Daily Financial CRISIS Capsule: “Government” Sachs Or Goldman Sacked?
April 19th, 2010 - by: danny
OTHER FINANCIAL VIEWS
NakedCapitalism.com Goldman Sacked?
The Goldman fraud charge is obviously huge news.
The Connecticut Attorney general wants to file criminal charges. And New York might not be far behind.
Germany and other European nations and companies might also sue.
ProPublica points out that other major banks did the same thing as Goldman. Yves Smith points to one example:
The Wall Street Journal reports that Dutch bank Rabobank has filed a suit alleging that Merrill Lynch engaged in the same type of behavior as Goldman did with John Paulson, namely, devising a CDO on behalf of a hedge fund who was using it to take a short position, and not disclosing that fact to investors in the deal. [More here →]
ZeroHedge.com:Yesterday Germany, Today UK, Tomorrow The World: Goldman’s Response To Lawsuits By Everyone – Q1 Stub Bonuses!
As expected, the line of people preparing to sue Goldman is now longer than the posers who bought the iPad on launch day. Reuters reports that British Prime Minister Gordon Brown, who himself has been in hot water over his much lamented decision to sell UK’s gold despite protests from the BOE and likely under the guidance of Goldman and JPM, wants an investigation into the Goldman affair by the FSA, and is saying that impacted UK banks will be considering legal action. Furthermore, GB slammed Goldman after the TimesOnline reported that Goldman will pay $5.6 billion in bonuses for just three months work, including 600 million pounds for London-based staff. Among other things, the ratings-strapped politician, who as recently as ten years ago was doing the bidding precisely of Goldman and its cronies when dumping the gold stash, accused the bank of “moral bankruptcy.” We assume is referring to Chapter 11. Of course, that would imply that Brown’s hypocrisy should be sufficient for immediate Chapter 7 liquidation proceedings. [More here →]
BaselineScenario.com: John Paulson Needs A Good Lawyer by Simon Johnson
Of all the reactions so far to various dimensions of Goldman fraudulent securities “Fab” scandal, one stands out. On Bill Maher’s show, Friday night, I argued that John Paulson — the investor who helped design the CDO at the heart of the affair — should face serious legal consequences.
On the show, David Remnick of the New Yorker pointed out that Paulson has not been indicted. And since then numerous people have argued that Paulson did nothing wrong — rather that the fault purely lies with Goldman for not disclosing fully to investors who had designed the CDO.
But this is to mistake the nature of the crime here — and also to misread the legal strategy of the SEC. [More here →]
WallStreetPit.com: Take Away Their Charter
“.. the Obama administration should immediately revoke Goldman’s bank charter. Even if the firm is completely cleared of illegal activities, it is not a bank. There is no justification for provision of deposit insurance for a firm that specializes in betting against its clients. Its business model is at best based on deception, if not outright fraud. It serves no useful purpose; it does not do God’s work. Government should also relieve itself of all Goldman alumni – no administration that is full of Goldman’s people can retain the trust of the American public. President Obama should start his house cleaning with the Treasury department.” [More here →]
TheBigPicture.com: QUESTIONS SURROUNDING THE LITIGATION
Just some of the questions posed:
1. Was this a one off at GS, or are there other CDOs that were sold via Fraud and Misrepresentation?
2. How endemic is this practice on the Street? Did other big derivative underwriters – Merrill, Morgan, Lehman, Deutsche, etc. – engage in similar (alleged) fraudulent practices when they were constructing and marketing these derivatives?
3. Who brought the issue to the SEC’s attention? Was it ACA, who lost 900 million dollars? Or was it other investors in the pool?
4. What does this say about the White House and Wall Street? Are the gloves off? Has the public outcry now reached the point where we might see vigorous prosecution of Wall Street wrongdoing? [More here →]
LATimes.com: “Government” Sachs
Goldman Sachs Group Inc. was once a darling in Washington, handing out millions of dollars in campaign contributions and supplying so many executives for key federal positions — including two recent Treasury secretaries — that some people called the firm “Government Sachs.” [More here →]
CommonDreams.org: Hedge Fund Managers Invest on Capitol Hill by Manu Raju
John Paulson, one of the world’s richest hedge fund managers, has not been shy about spreading his wealth to Senate campaign coffers – or to the chairman of the committee that could directly affect his bottom line. Paulson held a ritzy $1,000-per-head fundraiser for Senate Banking Committee Chairman Chris Dodd last year – and then maxed out his donation with $4,800 more for the Connecticut Democrat’s now-aborted reelection run.
Paulson is hardly alone.
According to a review of Federal Election Commission records, the nation’s 10 richest hedge fund managers have dumped nearly $1 million into campaign accounts over the past several years – with much of it going to senators who’ve given them a friendly reception on Capitol Hill. [More here →]
Aaron Krowne of Ml-implode.com writes:
Hey look, former SFDPA companies are using insurance fraud to push more junk loans into FHA.
InformationClearingHouse.com: High Frequency Trading High-tech Highway Robbery By Mike Whitney
The Securities and Exchange Commission (SEC) knows that High-Frequency Trading (HFT) manipulates the market and bilks investors out of tens of billions of dollars every year. But SEC chairman Mary Schapiro refuses to step in and take action.
RELATED:
• 12.23.2009 — NYT: Banks Bundled Bad Debt, Bet Against It and Won
• 11.14.2009 — TheDailyBeast.com: Can Goldman Find God? by Jacki Zehner
Lloyd Blankfein says Goldman Sachs is “doing God’s work.” Is it? A former Goldman partner, a minister, and seminary president have a biblically ambitious plan to help the company do just that. [More here →]
• 04.02.2009 –AIG Bonus Bombshell Raises New Questions About Goldman Sachs
• 07-17-09 Matt Taibbi Talks Goldman Sachs, Regulation based on his story from July of 2009, which is referenced above: THE GREAT AMERICAN BUBBLE MACHINE
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About Danny Schechter
Danny Schechter is an Emmy award winning journalist, television producer and independent filmmaker who also writes, blogs and speaks about media issues.
His latest film is PLUNDER The Crime Of Our Time.
Mr. Schechter is NOT the Godfather of Soul.
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