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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, August 13, 2013

Goldman Sachs and GSAMP Trust 2007 NC1

This blog has discussed other Goldman Sachs products (that contributed to the meltdown of 2008) in the GSAMP Trust categories of 2006 and 2007A DealBook article by Peter Eavis describes another Goldman product called GSAMP Trust 2007 NC1:
In One Bundle of Mortgages, the Subprime Crisis Reverberates
By Peter Eavis - DealBook
. . . .

Yet the financial crisis still reverberates for many others, in large part because of the insidious reach of the financial products that Wall Street created. Subprime securities still pose a significant legal risk to the firms that packaged them, and they use up capital that could be deployed elsewhere in the economy.
This is the story of one of those bonds, GSAMP Trust 2007 NC1.

The name is the sort of gobbledygook that is common in the bond market, but it tells a story. The “GS” is derived from Goldman Sachs. The Wall Street firm didn’t actually make mortgages to subprime borrowers that were in the deal. Instead, Goldman bought them from a lender called New Century, the “NC” in the title.

It was New Century that lent to Wendy Fillmore, when she and her husband wanted to buy their house in Las Vegas in 2006. The home cost $276,000. New Century provided two loans, one for a $221,000 loan and a second mortgage for $53,000. Data for the Goldman deal shows that it contains the Fillmores’ larger loan.

Ms. Fillmore’s husband was, and still is, an information technology specialist, and at the time she was working as a transcriber. She recalls the surprise she felt when New Century agreed to the make the mortgages.

Read more of the details here

Monday, August 12, 2013

What Business does Goldman Sachs Have to be Warehousing Aluminum?

Goldman Sachs is facing lawsuits for the way it is warehousing aluminum.  The CFTC has sent out subpoenas and the DOJ is investigating a metals warehousing firm according to Market Place Business

Goldman, of course, can explain everything.
Lawsuits claim banks involved in aluminum price fixing
Interview with Sabri Ben-Achour - Market Place Business

Reuters is reporting that the U.S. Commodity Futures Trading Commission has subpoenaed at least one metals warehousing firm, and the Department of Justice is probing another. Separately, aluminum manufacturers have launched class action lawsuits against the London Metals Exchange.

The concern is whether warehouse companies -- many of them owned by Wall Street Banks and trading firms like Goldman Sachs or JP Morgan Chase -- are manipulating prices by controlling how much metal enters and leaves the market.

Coca Cola and beer producers have made these accusations for several years.

The banks and firms that own warehouses only store the metal, they do not own it.

But two points to consider:

Warehouses do control how fast or how slow the metal can be released. Under (recently relaxed) rules of the London Metal Exchange, only 3,000 tons per day of metal are allowed out of a warehouse per day. It can take a year for that metal to leave the warehouse.

Two, some of the owners of metals in warehouses are hedge funds or other speculators who have a vested interest in affecting prices.

Read the article here

Sunday, August 11, 2013

Goldman Sachs Prospers When the Financial System is Corrupt

Kaufman:  Why has no banker gone to jail?
By Ted Kaufman - delawareonline
. . . .
 The New York Times summed up the reaction of observers, saying “Still, some critics have questioned why the agency chose to make Mr. Tourre – a midlevel employee who was 28 at the time of the mortgage deal – the face of the crisis. Not one executive at Lehman Brothers, which filed Wall Street’s biggest bankruptcy ever at the height of the crisis, was charged with wrongdoing.”

Exactly. The questions I have been asking for years remain. Why has not one of the bank executives who were running the show even been indicted? Why has no one gone to jail?

In his closing arguments Mr. Martens came up with at least one possible answer to those questions. Mr. Touree, he said, was living in “a Goldman Sachs land of make-believe,” where deceiving investors is not fraudulent.

We have allowed Wall Street banks to operate in that land of make-believe for years. Over and over again, they get away with slap-on-the-wrist money penalties, fines often so small they seem to be regarded as a cost of doing business.

