Ralph Nader: Hillary the Hawk Flies Again

"We came, we saw, he died!". Hillaty laughing on Gaddafi's death

Πηγή: Litchfield County Times
By Ralph Nader
Aug 21 2014

“Hillary works for Goldman Sachs and likes war, otherwise I like Hillary,” a former Bill Clinton aide told me sardonically. First, he was referring to her cushy relationships with top Wall Street barons and her $200,000 speeches with the criminal enterprise known as Goldman Sachs, which played a part in crashing the U.S. economy in 2008 and burdened taxpayers with costly bailouts. Second, he was calling attention to her war hawkish foreign policy.

Last week, Hillary, The-Hawk emerged once again with comments to The Atlantic attacking Obama for being weak and not having an organized foreign policy. She was calling Obama weak despite his heavy hand in droning, bombing and intervening during his presidency. While Obama is often wrong, he is hardly a pacifist commander. It’s a small wonder that since 2008, Hillary,The-Hawk has been generally described, in the words of the New York Times journalist Mark Landler, “as more hawkish than Mr. Obama.”

In The Atlantic interview, she chided Obama for not more deeply involving the U.S. with the rebels in Syria, who themselves are riven into factions deprived of strong leaders and, with few exceptions, trained fighters. As Mrs. Clinton well knows from her time as Secretary of State, the White House was cautious because of growing Congressional opposition to intervention in Syria. Congress was seeking to determine the best rebel groups to arm and how to prevent this weaponry from falling into the hands of the enemy insurgents.

She grandly told her interviewer,“Great nations need organizing principles, and ‘Don’t do stupid stuff’ is not an organizing principle.” Nonsense. Not plunging into unconstitutional wars could have been a fine “organizing principle.” Instead, she voted for the criminal invasion of Iraq, which boomeranged back into costly chaos and tragedy for the Iraqi people and the American taxpayers.

Moreover, the former Secretary of State ended her undistinguished tenure in 2013 with an unremitting record of militarizing a department that was originally chartered over 200 years ago to be the expression of American diplomacy. As Secretary of State, Hillary Clinton made far more bellicose statements than Secretary of Defense Robert Gates did. Some career Foreign Service Officers found her aggressive language unhelpful, if not downright hazardous to their diplomatic missions.

Such belligerency translated into her pushing both opposed Secretary of Defense Robert Gates and a reluctant President Obama to topple the Libyan dictator, Muammar Gaddafi. The Libyan dictator had given up his dangerous weapons and was re-establishing relations with Western countries and Western oil companies. Mrs. Clinton had no “organizing principle” for the deadly aftermath with warring militias carving up Libya and spilling over into Mali and the resultant, violent disruption in Central Africa. The Libyan assault was Hillary Clinton’s undeclared war — a continuing disaster that shows her touted foreign policy experience as just doing more “stupid stuff.” She displays much ignorance about the quicksand perils for the United States of post-dictatorial vacuums in tribal, sectarian societies.

After criticizing Obama, Mrs. Clinton then issued a statement saying she had called the president to say that she did not intend to attack him and anticipated “hugging it out” with him at a Martha’s Vineyard party. Embracing opportunistically after attacking is less than admirable.

Considering Hillary Clinton’s origins as an anti-Vietnam War youth, how did she end up such a war hawk? Perhaps it is a result of her overweening political ambition and her determination to prevent accusations of being soft on militarism and its imperial Empire because she is a woman.

After her celebrity election as New York’s Senator in 2000, she was given a requested seat on the Senate Armed Services Committee. There, unlike her war-like friend, Republican Senator John McCain, she rarely challenged a boondoggle Pentagon contract; never took on the defense industry’s waste, fraud and abuse; and never saw a redundant or unneeded weapons system (often criticized by retired generals and admirals) that she did not like.

The vaunted military-industrial complex, which President Eisenhower warned about, got the message. Hillary Clinton was one of them.

Energetically waging peace was not on Secretary of State Clinton’s agenda. She would rather talk about military might and deployment in one geographic area after another. At the U.S. Naval Academy in 2012, Generalissma Clinton gave a speech about pivoting to East Asia with “force posture” otherwise known as “force projection” (one of her favorite phrases) of U.S. naval ships, planes and positioned troops in countries neighboring China.

Of course, China’s response was to increase its military budget and project its own military might. The world’s super-power should not be addicted to continuous provocations that produce unintended consequences.

As she goes around the country, with an expanded publically funded Secret Service corps to promote the private sales of her book, “Hard Choices,” Hillary Clinton needs to ponder what, if anything, she as a presidential candidate has to offer a war-weary, corporate-dominated American people. As a former member of the board of directors of Walmart, Hillary Clinton waited several years before coming out this April in support for a restored minimum wage for 30 million American workers (a majority of whom are women).

This delay is not surprising considering Hillary Clinton spends her time in the splendors of the wealthy classes and the Wall Street crowd, when she isn’t pulling down huge speech fees pandering to giant trade association conventions. This creates distance between her and the hard-pressed experiences of the masses, doesn’t it.

Goldman Wins Again As European Union Court Rules To Keep ECB Involvement In Greek Debt Fudging A Secret

Πηγή: Zero Hedge
By Tyler Durden
Nov 29 2012

Three years ago, a hard fought landmark FOIA lawsuit was won by the great Bloomberg reporter, the late Mark Pittman, in which the Fed was forced to disclose a plethora of previously secret bailout information, which in turn spurred the movement to "audit the Fed" and include a variety of largely watered down provisions in the Frank-Dodd bill. 

This victory came despite extensive objections by the Fed and the threat that the case may even escalate to the highly politicized Supreme Court, which lately has demonstrated conclusively that not only is justice not blind, but goes to the highest ideological bidder. 

Moments ago, Europe just learned that when it comes to secrecy of its supreme monetary leaders, in this case all originating from Goldman Sachs and defending data highly sensitive to the same Goldman Sachs, the European central bank's secrecy is not only matched by that of the Fed, but even more engrained in the "judicial" system of the Eurozone, after the European Union General Court in Luxembourg just announced that the European Central Bank will be allowed to refuse access to secret files showing how Greece used derivatives to hide its debt. Why? 

Simple: recall that it was Goldman Sachs who was the primary "advisor" on a decade worth of FX swaps-related deals which allowed Greece to outright lie about both its fiscal deficit and its total debt levels, and that it was a Goldman alum who became head of the same Greek debt office just before the country imploded. And certainly the ECB was involved and knew very all about the Greek behind the scenes shennanigans. And who happens to be head of the ECB? Why yet another former Goldman worker, of course. Mario Draghi.

And with yet another ex-Goldmanite taking over the BOE, any hopes of bank transparency in the UK have just been crushed as well. Goldman is taking over the world one central bank, and Supreme Court at a time, and leaving not a trace behind, even as it manages to create ever more debt out of thin air to keep the population occupied chasing trinkets, gadgets, and other unneeded stuff, while the real wealth plunder by Goldman et al enters its terminal phase.

From Bloomberg:

“Disclosure of those documents would have undermined the protection of the public interest so far as concerns the economic policy of the EU and Greece,” the European Union General Court in Luxembourg said today, rejecting a challenge by Bloomberg News. The news organization initially sought the documents in August 2010.

 The same excuse always and forever: the common man should not know what is truly going on behind the scenes, as the truth would "undermine protection of the public interest" - just leave it to the smart men in tweed suits to fret about the details; it is best if the general ignorant herd remains in the dark, or else its "protection" may be impaired...

