and misleading statements and that the securities were riskier than had been represented, backed by mortgage loansworth significantly less than had been represented.”
. . . . . . . . . . . . . . . . .

Second, Professor Jeffrey Sachs calls the banks what they really are in an audio/video recoding posted at Market-Ticker. He is talking by telephone to a conference of academics discussing ending the fractional reserve lending system in order to repair the financial system by taking liquidity away from bankers who treat their banks as casinos for gambling. He calls the bankers cynical and full of conflicts of interest. Here is a partial transcript of what he thinks the banking system is:

“Prima facie, [it is] criminal behavior. It’s financial fraud on a very large [scale]; there’s a tremendous amount of insider trading…. [John] “Paulson worked together with Goldman Sachs to defraud massively many European banks which bought the toxic mortgages that Paulson had put together…. Goldman ended up paying a small fine and the chair of Goldman, of course, continued in his position and continued [to attend] White house State dinners.”

Other descriptors that Sachs uses for bankers and banking include:
“lawlessness,” “collapse of decency,” “a lot of them are crooks,” “nefarious behavior,”

Goldman Sachs should not be a commercial banking unit. That [it is] is sad.

The banking system is dysfunctional; there is a crisis of values that is extremely deep. Legal structures and regulators need reform. “I regard the moral environment of Wall Street people as pathological.” They bear no responsibility to others; they are tough, greedy, aggressive and out of control and have “gamed the system.” Regulators and the White House remain docile. Politics is corrupt to the core.

==============================================================

Fraud*
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

Goldman Sachs Says: TINA (There Is No Alternative)


Goldman Sachs Says: TINA (There Is No Alternative)

When Blankfein says that the UK has no other choice but to stay with its austerity plan or it will (here’s the threat):  “face a negative reaction from global investors,” he knows that Goldman Sachs will benefit from austerity at the expense of the rest of the public:

Austerity gives Goldman opportunities to privatize and financialize the economy further;

Austerity allows Goldman to continue to be a parasite sucking on the lifeblood of the economy;

Austerity will guarantee more bailouts when Goldman takes big risks and fails;

Austerity will keep the 1% wealthy and the wealth accumulation for the rich will continue apace;

Austerity keeps wealth within the financial sector where Goldman can enjoy it;

Austerity guarantees Goldman’s “rentier” status, i.e., it collects unearned money via debt;

Austerity is financial warfare against labor, against industry and against the government;

Austerity will increase the role of the bank and lead to an increase of power and wealth over the rest of society while citizens suffer from low wages, low or no pensions, high debt and fewer entitlements.

You, too, Goldman Sachs, Have Committed Frauds


 

You, too, Goldman Sachs, Have Committed Frauds

Mr. Nye Lavalle is a consumer advocate who has written a paper entitled “You Can’t Trust the Mortgage Paper Trail” that carefully looks at all the frauds committed by mortgage servicers (such as Goldman’s Litton), banks and others that committed fraud leading directly to The Great Recession we are now in.It is difficult to be empathic and honest when the banks, the justice system and the government conspire together to cover up fraud in the mortgage servicing and securitization systems. Lavalle is one of those persons who insists on pursuing the truth to the best of his ability as shown in his report gong back to frauds beginning in the 1990s.

Goldman Sachs committed accounting control fraud and forgery through robo-signing and only ever had to pay a small fine for its gigantic frauds.

Mr. Nye Lavalle is a consumer advocate who has written a paper entitled “You Can’t Trust the Mortgage Paper Trail” that carefully looks at all the frauds committed by mortgage servicers (such as Goldman’s Litton), banks and others that committed fraud leading directly to The Great Recession we are now in.It is difficult to be empathic and honest when the banks, the justice system and the government conspire together to cover up fraud in the mortgage servicing and securitization systems.  Lavalle is one of those persons who insists on pursuing the truth to the best of his ability as shown in his report gong back to frauds beginning in the 1990s.

Goldman Sachs committed accounting control fraud and forgery through robo-signing and only ever had to pay a small fine for its gigantic frauds.

Below are some excerpts from his report:

You Can’t Trust the Mortgage Paper Trail (TM) By Nye Lavalle – Scribd.com
. . . .
As such, to protect our nation, taxpayers, borrowers, and investors each alleged lender must be required to prove their noteownership with their accounting and financial books and records, not fabricated and forged paperwork and dubious servicing records that only allege accounting for a borrower’s payments.