Read the whole article here

Saturday, August 10, 2013

Goldman Sachs Seeks Retribution

The legal jujitsu of Goldman Sachs
By Felix Salmon - Reuters
. . . .
The big difference between the two cases is that while Tourre was defended by Goldman Sachs, Aleynikov was prosecuted by them: Lewis leaves the reader in no doubt that the decision to prosecute, along with all the supporting arguments, while nominally taken by the FBI, was essentially made by Goldman Sachs itself. The irony is painful: the government, acting against Goldman Sachs, could only manage a civil prosecution. But Goldman Sachs, acting through the government, managed to secure itself a highly-dubious criminal prosecution, complete with an eight-year prison sentence.

Lewis doesn’t delve too deeply into the jurisprudence here. But it’s obvious that the case would never have been brought without Goldman’s aggressive attempt to cause as much personal destruction as possible to Aleynikov — and it’s also obvious that Aleynikov neither meant nor caused any harm to Goldman whatsoever.

Goldman has consistently attempted to paint Aleynikov as a stealer of valuable secrets — but if anything in Goldman’s high-frequency trading code was valuable, it was Goldman’s trading strategies, and Aleynikov had zero interest in those. What’s more, he wasn’t interested in the code itself, a big buggy mess which he was happy to leave behind: his new job was to build an entirely new system from scratch, in a completely different computer language to that used at Goldman. All that Aleynikov did, in substance, was to email to himself a bunch of files which included open-source code he had managed to find, over the years, online. He thought it might come in handy, one day, but it never really did: most of the files, when they were seized, were unopened.

The story of Aleynikov’s prosecution is a depressing one — one of the experts Lewis assembled to judge the coder’s claims was literally nauseated by the bank’s actions. The story is pretty simple: there are smart HFT shops, and then there’s Goldman Sachs. 

Read the entire article here

Friday, August 9, 2013

Goldman Sachs Now a Big Commodities Dealer

How The Financial Crisis Helped Turn Big Banks Into Global Commodities Kings
By Linette Lopez - Business Insider

Wall Street's biggest banks are currently under the gun for their massive role in global commodities markets. But what many don't realize is the vast expansion of that role was, in large part, an unintended consequence of the chaos of the financial crisis.

Should we be shocked that the ramifications of the financial crises are still reverberating years later with unexpected repercussions? Not in the slightest.

Without the financial crisis, Wall Street's legally designated, FDIC insured, bank holding companies (FHCs) would not have had the opportunity to build massive portfolios of oil, natural gas, metals and more. They would not have been able to buy the things that transport and house those commodities either.

Right now, bankers might be daydreaming of an alternate reality where they didn't build the huge, now tenuous, commodities portfolios which are drawing increased scrutiny.

Such scrutiny as the July 20th The New York Times story that accused Goldman Sachs of using its aluminum warehouses to manipulate the price of the commodity — an assertion the bank emphatically denies — costing consumers billions.

Read the whole article here

Wednesday, August 7, 2013

Why Does Goldman Sachs Need Its Own Economist?

Goldman Sachs has its own economist on staff to advise the executives.  Jan Hatzius joined Goldman in 1997 and became Chief Markets Economist when he succeeded William Dudley in 2005.  (Dudley went on to become President of the Federal Reserve Bank of New York.)  What is the job of an economist who works at Goldman Sachs?  Does he try to see the whole economic picture while focussing on the bank's role?  Does he consult with the CEO about products like subprime mortgages and CDOs and CDSs that Goldman created in order to pump up profits?

Does a Goldman economist worry about anything more than the small economy which surrounds Goldman--the one that can focus only on how to make more and more profits?

Goldman's economist is the public face of Goldman and his role seems to be defined very narrowly around what Goldman does.  Thus, the best that an economist at Goldman can do is suggest (in 2005) that there is a problem with housing in the economy without mentioning the role that Goldman played in using subprime mortgage derivatives.