Today’s ruling by three judges denies European taxpayers, on the hook for the cost of Greece’s 240 billion-euro ($311.5 billion) bailout, the opportunity to see whether EU officials knew of irregularities in Greece’s public accounts before they became public in 2009.
The decision underscores the lack of accountability at the ECB as it expands its powers to become the region’s lender of last resort and chief banking regulator. The central bank, which puts greater limits on its disclosures about its decision making than its British and U.S. equivalents, is under pressure from policy makers including governing council member Erkki Liikanen to boost transparency. ECB President Mario Draghi last month defended the Frankfurt-based bank, telling reporters it was already a “very transparent” institution.
Bloomberg News sought two internal papers drafted for the central bank’s six-member Executive Board. The first document is entitled “The impact on government deficit and debt from off- market swaps: the Greek case.” The second reviews Titlos Plc, a structure that allowed National Bank of Greece SA (ETE), the country’s biggest lender, to borrow from the ECB by creating collateral.

And just to complete the farce, perhaps the Fed will tell us how its own investigation launched in February of 2010(!) looking at Goldman's behind the scenes involvement in faking the Greek debt numbers for a decade, is going. Recall: "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Bernanke said in testimony before the Senate Banking Committee. It is now nearly three years later and still nothing...

Naturally, we won't hold our breath.

Sadly, little can be added here: Goldman wins again, and justice for the common man is long dead.

Speculating Banks Profit as World's Poorest Go Hungry

Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just “getting by,” says Oxfam.

Πηγή: Common Dreams
Sept 3 2012

Goldman Sachs, Morgan Stanley among those accused of reaping financial harvest from growing food crisis.

Reports over the weekend saw some of the world's most powerful financial institutions accused of profiteering on the backs of the world's poorest people and those most vulnerable to the wild price fluctuations caused by over-rampant speculation on the price of food commodities like wheat, soy beans, and corn.

Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just “getting by,” says Oxfam."Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley," reported the UK's Independent, citing research from the World Development Movement.

Christine Haigh, policy and campaigns officer at the WDM and one of the analysts behind the research, said the behavior of the banks "risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."

As droughts have devastated grain crops in major agricultural strongholds like the US and India this year, experts warn of a food crisis taking shape across the globe. The accusations of 'profiteering' by groups like WDM and Oxfam International, however, transcend the price changes due to external conditions like drought or farmers who use commodity indexes to protect the price of their crops, and speak to the greed and recklessness of investors who create volatile trading conditions by speculating on the future prices of such commodities with no regard for the harm it does to real people.

"Fragile populations around the world, living on or near the poverty line, will be dragged under by price spikes and volatility," said Oxfam in a recent statement. "Nearly a billion people are already too poor to feed themselves, so any long-term food spike is guaranteed to trap millions more who are now just 'getting by'."

The World Development Movement report estimates that Barclays made as much as $840 million from its "food speculative activities" over the course of 2010 and 2011. Barclays made much more from food speculation in 2010, as the prices of agricultural commodities were rising, and a smaller sum in 2011 as prices fell.

As the Independent reported: "The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach."

Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."

And the Independent adds:

The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.

Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.

Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (£126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.

Why Goldman Sachs, Other Wall Street Titans Are Not Being Prosecuted

Protesters hold signs during a demonstration outside the Goldman Sachs San Francisco headquarters in San Francisco, July 31, 2012.

Πηγή: The Daily Beast
By Peter Schweizer
August 14 2012

The Justice Department's decision not to prosecute Goldman Sachs in a financial-fraud probe is another sign of the cronyism that has kept Attorney General Eric Holder from taking action against other big Wall Street firms, says Peter Schweizer.

On Thursday the Department of Justice announced it will not prosecute Goldman Sachs or any of its employees in a financial-fraud probe.

The news is likely to raise the ire of the political left and right, both of which have highlighted one of the most inconvenient facts of Attorney General Eric Holder’s Justice Department: despite the Obama administration’s promises to clean up Wall Street in the wake of America’s worst financial crisis, there hasnot been a single criminal charge filed by the federal government against any top executive of the elite financial institutions.

Why is that? In a word: cronyism.

Take Goldman Sachs, for example. Thursday’s announcement that there will be no prosecutions should hardly come as a surprise. In 2008, Goldman Sachs employees were among Barack Obama’s top campaign contributors, giving a combined $1,013,091. Eric Holder’s former law firm, Covington & Burling, also counts Goldman Sachs as one of its clients. Furthermore, in April 2011, when the Senate Permanent Subcommittee on Investigations issued a scathing report detailing Goldman’s suspicious Abacus deal, several Goldman executives and their families began flooding Obama campaign coffers with donations, some giving the maximum $35,800.

That’s not to say Holder’s Justice Department hasn’t gone after any financial fraudsters. But the individuals the DOJ’s “Financial Fraud Enforcement Task Force” has placed in its prosecutorial crosshairs seem shockingly small compared with the Wall Street titans the Obama administration promised to bring to justice.

Consider the following small-time operators as listed on the Financial Fraud Enforcement Task Force website:

• “Three Connecticut Women Charged with Overseeing ‘Gifting Tables’ Pyramid Scheme.” Three women in their 50s and 60s were indicted for conspiracy, tax, and wire-fraud charges. “These arrests should send a strong message to all who threaten the financial health of our communities,” one federal agent declared.

• In March, 2012, the DOJ sent a property appraiser in Washington, D.C., to the slammer for 65 months for fraudulently inflated prices in a scheme to “flip” properties. The scheme was a small-time $1 million operation, a sharp contrast with the billions on Wall Street.

• The DOJ’s “get tough” on financial crime strategy included sending two health-care software company executives to the clink for 13 and 15 years.

• A Florida resident was charged and sentenced to 14 months in federal prison for falsifying documents, thereby resulting in the obstruction of an SEC investigation.

• Five people in California were charged with bid-rigging foreclosure auctions. The individuals have been charged with violating the Sherman Act and could face up to 10 years in jail.

• Federal officials went after 10 people in Las Vegas because they tried to “fraudulently gain control of condominium homeowners’ associations in the Las Vegas area so that the HAOs would direct business to a certain law firm and construction company.”

• The owner of a Miami company got 46 months in prison for creating fake loan applications.

• Four people in Tacoma, Wash., were indicted for conspiracy that caused a small bank to fail. Their crime: making false statements on loan applications and to HUD.

To be sure, financial fraud of any kind is wrong and should be prosecuted. But locking up “pygmies” is hardly the kind of financial-fraud crackdown Americans expected in the wake of the largest financial crisis in U.S. history. Increasingly, there appear to be two sets of rules: one for the average citizen, and another for the connected cronies who rule the inside game.

That could be changing, as critiques of Eric Holder’s lack of financial prosecutions have now come from the political left and right; indeed, battling cronyism may represent one of the rare points of common ground in today’s fractious political environment. As progressive Richard Eskow of the Huffington Post recently wrote: “More and more Washington insiders are asking a question that was considered off-limits in the nation's capital just a few months ago: Who, exactly, is Attorney General Eric Holder representing? As scandal after scandal erupts on Wall Street, involving everything from global lending manipulation to cocaine and prostitution, more and more people are worrying about Holder's seeming inaction—or worse—in the face of mounting evidence.”