Due to the Sarbanes-Oxley Act that was created after the ENRON debacle, this should be a relatively simple process. Journal entries in the lender’s financial, accounting, and general ledger systems showing a borrower’s note as an asset and the asset being recognized and de-recognized from the alleged lender’s books should be able to be produced with the push of a few keys and clicks of a mouse. (page 4)

 . . . .
Issues such as who has really suffered a loss and what is the amount of that actual loss must be addressed in each proceeding?Is there really a holder in due course or can a borrower sue the current alleged lender for the torts of the originators and securitizers. By now, the questions for judges and lawyers should not be whether frauds, bad, and unlawful acts were committed for we all know they were. The questions that should be posed to each court is how was the borrower damaged; who was responsible for the damages; who are or were the ultimate lenders that actually suffered any loss; how much is their actual loss; and how do we adjust the equities for the borrower and the true and rightful owner of the debt? Simply, who can a borrower sue and settle with?  (page 4 and 5)
. . . .
On pages 27–28 of this report, I described several robo-signing practices including the:

•“filing of fraudulent and false affidavits by predatory lenders claiming that theyown the note when in fact they are only the servicer;”
•“filing of fraudulent and false affidavits by predatory lenders claiming that theylost the note when in fact they never had control of the document;”
• “filing of fraudulent and false affidavits by predatory lenders claiming anindebtedness that is not owed;”
• “filing of fraudulent and false affidavits by predatory lenders claiming amountsowed that are non-recoverable from the borrower;”
• “filing of fraudulent and false affidavits by predatory lenders claiming control and custody of documents that are not in their control and custody;”
• “filing of fraudulent and false affidavits that claim to support knowledge of  facts not known by the affiant;”
• “supporting motions for summary judgment with fraudulent and false affidavits;”
• “using corporate dummies as corporate reps that are trained to avoid questioning and obstruct justice;” and “witness tampering.” (page 9 and 10)
. . . .
I also provided Merrill Lynch, Ocwen, Fairbanks Capital, Citigroup, and Litton LoanServicing with my reports. As for Ocwen, I attended an annual meeting where I was theonly outside shareholder in attendance in a conference room with the entire board andCEO and chairman present where I presented questions and noticed the board of myfindings. Years later, the general counsel for Ocwen would write me to inform me that there was nothing wrong with Ocwen’s practice of “surrogate signing” in front of notaries attesting to the signature of Scott Anderson. (page 15)
. . . .
My investigation and research over the last 20-years into the servicing, securitization, document custody, and foreclosure practices of both commercial and residential mortgage servicers reveals a variety of motives designed to confuse borrowers, lawyers,courts, and regulators about note ownership. These motives include:
• Concealing that the current and/or prior bank/lender is/was cooking their books;
• Concealing accounting schemes, frauds, and abuses from borrowers, shareholders,and regulators;
• Concealing that the securitizations were shams and were in reality not true sales, but financing of receivables subjecting the notes to the reach of federal bankruptcy trustees;
• Concealing real owners of foreclosed properties in downtrodden neighborhoods to prevent payment of property taxes and fines to local and state municipalities;
• Avoiding local transfer and state intangibles taxes and recording fees on transfers and assignments of mortgages and notes;
• Concealing double and multiple pledges of the same promissory note;
• Concealing broken chains of title;
• Concealing pledges of the note to other banks, private lenders, and even Federal Home Loan Banks and the Federal Reserve for other borrowings and advances; (etc., on page 42 ff.)
. . . .
Robo-signing is a merely a “symptom” of a much larger cancer (fraud). Since the cancer (i.e. foreclosure, securitization and accounting fraud) is so widespread, mere “testing” via a “temperature” is not sufficient to diagnose the extent of the disease and determine the appropriate treatment. If you find cancer in one part of the body or system, you must conduct additional tests and scans to see if the cancer has spread and if successfully treated, conduct continual testing to insure it has not returned

Goldman’s Big Guns Fire Dud in Defense of Megabanks


108280_600

The six very large U.S. bank holding companies — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup (C) Inc., Wells Fargo & Co. (WFC), Goldman Sachs (GS) Group Inc. and Morgan Stanley (MS) — share a pressing intellectual problem: They need to explain why they should be allowed to continue with their dangerous business model.

So far their justifications have been weak, and the latest analysis on this topic from Goldman Sachs may even help make the case for breaking up the financial institutions and making them safer.

egislative proposals from two senators, Democrat Sherrod Brown of Ohio and Republican David Vitter of Louisiana, have grabbed attention and could move the consensus against the modern megabanks. Under intense pressure from Democratic Senator Elizabeth Warren of Massachusetts, Federal Reserve Chairman Ben S. Bernanke conceded recently that the U.S. still has a problem with financial institutions that are seen as too big to fail. Pressed by Republican Senator Chuck Grassley of Iowa, among others, Attorney General Eric Holder is sticking to his story that these companies are too big to prosecute. Cyprus offers another vivid reminder of what happens when banks (S5FINL) become too big to save.

Goldman Report

In this context, it is no surprise to see the financial sector wheel out its own intellectual big guns. A frisson no doubt rippled through the financial-lobbying community last week with the release of a report from Goldman Sachs’s equity research team, “Brown-Vitter bill: The impact of potential new capital rules.” This is the A-team at bat, presumably with clearance from the highest levels of management.