Goldman was not the least bit chagrined by using the mortgage market to commit fraud--a fraud that made all the executives at Goldman very, very rich in the process.

But when you read what Hatzius has to say about the financial crisis, his gaze is so narrow that we can hardly perceive the reality.

Hatzius understands financial sectoral balances but then does not use this knowledge to apply it to the need for government deficits in a recession.  He speaks in economic generalities and in Goldman specifics.

James Galbraith understands the world in which such economists live and sees economists as refusing to see any criminality in the economy.  There are "conditions that generate epidemics of financial fraud " according to Galbraith.  It is certain that Hatzius would never be able to see fraud because of where he works.

The following excerpt describes where Hatzius, the economist, would fear to tread.
Who Are These Economists, Anyway?
By James Galbraith - NEA
. . . .
In the present crisis, the vapor trails of fraud and corruption are everywhere: from the terms of the original mortgages, to the appraisals of the houses on which they were based, to the ratings of the securities issued against those mortgages, to gross negligence of the regulators, to the notion that the risks could be laid off by credit default swaps, a substitute for insurance that lacked the critical ingredient of a traditional insurance policy, namely loss reserves. None of this was foreseen by mainstream economists, who generally find crime a topic beneath their dignity. In unraveling all this now, it is worth remembering that the resolution of the savings and loan scandal saw over a thousand industry insiders convicted and imprisoned.  Plainly, the intersection of economics and criminology remains a vital field for research going forward.
. . . .
This remains the essential problem. As I have documented—and only in part—there is a considerable, rich, promising body of economics, theory and evidence, entirely suited to the study of the real economy and its enormous problems. This work is significant in ways in which the entire corpus of mainstream economics—including recent fashions like the new “behavioral economics”—simply is not. But where is it inside the economics profession?  Essentially, nowhere.
It is therefore pointless to continue with conversations centered on the conventional economics. The urgent need is instead to expand the academic space and the public visibility of ongoing work that is of actual value when faced with the many deep problems of economic life in our time. It is to make possible careers in those areas, and for people with those perspectives, that have been proven worthy by events. This is—obviously—not a matter to be entrusted to the economics departments themselves. It is an imperative, instead, for university administrators,for funding agencies, for foundations, and for students and perhaps their parents. The point is not to argue endlessly with Tweedledum and Tweedledee. The point is to move past them toward the garden that must be out there, that in fact is out there, somewhere.
Read the paper here

Tuesday, August 6, 2013

Goldman Sachs Produces "Fictitious Capital"

The financialization of the economy proceeds apace.  The banks committed mortgage fraud in order to create large profits for their companies that in turn gave the executives large bonuses and salaries.  The banks continue to lobby for regulations that they perceive are necessary for their continued profit-making.  So when Goldman Sachs realizes that it has "to have riskier credit derivatives trades take place in a separately capitalized unit so that any trading failure there would not have access to the institution's commercial bank division, which is backed by insured deposits and taxpayers through the Federal Reserve's discount window" (Donald D. Orol, MarketWatch), why, it obtains two more years to comply!

That is the nature of an economy that is based on the success of the financial system at the cost of manufacturing and other productive companies.  Goldman's capital is as Hudson defines it.  These same credit default swaps that Goldman continues to use were responsible for the huge taxpayer bailouts of 2008 and for the continuing gutting of industry in the economy.

Goldman is a past master at the sterile operation of  "making money from money."