Will bipartisan outrage boost the decibels in D.C. loud enough for Holder to hear and heed? We’ll see. He’s got at least three months to get moving.

Peter Schweizer is the president of the Government Accountability Institute and the William J. Casey Fellow at the Hoover Institution at Stanford University. In 2008-09 he served as a consultant to the White House Office of Presidential Speechwriting and he is a former consultant to NBC News. He has written for The New York Times, The Wall Street Journal, Los Angeles Times, USA Today, National Review, Foreign Affairs, and elsewhere. His new book is Throw Them All Out.

Levin: Decision not to prosecute Goldman Sachs shows weakness

Chairman of the Senate Permanent Subcommittee on Investigations, Sen. Carl Levin, speaks during a hearing in July.

Πηγή: Chicago Tribune
By Reuters
August 10 2012

The U.S. Justice Department's decision not to prosecute Goldman Sachs Group Inc for its subprime mortgage trades resulted from either "weak laws or weak enforcement," the senator who asked for a criminal investigation of the firm said on Friday.

A day after the department announced its decision, Democratic Senator Carl Levin reiterated in a written statement the criticisms he lodged against Goldman beginning more than two years ago. He called the firm's actions "deceptive and immoral."

Goldman said it did nothing wrong in its marketing of mortgage securities, including one known as Abacus that was the subject of televised hearings before Levin's investigative subcommittee in 2010. The hearings focused on whether Goldman was wrong to sell products that it disparaged internally.

Levin said he is still convinced Goldman was in the wrong.

"It misled investors by claiming its interests in those securities werem 'aligned' with theirs while at the same time it was betting heavily against those same securities, and therefore against its own clients, to its own substantial profit," he said on Friday.

Goldman settled a related civil investigation by the U.S. Securities and Exchange Commission for $550 million in July 2010 without admitting wrongdoing.

In April 2011, Levin asked for a criminal probe on the day that he and Republican Senator Tom Coburn released a 639-page report on the financial crisis.

The unsigned Justice Department statement on Thursday on its decision not to prosecute said that "the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time."

A Goldman spokesman reacted on Thursday with a brief email: "We are pleased that this matter is behind us."

To critics, the department's decision was another example of the inability of prosecutors to pinpoint blame for a financial crisis that pushed the United States into a severe recession from which the economy is still recovering only slowly.

Levin said the 2010 banking and Wall Street regulation overhaul known as Dodd-Frank is part of a solution if regulators "do not water it down" and "enforce those rules with vigor."

Goldman Sachs: the bank that thought it ruled the world

Finance sector stocks tumbled after Goldman Sachs was accused of fraud

Πηγή: The Telegraph
By Harry Wilson
July 19 2012

'Long-term greedy” was the phrase that Sidney Weinberg, Goldman Sachs’s legendary managing partner from the 1930s to the 1960s, used to describe the American investment bank’s overarching strategy. Such a pious mission statement from a corporate titan would make a modern audience balk. However the phrase neatly encapsulates the way that Goldman Sachs has operated over the past 80 years, a period in which it has risen from being a little-known, slightly scrubby broker to the world’s most profitable, powerful and controversial financial institution.

When Lloyd Blankfein, Goldman Sachs’s current chairman and chief executive, was caught saying last year that the bank was doing “God’s work”, the contrast between Goldman Sachs’s own view of its business and what the rest of the world thought of it was vividly demonstrated.

His comments came just weeks after the firm was memorably described in an article in Rolling Stone magazine as a “vampire squid wrapped around the face of humanity relentlessly jamming its blood funnel into anything that smells like money”. Doing God’s work is the last thing most think Goldman Sachs is up to.

As Philip Pullman writes in his latest book, The Good Man Jesus and the Scoundrel Christ, “As soon as men who believe they’re doing God’s will get hold of power, whether it’s a household or a village or in Jerusalem or in Rome itself, the devil enters into them.”

Last Friday, those who believed that the devil was running the show at Goldman Sachs finally received the news they had been waiting for. America’s Securities and Exchange Commission (SEC) said that it was investigating the bank for misleading investors in so-called collateralised debt obligations, a complex financial product sold by the bank during the boom years of the Noughties.

Goldman Sachs immediately hit back, saying that it would “vigorously” contest the case. However some will have found it hard to hide a feeling of Schadenfreude that at last a bank that at its peak was worth more than $100 billion (£65 billion) was finally being brought to heel.

The story of the bank over the past decade has been one of inexorable rise. In the 1980s Salomon Brothers, now part of the American banking behemoth Citigroup, was the bank to beat on the global stage. In the 1990s a cluster of largely American firms vied for supremacy after the demise of Salomon’s, brought down in part by being found guilty of rigging bond market auctions. The 2000s, however, undoubtedly belonged to Goldman Sachs.

In whichever market observers cared to look at, whether it be share trading, bond trading, corporate advisory or securities underwriting, Goldman Sachs was either at the top or running a close second. Its success was born of a combination of brutally hard work, an undoubted ability to attract the best young minds and that undefinable X-factor that comes from being acknowledged as the best game in town.

“No one ever got fired for hiring Goldman Sachs” is still one of the markets’ mantras. Indeed it has been said that the bank was often hired by companies to advise them only because they were afraid that it might end up working for a rival.

For all its reputation, there has always been at least a hint that some of Goldman Sachs’s success had less to do with its market nous and more to do with its connections. After Lehman Brothers was allowed to file for bankruptcy in September 2008, Goldman Sachs, along with Morgan Stanley, was allowed to convert itself into a bank holding company just weeks later. This gave it access to tens of billions of dollars of government lending. One did not need to be a conspiracy theorist to point out that US Treasury Secretary Henry “Hank” Paulson – the man in charge of the bail-out – was the bank’s former chief executive.

This impression was not helped when Mr Paulson selected Neel Kashkari, a youthful former Goldman Sachs executive, to run the American government’s Troubled Asset Relief Programme, the equivalent of Britain’s Asset Protection Scheme. The move put him in charge of hundreds of billions of dollars of American taxpayers’ money. Again, Goldman Sachs was a beneficiary.

The American authorities’ case against Goldman Sachs prominently features another young Goldman Sachs banker, a French-born 31-year-old called Fabrice Tourre. Mr Tourre, who referred to himself in emails published by the SEC as “the fabulous Fab”, is alleged to have sold a debt product that he knew would fail to a group of investors, mainly large banks, including ABN Amro, now part of Royal Bank of Scotland.

Mr Tourre is alleged to have allowed another Goldman Sachs client, American hedge fund Paulson & Co, to select the complex bonds that were put inside the product. The SEC alleges that Goldman Sachs did this so that Paulson & Co could make money by betting that the bonds would fall in value (Paulson & Co has not been accused of any wrongdoing).

Goldman Sachs’s strong links with hedge funds have always aroused suspicion; however, the bank has argued that it has highly effective internal “Chinese walls”, barriers that stop employees from sharing information that might allow them or a client to trade on insider information.

The significance of the latest allegations is twofold. First, they suggest that Goldman Sachs was favouring one client over another. This is particularly resonant as Paulson & Co was one of the most high-profile success stories of the financial crisis and recently the subject of a best-selling book, The Greatest Trade Ever. The book detailed how Paulson & Co founder John Paulson made billions of dollars shorting the American sub-prime market.

Second, the allegations imply that Goldman Sachs made money from the travails of its own customers. It is often pointed out that the bank makes far more money from trading with its own money than it does from advising its clients. This so-called proprietary trading involves the firm putting billions of dollars of its own capital at risk by buying stakes in assets as diverse as golf courses – the firm was once the largest owner of golf courses in Japan – to oil and ships.