Yet instead of providing any kind of rebuttal to the proposals in Brown-Vitter, the report may strengthen the case for breaking up the six megabanks, while also requiring that they and any successors protect themselves with more equity relative to levels of debt. Read the report with five main points in mind.

First, notice the lack of sophistication about bank capital itself. The authors write of banks being required to “hold” capital, as if it were on the asset side of the balance sheet. They go on to construct a mechanistic link that implies that “holding” capital prevents lending.

Banks don’t hold capital. The proposals are concerned with the liability side of the balance sheet — specifically, the extent to which banks fund themselves with debt relative to equity (a synonym for capital in this context). Higher capital requirements push companies to increase their relative reliance on equity funding, thus increasing their ability to absorb losses without becoming distressed or failing. If the transition is properly handled, there is no reason that more equity funding would translate into lower lending.

Second, the Goldman Sachs analysts seem completely unaware of the recent book by Anat Admati and Martin Hellwig, “The Bankers’ New Clothes,” in which those authors — who are top finance professors — debunk the way many bank representatives (including the authors of the Goldman Sachs note) look at issues around capital.

More equity relative to debt on a bank’s balance sheet means that equity and debt become safer: The bigger buffer against losses helps both.

Goldman Sachs makes much of the implications for return on equity, without mentioning any adjustment for risk. Bankers are generally paid based on return on equity without proper risk adjustment. Naturally, they like a great deal of leverage, but the reasoning they use to justify this is fallacious (see Chapter 8 in Admati and Hellwig).

Safety Measures

Admati and Hellwig make the broader case that we can run our system much more safely. Goldman Sachs made a big mistake by refusing to take them on directly.

The bank is correct in its assessment that bank equity is higher than it was before the 2007-08 crisis, but this is the natural reaction to a near-death experience. Over the cycle, big banks will again become more leveraged (meaning they will have less equity relative to debt). As a result, Goldman is far too optimistic in its projection of the capital levels that will be needed when the next crisis hits. Current — and likely future – – levels of equity capital are insufficient for our intensely interconnected financial system.

Contrast Goldman Sachs’s note with this excellent speech last week by Tom Hoenig, vice chairman at the Federal Deposit Insurance Corp., on the illusion of the Basel III rules in particular and the right way to think about capital more generally.

Third, while the Goldman Sachs analysts get some points for stating the obvious about Brown-Vitter — “In our view such a bill would incent the largest banks to break up” — they fail to explain why this would be a bad thing.

They do, however, have a line about how banks could only be broken up along existing divisional lines, though they fail to make clear why they believe this is the case or how it would be the best deal for shareholders. Also, once the too-big-to-fail subsidies fade, these new companies would probably be smaller than projected by Goldman Sachs. Less complex, easier to govern and more transparent to supervisors sounds pretty attractive, to officials and investors. (Any client can request a copy of Goldman’s May 2010 report, “U.S. Banks: Regulation.” See Page 32, where it explains how JPMorgan and Bank of America would be worth more if broken up. Richard Ramsden is the lead author of both this report and the one cited above.)

Fourth, the analysts express concern that these smaller companies will be less diversified and therefore more fragile than the megabanks. Delusions of diversification are precisely what brought us to the brink of catastrophe in September 2008. Have the smartest people on Wall Street really learned so little?

Diversification Imperative

From a social perspective, we want a system in which some companies can fail while others prosper, more like the conditions under which hedge funds operate. For macroeconomic purposes, we want diversity within the financial sector, not diversification within Citigroup (which has come close to failing three times since 1982 precisely because of this misperception).

Fifth, on supposed progress to eliminate too big to fail, Goldman’s arguments fall under the heading of what Winston Churchill called terminological inexactitude. The Orderly Liquidation Authority under the Dodd-Frank financial reform law won’t work for complex cross-border banks, such as Goldman, because there is no cross-border resolution authority. Living wills have so far proved to be a joke, and annual stress tests show every sign of becoming a meaningless ritual that undermines serious supervision.

What will move forward the debate? Will it be another money-laundering scandal, another disaster in the European financial system, or further revelations about the London Whale and Libor?

Or will it be thoughtful people sitting down to evaluate the best in-depth arguments for both sides? If it’s Admati and Hellwig v. Goldman Sachs in the court of informed public opinion, reformers win in a landslide.

(Simon Johnson, a professor at the MIT Sloan School of Management as well as a senior fellow at the Peterson Institute for International Economics, is co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.” The opinions expressed are his own.)

To contact the writer of this article: Simon Johnson at sjohnson@mit.edu.

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net.

via Goldman’s Big Guns Fire Dud in Defense of Megabanks – Bloomberg.

via Goldman’s Big Guns Fire Dud in Defense of Megabanks – Bloomberg.

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