Michael Hudson describes the way financialization has subsumed industry so that the banks and huge corporations now run the insane asylum.
From Marx to Goldman Sachs:  The Fictions of Fictitious Capital
By Michael Hudson - His Blog
. . . .
This self-expanding growth of financial claims, Marx wrote, consists of “imaginary” and “fictitious” capital inasmuch as it cannot be realized over time. When fictitious financial gains are obliged to confront the impossibility of paying off the exponential growth in debt claims – that is, when scheduled debt service exceeds the ability to pay – breaks in the chain of payments cause crises. “The greater portion of the banking capital is, therefore, purely fictitious and consists of certificates of indebtedness (bills of exchange), government securities (which represent spent capital), and stocks (claims on future yields of production).” [10]

A point arrives at which bankers and investors recognize that no society’s productive powers can long support the growth of interest-bearing debt at compound rates. Seeing that the pretense must end, they call in their loans and foreclose on the property of debtors, forcing the sale of property under crisis conditions as the financial system collapses in a convulsion of bankruptcy.
. . . .
  The last few decades have seen the banking and financial sector evolve beyond what Marx or any other 19th-century writer imagined. Corporate raiding, financial fraud, credit default swaps and other derivatives have led to de-industrialization and enormous taxpayer bailouts. And in the political sphere, finance has become the great defender of deregulating monopolies and “freeing” land rent and asset-price gains from taxation, translating its economic power and campaign contributions into the political power to capture control of public financial regulation.
. . . .
Growing independently from tangible production, financial claims for payment represent a financial overhead that eats into industrial profit and cash flow. Today’s financial engineering aims not at industrial engineering to increase output or cut the costs of production, but at the disembodied M-M’ – making money from money itself in a sterile “zero-sum” transfer payment.

As matters have turned out, the expansion of finance capital has taken the form mainly of what Marx called “usury capital”: mortgage lending, personal and credit card loans, government bond financing for war deficits, and debt-leveraged gambling. The development of such credit has added new terms to modern language: “financialization,” debt leveraging (or “gearing” as they say in Britain), corporate raiding, “shareholder activists,” junk bonds, government bailouts and “socialization of risk,” – as well as the “junk economics” that rationalizes debt-leveraged asset-price inflation as “wealth creation” Alan Greenspan-style.

Read the whole article here

Monday, August 5, 2013

Goldman Sachs Profits From Bad Economic Times

Goldman Sachs profits mightily from the so-called "stimulus" of Quantitative Easing (QE) by the Federal Reserve, but Goldman is not interested in helping to create economic growth through lending because it can prosper very nicely in a period of debt-deflation "by riding [the trend].  If they [the banks] withhold loans, prices will fall even further and the asserts can be bought later for even less.  You might call this shorting the entire economic system."

As we know, Goldman always seems to know that right time to make a profit by shorting, first by shorting the housing market and then by shorting the whole economy.
Quantitative easing isn't magic
It is unrealistic to expect central banks like the Fed and the ECB to solve our deep economic problems 
by James K. Galbraith - The Guardian
. . . .
Quantitative easing, the third tranche of which was announced in the US last week (QE3), is just a fancy phrase for buying bonds, notably mortgage-backed-securities, in which operation the Federal Reserve takes assets from the banks and gives them cash. This raises the bond price and lowers the yield. It also tends to boost stock prices – very nice for people who own stock – and it can spur mortgage refinancing, improving the cashflow of solvent homeowners.

And the effect on the economy of all this is? Mostly indirect and quite small. People don't generally spend capital gains as windfalls. Saving on mortgage debt helps to support spending but some of it goes to paying down other debts. People who are already underwater on their mortgages can't refinance anyway, and are not affected. Yes, there is some effect. But powerful stimulus, this is not.
. . . .
As Hyman Minsky used to say: banks are not moneylenders! Banks don't lend reserves, and they don't need reserves in order to lend. Banks create money by lending. They need a client willing to borrow, a project worth lending to, and collateral to protect against risk. If these are lacking, no amount of reserves will turn the trick. And especially not when the government is willing to pay interest on their reserves: the truest form of welfare, income for doing nothing.
. . . .
What we need instead, today, is a candid review of what central banks cannot do. Yes, they can usually forestall panic. Yes, for better or worse they can keep zombie banks alive. No, they cannot bring on economic recovery or solve any of our deeper economic problems, from unemployment and foreclosures in America to unemployment and economic collapse in Greece and elsewhere. The sooner we stop thinking of central bankers as wizards and magicians, the better. 