In the case of the sub-prime market, it is now well-known that Goldman Sachs, unlike almost all of its Wall Street rivals, took an early decision around 2006 to begin betting against the American housing market.

The SEC’s allegations suggest that these trades might have involved not just canny positioning by the bank, but actively putting its clients into trades that it knew would lose them money.

What this means for the future of Goldman Sachs is still too early to say. At best, the bank will be one of many financial institutions that become embroiled in a series of investigations relating to this issue – Britain’s own Financial Services Authority is already reported to be starting its own investigation into the matter. Finding safety in numbers would allow Goldman Sachs to argue that it was just doing what everyone else was.

It would be more serious, however, if the SEC’s investigation remained an isolated incident. If this was the case it could mark the beginning of the end for Goldman Sachs, going the same way as other investment banks that sailed too close to the wind and sank. Who now, aside from those with a long memory and an interest in markets, remembers Salomon Brothers or Drexel Burnham Lambert?

As one Goldman Sachs partner, quoted in Charles Ellis’s history of the bank The Partnership, said: “Only looking back could we see the real risk – the risk of arrogance. We didn’t see it then, but it was there and it was growing.

“The firm was at the top. We had always been the best – always the top students and the best athletes and the class leaders. And now we were the best firm – in our self-appraisal. But that was the first step towards arrogance.”

Goldman's secret loan to Greece shows ‘2 sinners' as client unravels

PM Simitis and Papademos (president of the BoG by this time) celebrating the success of Greece's entrance into the eurozone.

Πηγή: The News Tribune
By NICHOLAS DUNBAR AND ELISA MARTINUZZI (Bloomberg)
March 7 2012

LONDON — Greece’s secret loan from Goldman Sachs was a costly mistake from the start.

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

“The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview.

Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University, Alabama’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.

“Like the municipalities, Greece is just another example of a poorly governed client that got taken apart,” said Satyajit Das, a risk consultant and author of “Extreme Money: Masters of the Universe and the Cult of Risk.” “These trades are structured not to be unwound.”

A gain of 600 million euros represents about 12 percent of the $6.35 billion in revenue Goldman Sachs reported for trading and principal investments in 2001, a business segment that includes the bank’s fixed-income, currencies and commodities division, which arranged the trade and posted record sales that year. The unit, then run by Lloyd Blankfein, 57, now the New York-based bank’s chairman and chief executive officer, also went on to post record quarterly revenue the following year.

The Goldman Sachs transaction swapped debt issued by Greece in dollars and yen for euros using a historical exchange rate, a mechanism that implied a reduction in debt, Sardelis said. It also used an off-market interest-rate swap to repay the loan. Those swaps allow counterparties to exchange two forms of interest payment, such as fixed or floating rates, referenced to a notional amount of debt.

The trading costs on the swap rose because the deal had a notional value of more than 15 billion euros, more than the amount of the loan itself, said a former Greek official with knowledge of the transaction who asked not to be identified because the pricing was private. The deal’s size and complexity meant that Goldman Sachs charged proportionately higher trading fees than for deals of a more standard size and structure, he said.

“It looks like an extremely profitable transaction for Goldman,” said Saul Haydon Rowe, a partner in Devon Capital, a London-based firm that advises global investors on derivatives disputes.

Goldman Sachs declined to comment about how much it made on the swaps. Fiona Laffan, a spokeswoman for the firm in London, said the agreements were executed in accordance with guidelines provided by Eurostat, the EU’s statistical agency.

“Greece actually executed the swap transactions to reduce its debt-to-gross-domestic-product ratio because all member states were required by the Maastricht Treaty to show an improvement in their public finances,” Laffan said. “The swaps were one of several techniques that many European governments used to meet the terms of the treaty.”

What Chase & Goldman Sachs did to Greece

The swap had set the currency rate at an artificially low EUR/USD rate (or EUR/JPY rate) to create an upfront payment from Goldman Sachs to Greece and increase future Greek debt payments.

Πηγή: AMERICAblog
By Gaius Publius

Jan 2 2012

I've known about this for a while, and haven't found the right explanation. So thank you Matt Taibbi, from a post that keeps on giving.

I focused on the hubristic, feet-never-touch-the-ground aspect of banker life in this post. Now I want to look at what Taibbi says about Greece.

Greece is most people's designated Tabloid Demon, one of whom no good can be said and all wickedness is assumed — Michael Jackson's doctor, for example, or OctoMom.

(Tabloid Demons are the opposite of Tabloid Saints, those of whom no ill can be said. Any number of cute white actresses with philandering husbands fill that bill. A Tabloid Saint who deals drugs won't get called out; a Tabloid Demon who saves crippled kittens will do so unnoticed.)

Greece is the "known bad actor" in the European drama. What "everyone knows" about Greece is that the government was corrupt, the people lazy and spendy, and by running debt high they destroyed their country. What "everyone knows" is that the undeserving of Greece deserve all the austerity they're getting, and let the rest of the world take note.

Well, in that list of Greece's sins, one statement is actually true — those in positions of power, in the government, were indeed corrupt. And the corrupt are easy targets — and eager partners — of looters.

Enter Jamie Dimon & JP Morgan Chase. Taibbi tells the tale, starting with what Chase did to Jefferson County, Alabama, home of Birmingham (my emphasis throughout):
[Jefferson County] is now in bankruptcy proceedings primarily because Dimon’s bank, Chase, used middlemen to bribe local officials – literally bribe, with cash and watches and new suits – to sign on to a series of onerous interest-rate swap deals that vastly expanded the county’s debt burden. ... Jamie Dimon handed Birmingham, Alabama a Chase credit card and then bribed its local officials to run up a gigantic balance[.] ... As a result, the citizens of Jefferson County will now be making payments to Chase until the end of time.What they did to Birmingham, they did to Greece:
Having seen how well interest-rate swaps worked for Jefferson County, Alabama, Chase “helped” countries like Greece and Italy mask their debt problems for years by selling a similar series of swaps to those governments. The bank then turned around and worked with banks like Goldman, Sachs (who were also major purveyors of those swap deals) to create a thing called the iTraxx SovX Western Europe index, which allowed investors to bet against Greek debt.

In other words, banks like Chase and Goldmanknowingly larded up the nation of Greece with a crippling future debt burden, then turned around andhelped the world bet against Greek debt. ... [D]oes a human being do that deal?

Operations like the Greek swap/short index maneuver were easy money for banks like Goldman and Chase – hell, it’s a no-lose play, like cutting a car’s brake lines and then betting on the driver to crash – but they helped create the monstrous European debt problem that this very minute is threatening to send the entire world economy into collapse, which would result in who knows what horrors.The world of propaganda news — the world of "what everyone knows" (the propagandist's best friend) — won't change because you now know what the bankers did to Greece.

Yes, the government was eagerly corrupted. But an addict needs a seducer, a leech, an enabler, someone to bleed his wallet in trade for his supply. That leech, that predator, is the international branch of the U.S. banking system.

It's the leech that caused the crisis in Greece; and the leech that marketed the evils of one bad addict as the reason the entire continent needs to go on food stamps for a generation or so.

Sweet deal, being a banker. Sort of a racket, wouldn't you say? On some planet, they call it organized crime. On others they call it a public-private partnership.

Either way it's looting.

Goldman advisor defends $2 bln Islamic bond scheme

Πηγή: The Dailiy News Egypt
By  Andrew Torchia / Reuters
Jan 2 2012

DUBAI: An advisor to Goldman Sachs has defended the US bank's $2 billion Islamic bond program against criticism it may contravene religious principles, in a controversy that could affect Western banks' ability to enter the Islamic debt market.

In October, Goldman registered the sukuk program with the Irish Stock Exchange. It set up a Cayman Islands-registered special purpose vehicle, Global Sukuk Co Ltd, to issue a sukuk based on murabaha, a cost-plus-profit arrangement which complies with Islamic law.

Some analysts however have suggested Goldman might use the proceeds of the issue to lend money to clients for interest, which would be against Islamic law, and that the issue might not trade at par value on the Irish exchange, which would also contravene sharia law.

Asim Khan, managing director at Islamic finance advisory firm Dar Al Istithmar, said such speculation was groundless.

"Bulge-bracket banks such as Goldman Sachs can bring to Islamic finance their sophistication and depth of experience in liquidity management and equity/quasi-equity investment, which can take Islamic finance closer to its true ideals, so long as they adhere to the generally accepted sharia principles," Khan said.

"So far there is no basis to speculate otherwise," Khan, whose London- and Dubai-based company advised Goldman on the sukuk, wrote in a column contributed to Reuters. (For the full column, click on).

As the euro zone debt crisis poisoned conventional debt markets last year, several big Western banks considered raising money through Islamic finance, which is based on religious principles and bans the payment of interest and pure monetary speculation. The Arab Gulf, home to billions of dollars of Islamic investment funds, has been relatively untouched by the financial crisis.

HSBC's Middle East unit became the first Western bank to issue a sukuk last May with a $500 million Islamic bond carrying a maturity of five years. French bank Credit Agricole has said it is considering issuing an Islamic bond or creating a wider sukuk program that could lead to several issues.

Unlike HSBC with its HSBC Amanah brand, however, Goldman does not have an established presence in the Islamic banking sector, and its entry into the market has caused controversy.

Mohammed Khnifer, an Islamic finance analyst in Saudi Arabia, wrote that Goldman might use the proceeds of the sukuk to fund conventional banking activities. He suggested the sukuk might trade on the Irish exchange at levels other than par value, which would be impermissible under sharia law, and that the underlying structure of the sukuk might not be murabaha but reverse tawarruq, which has been ruled unacceptable by some Islamic scholars as an effort to hide the use of interest.

In his column, Khan wrote that the prospectus clearly showed the proceeds of the sukuk would not be used to lend money to Goldman clients for interest.

"Goldman Sachs, as an investment bank and as a proprietary commodity trader, has invested billions of dollars in commodities and will use the murabaha commodities in its commodity trading business, which will partly replace the conventional funding with Islamic finance," he wrote.

Khan said the prospectus had informed investors that the sukuk should only be traded at par value, and had warned investors there was not expected to be a secondary market in the instrument.

He argued that the Goldman deal had a legitimate murabaha structure. "One would have to stretch one's imagination a bit too far to label such a vanilla murabaha transaction as a tawarruq," he wrote.

Khan also suggested Goldman's entry into Islamic finance could help the industry overcome obstacles hindering its expansion, including a shortage of tools to help banks manage their liquidity, and a lack of sufficient involvement by institutional funds.

"The benefits of a large investment bank's foray into Islamic banking could be significant," he wrote.

Controversies over the permissibility of financial instruments, which can affect investors' willingness to put money into them, have characterized Islamic finance since it was born in its modern form in the 1970s. A range of scholars and industry bodies set product standards which are sometimes contradictory and act as guidelines rather than firm, enforceable rules.

Goldman has said its sukuk could be denominated in United Arab Emirates dirhams, US dollars, Saudi riyals or Singapore dollars. It has not disclosed a time frame for issuance, but has insisted that Islamic scholars have given the program adequate certification that it complies with sharia principles.

Goldman runs into sukuk hurdle

Πηγή: FT
By Tom Braithwaiteand David Oakley

Dec 15 2011

Goldman Sachs is facing obstacles to the launch of its first Islamic bond, with some experts warning its structure might breach sharia law.

The bank announced in October that it would offer a $2bn sukuk, securities designed to comply with Islamic law forbidding usury, via a Cayman Islands-registered vehicle listed on the Irish Stock Exchange.

The exotic offering would be the first foray into the market for Goldman, which enlisted Dar Al Istithmar Limited, a UK-based Islamic finance consultancy, to advise it on the structure of the sukuk and check its compliance.

But other experts say the offering may flout the rules. Mohammed Khnifer, a Saudi Arabia-based sharia adviser, said there were at least three “flaws” in the structure that he believed would disqualify the offering from sharia compliance.

First, the prospectus suggested that underlying assets used in the sukuk could be sold to a third party; second that the funds raised could be directed to Goldman itself; and third that there was no guarantee the securities would trade at par. Any of those might breach the complex rules required to be compliant.

Lawyers who structure products to comply with Islamic law warn that, whatever the merits to the scholarly debate, investors may be deterred by the doubts. “Goldman can list this programme on the Irish Stock Exchange, but that does not mean they will get the buyers,” said one lawyer who specialises in the field. “They may well find there is not much demand because of the widespread doubts over the issue in the market.”

Goldman said: “We are entirely confident in the certification we received that our programme is in compliance with sharia law.”

Instead of a conventional bond offering, Goldman set up a vehicle in the Cayman Islands that will sell certificates to investors and use the funds to buy commodities. According to the prospectus, Goldman will buy the commodities from the Cayman vehicle with deferred payments. These then flow back to the original certificate holders, aping a bond yield without being pure interest.

Asim Khan, managing director at Dar Al Istithmar, hit back against the doubters, saying: “This particular transaction has been vetted and approved by various scholars [who are] very well known, very well reputed.” He said potential investors were also comfortable with the deal and said the negative commentary was ill-informed.

The niche nature of the sector could be seen as a weakness but increasing populations and oil wealth offer the potential for substantial growth

He said each of the concerns put forward by Mr Khnifer misconstrued the transaction. For example, Goldman’s other investment activities were irrelevant. “I can go to a bar and have an orange juice knowing that the bar is a totally non-sharia compliant entity but the transaction between me and the bar is totally sharia compliant,” said Mr Khan. “I got orange juice and I paid for orange juice.”

He added that Goldman would make use of the commodities and was not just flipping them to the original seller to create the illusion of a sale. And he said that the listing on the Irish Stock Exchange was for regulatory and tax purposes – scholars and potential investors did not anticipate a secondary market.

In its prospectus, Goldman advises that “as with any sharia views, differences in opinion are possible”. It says that its advisers say the certificates can only be traded in the secondary market at par value but investors should “make their own determination as to the future tradeability of the certificates on any secondary market”.

There has been $22.7bn of sukuk debt issued globally so far this year, the most since before the financial crisis, according to Dealogic. Issuance peaked in 2007 when $27.2bn was issued.

Occupy protesters declare Goldman Sachs guilty, get arrested

Πηγή: Heraldonline
By Gianna Palmer

Nov 14 2011

NEW YORK — In the latest round of demonstrations calling for corporate accountability, 16 Occupy Wall Street protesters were arrested in front of the global headquarters of Goldman Sachs in lower Manhattan.