Read the entire article here

Sunday, August 4, 2013

Goldman Sachs was a Lender in the Great Subprime Meltdown

William K. Black writes wonderfully concise and eminently readable articles on all aspects of the financial crisis of 2008.  In the article excerpted below, he tackles the crisis from the point of view of appraisers who were pressured by lenders (read:  "Goldman Sachs") to artificially create higher prices on properties that homeowners sought to own.

The appraisers played a crucial role in the financial crisis--both in bringing attention to the fraudulent requests from lenders and also in becoming captured by the fraud perpetrated by the lenders.  (The comments about the article are worth reading also.)
Two Sentences that Explain the Crisis and How Easy it Was to Avoid
By William K. Black - New Economic Perspectives

Everyone should read and understand the implications of these two sentences from the 2011 report of the Financial Crisis Inquiry Commission (FCIC).

“From 2000 to 2007, [appraisers] ultimately delivered to Washington officials a petition; signed by 11,000 appraisers…it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” (FCIC 2011: 18).

Those two sentences tell us more about the crisis’ cause, and how easy it was to prevent, than all the books published about the crisis – combined.  Here are ten key implications.

Please read the rest of the article here 

Saturday, August 3, 2013

Goldman Sachs is Still "Too Big to Fail"

We are aware that Goldman Sachs isToo Big To Fail just as its CEO, Lloyd Blankfein, is Too Big To Jail.

As Simon Johnson states in Bloomberg:  "The problem of too-big-to-fail banks is alive and well, and looms over our financial future."  Johnson says that the Federal Reserve (which regulates the TBTF banks) has a mostly positive view of the financial system as it now stands.

However, the banking system enjoys the implied subsidy of having a government guarantee which gives Wall Street banks like Goldman Sachs an unfair advantage (see page 6 of Statement of Committee on Financial Services.)
Fumbling Through the Fog Around Too Big To Fail
By Simon Johnson - Bloomberg View
. . . .
‘Safety Net’

As Tom Hoenig, the current FDIC vice chairman, put it at the hearing: “Short-term depositors and creditors continue to look to governments to assure repayment rather than to the strength of the firms’ balance sheets and capital. As a result, these companies are able to borrow more at lower costs than they otherwise could, and thus they are able increase their leverage far beyond what the market would otherwise permit. Their relative lower cost of capital also enables them to price their products more favorably than firms outside of the safety net can do.”

Unfortunately, the Fed’s Board of Governors seems unable to state the problem as clearly. And without the Fed Board, there is very little chance of progress within the existing Dodd-Frank framework.
In the absence of further legislative instruction, reform is stuck. The regulators could make use of their existing powers to do more, but they won’t. The last three years have taught us this.

Very large financial companies are likely to be rescued in future crises; the credit markets take this into effect when providing funding.

Fisher strongly advises that further steps be taken to make the banks simple enough and small enough to fail. He has some practical suggestions, such as limiting the official safety net to traditional commercial banking, while forcing everyone engaged in lending to higher risk trading or investment banking to acknowledge they have no downside protection from the government. 

See the rest of the article here
Read the report of the Committee on Financial Services here

Friday, August 2, 2013

Economic Financialization by Goldman Sachs

Michael Hudson is an economist who clearly explains how the financial crisis developed, who was responsible for bringing it to us and what the future may hold because of it.  He explains where the fruits of our labor have gone (to the financial sector) and how living standards have declined for the majority of citizens while the wealthy elite have become even wealthier.

The financialized economy is characterized by increased indebtedness as wages decrease in value or stagnate while citizens strive to buy the goods they need.

Hudson traces the evolution of this financialization which runs concomitantly with de-industrialization of the economy.