A New York Police Department spokesperson confirmed that nine men and seven women were arrested and charged with disorderly conduct and resisting arrest.

The protest began with a mock trial of the giant investment firm at 10 a.m. in Zuccotti Park, the protesters' base. During "A People's Hearing of Goldman Sachs," a group gathered to hear testimony from people who shared stories of how they were directly affected by Goldman Sachs' influence on financial markets. Civil rights activist and Princeton professor Cornel West also spoke at the panel, as did journalists Chris Hedges and Nomi Prins.

A five-month McClatchy investigation in 2009 revealed how Goldman Sachs peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst.

Shortly before noon, the protesters began to make their way to 200 West St., Goldman's headquarters.

"Banks got bailed out, we got sold out," the protesters chanted as they walked. Some drummed, other held signs. One protester held a piece of cardboard that read simply, "GREED." Another said: "Goldman Sucks."

Police with plastic handcuffs dangling from their belts walked alongside the demonstrators as they marched north on Church Street, past the National September 11 Memorial. The group arrived at the Goldman Sachs building just before 12:30 p.m.

At least 19 police offers stood on the pedestrian walkway watching as protesters blocked the front entrance of the building and delivered their "guilty" verdict. Soon, a white-shirted police officer entered the crowd with a megaphone and asked the protesters to leave. By this time, a small group had sat in a circle on the ground.

"You will be arrested, I repeat, you will be arrested," the officer told the group when they stayed sitting, arms linked.

The majority of people moved to a nearby walkway.

"We stopped listening to orders, when will you?" a man shouted in the direction of the police, who were now gathered around the remaining group, all of whom would be arrested.

Among the first was activist Bill Talen, commonly known as Reverend Billy — an activist actor who was led away in plastic cuffs. The arrests were largely a nonviolent affair, though some protesters struggled as the officers picked them up by their hands and feet.

"First Amendment rights, First Amendment rights," one woman shouted as she was handcuffed and led away to nearby police vans.

By 1 p.m., all of protesters in front of the Goldman Sachs entrance had been arrested. The same white-shirted officer then warned the remaining crowd of protesters that they were obstructing pedestrian and vehicular traffic and would be subject to arrest if they stayed.

The crowd slowly marched away, as a handful of employees in the Goldman Sachs building stood by the windows watching the protesters from several floors up. Police on foot and on motorcycles followed the group back to Zuccotti Park.

"The police as an institution are in a position where they're protecting the real criminals, the people who are responsible for the economic state of the world right now," said Zack Rosen, 22, as he was leaving Goldman Sachs headquarters. Rosen, who was previously arrested in another Occupy Wall Street protest, said he thought the demonstration "went great."

Rajat Gupta faces criminal charges in insider trading scheme

Πηγή: Deccan Herald
Oct 26 2011

Former Goldman Sachs director Rajat Gupta, one of the most prominent Indian-Americans in the country's financial scene, is likely to surrender before authorities here today as prosecutors are expected to file criminal charges against him in a massive insider trading scheme.

A report in the New York Times quoted people briefed on the matter as saying that criminal charges would be filed against Gupta. The report quoted Gary Naftalis, a lawyer for 62-year-old Gupta, who said, "The facts demonstrate that Gupta is an innocent man and that he acted with honesty and integrity."

"The case against Gupta would extend the reach of the government's inquiry into America's most prestigious corporate boardrooms. The charges would also mean a stunning fall from grace of a trusted adviser to political leaders and chief executives of the world’s most celebrated companies," it said.

Gupta was the former director of Goldman Sachs and Procter & Gamble and head of McKinsey & Company. He came under the scanner after prosecutors charged his friend Sri Lanka born hedge fund billionaire Raj Rajaratnam on insider trading charges. Rajaratnam has been sentenced earlier this month to 11 years in prison.

The NYT report said while there is no indication yet that Gupta profited directly from the information he passed to Rajaratnam, securities laws prohibit company insiders from divulging corporate secrets to those who then profit from them.

"The case against Gupta would tie up a major loose end in the long-running investigation of Rajaratnam’s hedge fund, the Galleon Group," the report said. "The legal odyssey leading to charges against Gupta could serve as a case study in law school criminal procedure class."

A native of Kolkata, Gupta had a meteoric rise to corporate success after he graduated from Harvard Business School. He advised business leaders including General Electric's Jeffrey Immelt and Henry Kravis of the private equity firm Kohlberg Kravis Roberts & Company. He had also served as special adviser to the United Nations.

Gupta's name emerged in the insider trading scheme a week before Rajaratnam's trial in March, when the Securities and Exchange Commission filed an administrative proceeding against him. The agency accused Gupta of passing confidential information about Goldman Sachs and Procter & Gamble to Rajaratnam, who then traded on the information and profited from it.

Authorities said Gupta gave Rajaratnam confidential information of Warren Buffett’s five billion dollar investment in Goldman Sachs during the financial crisis. Federal prosecutors had named Gupta a co-conspirator but he was never charged.

During Rajaratnam's trial, Goldman chief executive Lloyd Blankfein testified about Gupta's role on the board and the secrets he was privy to, including earnings details and the bank’s strategic deliberations, the report said.

Gupta fought the S.E.C.'s civil action, saying that the proceeding denied him of his constitutional right to a jury trial and treated him differently than the other Rajaratnam-related defendants.

The SEC charges against Gupta were dropped in August, but the regulatory authority said it still has the right to bring an action in federal court. SEC is expected to file a new civil case against Gupta.

At Rajaratnam's trial, the government had played a recorded conversation between Gupta and Rajaratnam in July 2008 during which Gupta had divulged that Goldman was considering a purchase of either Wachovia or American International Group.

Two of the most incriminating calls played in court pertained to tips that the government said had come from Gupta. In one call played for the jury, Rajaratnam told a colleague, "I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose USD 2 per share."

In the other, he said to a trader, "I got a call saying something good is going to happen to Goldman." The SEC's original case provided evidence that could be used at trial against Gupta, including his phone records of September 23, 2008 when the Goldman board had met via telephone to consider Buffett's usd 5 billion investment in the financial giant.

"Immediately after disconnecting from the board call, Gupta called Rajaratnam from the same line," the SEC filing says. A minute later, Galleon funds bought more than 175,000 shares of Goldman just before the market closed, making a USD 900,000 profit when the deal was announced.

Around the time of his retirement in 2007, Gupta and Rajaratnam helped start private equity firm New Silk Route focused on investments in India. Gupta periodically visited Rajaratnam’s hedge fund Galleon in Midtown Manhattan.

"The two would order Indian or Chinese takeout and kibitz in Rajaratnam's office," the NYT report said. Gupta became an investor in Galleon’s hedge funds.

Is the SEC Covering Up Wall Street Crimes?

Πηγή: RollingStone
By MATT TAIBBI

AUGUST 17, 2011

A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals.

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records – "including case files relating to preliminary investigations" – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or "Matters Under Inquiry" – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission's internal website. "After you have closed a MUI that has not become an investigation," the site advised staffers, "you should dispose of any documents obtained in connection with the MUI."

Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.

The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission's records, the SEC has been destroying records of preliminary investigations since at least 1993. After he alerted NARA to the problem, Flynn reports, senior staff at the SEC scrambled to hide the commission's improprieties.

As a federally protected whistle-blower, Flynn is not permitted to speak to the press. But in evidence he presented to the SEC's inspector general and three congressional committees earlier this summer, the 13-year veteran of the agency paints a startling picture of a federal police force that has effectively been conquered by the financial criminals it is charged with investigating. In at least one case, according to Flynn, investigators at the SEC found their desire to bring a case against an influential bank thwarted by senior officials in the enforcement division – whose director turned around and accepted a lucrative job from the very same bank they had been prevented from investigating. In another case, the agency farmed out its inquiry to a private law firm – one hired by the company under investigation. The outside firm, unsurprisingly, concluded that no further investigation of its client was necessary. To complete the bureaucratic laundering process, Flynn says, the SEC dropped the case and destroyed the files.Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."

The destruction of records by the SEC, as outlined by Flynn, is something far more than an administrative accident or bureaucratic fuck-up. It's a symptom of the agency's terminal brain damage. Somewhere along the line, those at the SEC responsible for policing America's banks fell and hit their head on a big pile of Wall Street's money – a blow from which the agency has never recovered. "From what I've seen, it looks as if the SEC might have sanctioned some level of case-related document destruction," says Sen. Chuck Grassley, the ranking Republican on the Senate Judiciary Committee, whose staff has interviewed Flynn. "It doesn't make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what time frame and to what extent its actions were consistent with the law."

How did officials at the SEC wind up with a faithful veteran employee – a conservative, mid-level attorney described as a highly reluctant whistle-blower – spilling the agency's most sordid secrets to Congress? In a way, they asked for it.

On May 18th of this year, SEC enforcement director Robert Khuzami sent out a mass e-mail to the agency's staff with the subject line "Lawyers Behaving Badly." In it, Khuzami asked his subordinates to report any experiences they might have had where "the behavior of counsel representing clients in... investigations has been questionable."

Khuzami was asking staffers to recount any stories of outside counsel behaving unethically. But Flynn apparently thought his boss was looking for examples of lawyers "behaving badly" anywhere, including within the SEC. And he had a story to share he'd kept a lid on for years. "Mr. Khuzami may have gotten something more than he expected," Flynn's lawyer, a former SEC whistle-blower named Gary Aguirre, later explained to Congress.

Flynn responded to Khuzami with a letter laying out one such example of misbehaving lawyers within the SEC. It involved a case from very early in Flynn's career, back in 2000, when he was working with a group of investigators who thought they had a "slam-dunk" case against Deutsche Bank, the German financial giant. A few years earlier, Rolf Breuer, the bank's CEO, had given an interview to Der Spiegel in which he denied that Deutsche was involved in übernahmegespräche – takeover talks – to acquire a rival American firm, Bankers Trust. But the statement was apparently untrue – and it sent the stock of Bankers Trust tumbling, potentially lowering the price for the merger. Flynn and his fellow SEC investigators, suspecting that investors of Bankers Trust had been defrauded, opened a MUI on the case.A Matter Under Inquiry is just a preliminary sort of look-see – a way for the SEC to check out the multitude of tips it gets about suspicious trades, shady stock scams and false disclosures, and to determine which of the accusations merit a formal investigation. At the MUI stage, an SEC investigator can conduct interviews or ask a bank to send in information voluntarily. Bumping a MUI up to a formal investigation is critical, because it enables investigators to pull out the full law-enforcement ass-kicking measures – subpoenas, depositions, everything short of hot pokers and waterboarding. In the Deutsche case, Flynn and other SEC investigators got past the MUI stage and used their powers to collect sworn testimony and documents indicating that plenty ofübernahmegespräche indeed had been going on when Breuer spoke to Der Spiegel. Based on the evidence, they sent an "Action Memorandum" to senior SEC staff, formally recommending that the agency press forward and file suit against Deutsche.

Breuer responded to the threat as big banks like Deutsche often do: He hired a former SEC enforcement director to lobby the agency to back off. The ex-insider, Gary Lynch, launched a creative and inspired defense, producing a linguistic expert who argued thatübernahmegespräche only means "advanced stage of discussions." Nevertheless, the request to proceed with the case was approved by several levels of the SEC's staff. All that was needed to move forward was a thumbs-up from the director of enforcement at the time, Richard Walker.

But then a curious thing happened. On July 10th, 2001, Flynn and the other investigators were informed that Walker was mysteriously recusing himself from the Deutsche case. Two weeks later, on July 23rd, the enforcement division sent a letter to Deutsche that read, "Inquiry in the above-captioned matter has been terminated." The bank was in the clear; the SEC was dropping its fraud investigation. In contradiction to the agency's usual practice, it provided no explanation for its decision to close the case.

On October 1st of that year, the mystery was solved: Dick Walker was named general counsel of Deutsche. Less than 10 weeks after the SEC shut down its investigation of the bank, the agency's director of enforcement was handed a cushy, high-priced job at Deutsche.

Deutsche's influence in the case didn't stop there. A few years later, in 2004, Walker hired none other than Robert Khuzami, a young federal prosecutor, to join him at Deutsche. The two would remain at the bank until February 2009, when Khuzami joined the SEC as Flynn's new boss in the enforcement division. When Flynn sent his letter to Khuzami complaining about misbehavior by Walker, he was calling out Khuzami's own mentor.

The circular nature of the case illustrates the revolving-door dynamic that has become pervasive at the SEC. A recent study by the Project on Government Oversight found that over the past five years, former SEC personnel filed 789 notices disclosing their intent to represent outside companies before the agency – sometimes within days of their having left the SEC. More than half of the disclosures came from the agency's enforcement division, who went to bat for the financial industry four times more often than ex-staffers from other wings of the SEC.Even a cursory glance at a list of the agency's most recent enforcement directors makes it clear that the SEC's top policemen almost always wind up jumping straight to jobs representing the banks they were supposed to regulate. Lynch, who represented Deutsche in the Flynn case, served as the agency's enforcement chief from 1985 to 1989, before moving to the firm of Davis Polk, which boasts many top Wall Street clients. He was succeeded by William McLucas, who left the SEC in 1998 to work for WilmerHale, a Wall Street defense firm so notorious for snatching up top agency veterans that it is sometimes referred to as "SEC West." McLucas was followed by Dick Walker, who defected to Deutsche in 2001, and he was in turn followed by Stephen Cutler, who now serves as general counsel for JP Morgan Chase. Next came Linda Chatman Thomsen, who stepped down to join Davis Polk, only to be succeeded in 2009 by Khuzami, Walker's former protégé at Deutsche Bank.

This merry-go-round of current and former enforcement directors has repeatedly led to accusations of improprieties. In 2008, in a case cited by the SEC inspector general, Thomsen went out of her way to pass along valuable information to Cutler, the former enforcement director who had gone to work for JP Morgan. According to the inspector general, Thomsen signaled Cutler that the SEC was unlikely to take action that would hamper JP Morgan's move to buy up Bear Stearns. In another case, the inspector general found, an assistant director of enforcement was instrumental in slowing down an investigation into the $7 billion Ponzi scheme allegedly run by Texas con artist R. Allen Stanford – and then left the SEC to work for Stanford, despite explicitly being denied permission to do so by the agency's ethics office. "Every lawyer in Texas and beyond is going to get rich on this case, OK?" the official later explained. "I hated being on the sidelines."