This blog has traced in minute detail the role that Goldman Sachs has played (and is still playing) in making the American economy dependent on financialization rather than industry.  Goldman hopes to maintain its TBTF stature by being, all at the same time, an investment bank, a hedge fund, a commercial bank and an owner of commodities in the market.

Productivity, The Miracle of Compound Interest, and Poverty
By Michael Hudson - New Economic Perspectives

. . . .
In 1982, bank lobbyist Alan Greenspan was appointed to head a U.S. commission to shift Social Security out of the public budget (where it was funded largely by progressive taxation) and fund it by user fees that fall on employees and employers. The aim was to privatize it Chilean style. Wall Street’s dream is to turn wage set-asides over to money managers to buy stocks and create a stock market boom (and in the end, siphon off commissions and push contributors into high-risk bets on the losing side of the deal with large financial institutions, Goldman Sachs style). In effect, Mr. Greenspan’s position was that Social Security should not be a public service. It should be a user fee, so that prospective retirees would pay for it in advance. Their savings were to be lent to the government to enable the Treasury to slash taxes on the higher income and wealth brackets. So the effect was to reverse the long trend toward progressive taxation.

The upshot of the Greenspan tax increases (only on labor, not on wealthy earners) was to create a budget surplus for the Social Security Administration, enabling the government to cut taxes on real estate, on finance, and for the rich in general. Capital gains taxes in particular were cut in half. And real estate investors (absentee owners, not homeowners) were allowed to pretend that the value of their holdings were depreciating rather than rising in price, by junk accounting based on junk economics.
The end game came when the Bush and Obama administrations announced, in effect, “We’re broke. So now we have to balance the budget by cutting social spending and raising the Social Security tax further. We’ve cut taxes on the rich by so much that the workers have not paid enough to cover this give-away, not to mention fighting the Bush-Cheney war in Iraq and the Obama Administration’s war in Afghanistan – or for that matter, the class war against labour.

Under Pension Fund Capitalism, employees are encouraged to think of themselves as capitalists in miniature – and provide for their retirement by employee stock ownership programs rather than saving up their wages themselves or having pensions financed on a pay-as-you-go basis out of future production. The idea is to make money from money (MàM’), not by producing commodities (M-C-M’). In America, half the employee stock ownership plans (ESOPs) have gone bankrupt, mainly by being grabbed by the corporate employers. Corporate raiders borrow credit from bankers and bond investors to fund management buyouts. The plan is to buy out stockholders, pledging the earnings to pay out as interest. And not only earnings; they loot the employee pension plans. George Akerlof won the 20– Nobel Prize for describing this. But novelists have recognized it more than economists. It was Balzac who said that behind every great family fortune is a great theft, often long forgotten to be sure.

Today’s economy is based on theft under the euphemism of “free enterprise.” It’s sometimes called “socialism for the rich” because they receive most government subsidy. But it’s not the kind of socialism that people talked about a hundred years ago. It is a travesty of social democracy and socialism. In a word, it’s oligarchy. But we’re living in an Orwellian world. No party calls themselves fascist today, or even anti-labor. They call themselves social democracy. But it’s the opposite of what social democracy meant in the 19th and early 20th century.

Read the entire article here

Thursday, August 1, 2013

The Final (?) Decision About Goldman Sachs Guy, Jon Corzine

There are some articles that we read that make us see red.  Once such piece is by Kaja Whitehouse (New York Post) called Corzine off the crook.  The title says it all:  he is "off the hook" and should be "off[ed] as crook."  Why is Corzine "off the hook"?

Well, if he were found criminally responsible for fraud, stealing customers' account and lying under oath, it would necessarily mean that there are a number of other CEOs, including Lloyd Blankfein and Jamie Dimon and a host of other CEOs, who have also committed criminal fraud.  We can't have that now, can we?  If nothing else is achieved, the Department of Justice and the FBI are at least consistent in being blind to fraud committed right under their noses.