Goldman Sachs braced for legal battles over financial crisis

Goldman Sachs chief Lloyd Blankfein seen at a Senate hearing last year, has hired top defence lawyer Reid Weingarten. Photograph Charles Dharapak/AP

Πηγή: The Guardian
By Simon Goodley and Graeme Wearden

Tuesday 23 August 2011 20.13 BST

Goldman Sachs, the embattled investment bank, will face an array of legal claims focusing on its conduct during the financial crisis, one of Wall Street's most feared lawyers warned last night.

The prediction of an escalation in cases is being made by Jake Zamansky, the US attorney nicknamed "Jaws" who spearheaded the successful pursuit of the investment banks after the dotcom crash. It follows a move by Lloyd Blankfein, the chief executive of Goldman Sachs, to hire Reid Weingarten, one of America's top criminal defence lawyers, to help him address claims that the bank misled clients in the run-up to the financial crisis and, afterwards, Congress.

"I consider this to be a very significant event. For Lloyd Blankfein to be hiring a top criminal lawyer indicates that there may be allegations of wrongdoing forthcoming from the Department of Justice [DoJ]," Zamansky said. "Investors are asking why there have been no criminal cases against Goldman Sachs or any investment bank arising from the financial crisis. This may be a sign of more cases to come. It may be the beginning of a series of cases against Wall Street firms".

Back in 2001, as the internet bubble was bursting, Zamansky filed the very first lawsuit against Merrill Lynch's Henry Blodget, then a top-rated technology analyst caught pushing shares to investors which internal emails showed he actually rated as "dogs". The case proved to be a catalyst for a legal assault on Wall Street which resulted in the banks signing some huge cheques.

Zamansky is representing a group of un-named investors suing Goldman, although the case is unrelated to the bank's battles with the DoJ.

However, other moves to pursue the investment bank and its directors are under way, with court documents showing that Blankfein and his fellow directors have been named in a derivative court action filed in New York by an individual investor called Michael Brautigam. Counsel for the defendants, who also include Goldman non-executive and steel tycoon Lakshmi Mittal, have been asked by District Judge William H Pauley III to appear in court next month for a pre-trial conference. As this is a civil case, Weingarten will not be representing Blankfein. The derivative action formed part of a 12-page report detailing the current legal cases the bank is facing, which Goldman outlined in a regulatory filing this month.

The document goes on to admit: "The firm expects to be the subject of additional putative shareholder derivative actions, purported class actions, rescission and 'put back' claims and other litigation, additional investor and shareholder demands, and additional regulatory and other investigations and actions with respect to mortgage-related offerings, loan sales, CDOs [collateralized debt obligations] and servicing and foreclosure activities".

Shares in Goldman fell in late trading on Monday after Weingarten's appointment emerged – shedding 4.7% to $104.25, their lowest level since April 2009.They had dropped again on Tuesday.

Blankfein turned to the high profile lawyer after the DoJ began investigating the way Goldman sold subprime mortgages – the toxic investments that triggered the credit crunch. The banker has also been accused of misleading a Senate committee – a claim that is emphatically denied by Goldman. Blankfein has not been charged with any offence. Goldman itself was charged in April 2010 with defrauding investors of more than $1bn (£606m), and later paid a $550m fine. In June, the bank was served with a subpoena by the Manhattan prosecutor.

"As is common in such situations, Mr Blankfein and other individuals who were expected to be interviewed in connection with the justice department's inquiry into certain matters raised in the [Senate] report hired counsel at the outset," said a Goldman spokesman.

Weingarten specialises in white-collar criminal defence, and has represented former WorldCom chief executive Bernard Ebbers and former Enron accounting officer Richard Causey. Both men are incarcerated after being convicted of fraud charges.

The website of Steptoe and Johnson, the firm where Weingarten is a partner, states that the lawyer "is part of the firm's white-collar criminal defence group". It continues: "Weingarten represents clients in complex criminal matters in both state and federal courts at the pre-trial, trial, and post-trial stages, including cases involving public corruption, the Racketeer Influenced and Corrupt Organizations Act, bank fraud, bribery, government procurement fraud, antitrust, healthcare fraud, and tax and securities fraud."

Goldman Sachs probed for involvement with Libyan government

Πηγή: The Bureau of Investigative Journalism
by The Bureau

August 10th, 2011

An investigation is underway into Goldman Sachs’ dealings with Libya’s sovereign fund, the Libyan Investment Authority (LIA).

Goldman’s compliance with the US Foreign Corrupt Practices Act is being examined following an enquiry by the Securities Exchange Commission (SEC) into whether banks, hedge funds and private-equity firms paid for access to government-run funds.

Forbes and the Telegraph reported in May that the LIA had entrusted $1.3bn to Goldman Sachs in 2007, of which the investment bank lost approximately 98%.

In return for the failed investments, Goldman Sachs offered enraged Libyan officials large stakes in the company and other investment options including, ‘preferred shares, unsecured debt, a special purpose vehicle in the Cayman Islands, and investments in credit default swaps.’

The Foreign Corrupt Practices Act forbids US companies from paying bribes to officials of overseas governments. Agents working with sovereign wealth funds can be considered government officials.

Goldman have given no further details about the investigation and the SEC declined comment.

The report is one of many looking at investment banks’ involvement with North African countries in the aftermath of the Arab Spring.

Earlier this year the Bureau and the Guardian reported on practices by HSBC in Egypt, which enabled the enrichment of senior government officials.

Reuters also reported in January that Tunisia’s first Islamic bank, Ziytouna Bank, was put under the control of the central bank. The bank is owned by Sakher Materi, the son-in-law of deposed leader Ben Ali.

US - Greece: "Audit? What Audit?"

"For what citizen can there be found so ill-affected as to wish by one vote to draw two daggers against the Republic?"

"De petitione consulatus" (On running for the Consulship)

Quintus Tullius Cicero (66 - 54 BC)

In the end of May 2011 the Greek Parliament (the socialistic PASOK, the liberal ND and the far right LAOS parties) voted against the logistical audit of the national debt claiming that such an action "would foster the illusion that the international obligations of the country (against her creditors) could be averted". The two leading parties (PASOK and New Democracy) have ruled the country for more than a generation, namely for 37 years. So, if there is someone that holds the whole political responsibility for the present economic tragedy are those two parties that voted against the audit. In fact many of the present members participating in the process where active when the secret loans from Goldman Sachs (2001) were used to mask the deficit getting the country inside the OECD, when the logistic books were repeatedly cooked and when the "Stock market", the "Siemens", the "Vatopaidi" the "German submarines" or the "French Mirages" scandals broke up. So why taking pains to accuse themselves? 

The reasoning of this voting is admittedly a distortion. For if Greece was a little enterprise that her managers led to economic collapse by lending money secretly to mask the situation from the stakeholders (people) what would prevent the last from suing them? But this was in line with the ECB's reasoning for the denial of the disclosure of relevant papers concerning the G.S. secret loans that resulted to the Bloomberg's sue. The ECB claimed that "Releasing the papers could damage the commercial interests of the ECB’s counterparties, hurt the region’s banks and markets, and undermine the economic policy of Greece and the EU". 

Therefre if Bloomberg sued the ECB how come and the Greek people don't have any similar tool in their hands? 

The majority of us are like the small stakeholders of a ruined company that must pay back the huge loans that the executives took in secrecy (favoring foreign companies and the few big stakeholders that at best are going to share the whole deficit equally with the rest) without having any resort to unvaile the truth or to bring the responsible to justice. 

It is quite true that a reform is absolutely necessary. But are those responsible for the present situation willing and capable of shaping the social consensus for implementing (justly) those critical changes?

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