Oh, sad day for Justice who is shown as not only blind, but also deaf and dumb.  People of the World--this is what corruption looks like;  this is what a kleptocracy does; this is how an oligarchy works.
Corzine off the crook[sic]
By Kaja Whitehouse - New York Post

Federal investigators have found no evidence that the disgraced Wall Street titan broke the law.

“After 18 months of investigation, the criminal probe into Jon Corzine is now being dropped,” a person with knowledge of the probe told The Post.

“There is no evidence of criminal wrongdoing,” this person said.

The Justice Department’s decision to drop the case is sure to come as a relief to Corzine, who has been widely blamed for MFG’s bankruptcy — as well as the misuse of some $1.6 billion in customers’ funds. 
Read the entire article here

Who Decided There Are No Crimes in MF Global Collapse?
By masaccio - firedoglake
The New York Post reports that there will be no criminal charges against Jon Corzine over the billion dollars of customer money used to keep MF Global afloat for a few extra days. The Post quotes “federal investigators” as saying there is no evidence of lawbreaking. Some of the evidence is detailed in the complaint filed by the CFTC recently, which you can read here.

The complaint says what happened to the money. It says that Edith O’Brien took the money out of customer accounts, knowing that this was unlawful. ¶ 62(d) For months, these federal investigators were saying that the big problem was foul-ups and mistakes in a mad rush in the back office. That is now inoperative.

The Complaint explains that Corzine knew that the firm was “undersegregated”, meaning it was using for its own business money belonging to customers that the law requires to be segregated. The Complaint says that on Thursday, October 27, 2011 Corzine and O’Brien received documents showing that the firm was undersegregated. ¶ 63(f)

Read the whole article here

Sunday, June 30, 2013

More on Goldman Sachs's Guy, Jon Corzine

Below is further information on the case against Jon Corzine; however, shouldn't Corzine be facing criminal charges (under Sarbanes-Oxley) for stealing money from customers' accounts and for signing off on the company's financial reports ?  "Failure" is not the word I would use:  it is stealing and lying about stealing that should be prosecuted.  MF Global didn't "fail;" the executives in charge acted illegally and probably criminally.
CFTC charges Corzine, Assistant treasurer in MF Global failure
By Reuters
. . . .
 The Commodity Futures Trading Commission said on Thursday it will seek in a civil case to ban Corzine and former Assistant Treasurer Edith O'Brien from the industry, and also seek penalties against the two.
. . . .
But another lawyer, asking to speak anonymously, said there was little in the complaint that pointed to fraud, reducing chances of any criminal charges.

But U.S. Representative Michael Grimm, a New York Republican, urged prosecutors to bring criminal charges against Corzine, saying there was growing proof that he had committed perjury in his testimony before lawmakers.

The CFTC also sought an order for Corzine and O'Brien to disgorge any salaries or bonuses, or trading profits, that they had received from any unlawful actions.

Read the whole article here

Saturday, June 29, 2013

Letter #5 to Goldman Sachs's Abby Joseph Cohen

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 fifth letter is from page 96 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 #5:
Eternally Indebted


    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 Eastwood
Bartlesville, 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.[1] In 2001 she was named one of the 30 most powerful women in America by Ladies Home Journal.  (from Wikipedia)
You can buy the book here 

Friday, June 28, 2013

Man Sitting in Front of Goldman Sachs

Human beings are amazing.  Below is an article about a man, Max Zahn, who has chosen
to meditate in front of Goldman Sachs's headquarters.

"They also serve who only stand and wait."--John Milton
A 'sitting man' at Goldman Sachs
By Nathan Schneider - Waging NonViolence

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.

Read the rest of the article here

Thursday, June 27, 2013

Really! Jon Corzine, a Former Goldman Sachs Guy, is Being Charged?

Readers have seen just how little justice is being meted out for fraud at financial institutions in the U.S. since 2008.  Jon Corzine is being highlighted again for charges over the collapse of MF Global.  We feel pretty certain that if anything comes of these actions, Corzine will do what all the plutocratic elite do--pay the fine, do not admit any wrongdoing and carry on!
U.S. Civil Charges Against Corzine Are Seen as Near
By Ben Protess - DealBook (The New York Times)
Federal regulators are poised to sue Jon S. Corzine over the collapse of MF Global and the brokerage firm’s misuse of customer money during its final days, a blowup that rattled Wall Street and cast a spotlight on Mr. Corzine, the former New Jersey governor who ran the firm until its bankruptcy in 2011.

The Commodity Futures Trading Commission, the federal agency that regulated MF Global, plans to approve the lawsuit as soon as this week, according to law enforcement officials with knowledge of the case. In a rare move against a Wall Street executive, the agency has informed Mr. Corzine’s lawyers that it aims to file the civil case without offering him the opportunity to settle, setting up a legal battle that could drag on for years.

Without directly linking Mr. Corzine to the disappearance of more than $1 billion in customer money, the trading commission will probably blame the chief executive for failing to prevent the breach at a lower rung of the firm, the law enforcement officials said. If found liable, he could face millions of dollars in fines and possibly a ban from trading commodities, jeopardizing his future on Wall Street.

Read the rest of the article here 

Wednesday, June 26, 2013

Goldman Sachs Loves Those Derivatives Revenues!

It is very important to note what Gary Gensler is trying to accomplish as chair of the CFTC just as he is being forced to leave his position.  As Yves says, "The proximate reason for his ouster was that he was refusing to accede to the demands of banks and foreign regulators over implementation of Dodd Frank rules on swaps."

But that very regulatory requirement is exactly what is needed to reform the financial system where it is most vulnerable.  It is very refreshing to see an ex-Goldman Sachs guy performing a service for the public.  The banks' resistance is intense because their profits could be reduced.  Greed again!

Gensler Staring Down Administration and Banks on Derivative Reform
Article by George Bailey (member of Occupy the SEC) posted and commented on by Yves Smith - Naked Capitalism
. . . .
PriceWaterhouse Coopers prepared an explainer of Dodd Frank cross border derivatives rules conflicts, for anyone looking for an accessable [sic] layman’s version of the issues involved in the current state of play.
Preparedness scheduling was predicated on the assumption that Gensler would extend the relief period. It may already be too late implement the operational changes necessary to comply with the regulations. There is a lot of anxiety on Wall Street, in DC, and in Europe.

Gensler hasn’t given any indication he intends to back down. Industry, regulators and government policy makers all expected this to have the rules finalized months ago. Instead it’s turned into a multi dimensional game of chicken. His fellow commissioners are in open revolt so concensus [sic]  within the CFTC appears to be unlikely. Absent an extension, everyone will be out of compliance and in uncharted legal territory come July 12. Gensler has, so far, refused to put an extension on the agenda for a vote. He controls the agenda as Chairman.

The Europeans are so incensed they took to scolding the CFTC Chairman in an op-ed by Michel Barnier, in Bloomberg. Dennis Kelleher of Better Markets did a fine job if [sic] debunking this extraordinary display of pique.

Read the whole article here

Tuesday, June 25, 2013

Letter #4 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 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:
An Opportunity

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,

OWS Refinancing

Monday, June 24, 2013

Letter #3 to Goldman Sachs's Edith W. Cooper

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

Greetings Edith,

    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,

Hilary Grant
Los Osos, CA 93402

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

You can buy the book here

Sunday, June 23, 2013

Satire of Goldman Sachs

Just consider what is happening in the financial system recently:  Gary Gensler is being removed from the CFTC in July because he is becoming successful in trying to regulate derivatives; and the banks are consolidating their power for further use in "operational and analytical big data, content management and delivery, mobile and social infrastructure, user data management and data hub."

Look at the satire below and notice how it points out the ugly truth of the matter:

Financial Sector Thinks It's About Ready to Ruin World Again
Satire by Onion

“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.”

Read the rest of the satire here