fraud charge lodged against US investment bank Goldman Sachs

[Black Swan]

Where's ODT...!!!!


US bank charge sends FTSE 100 into slide

News of a shock fraud charge lodged against US investment bank Goldman Sachs sent London's FTSE 100 Index falling today.

The Footsie tumbled by 1.7% at one stage in late afternoon trading after America's Securities and Exchange Commission accused the Wall Street giant of defrauding investors in its disclosures about securities sold that were tied to sub-prime mortgage securities.

The civil fraud charge caught markets by surprise on both sides of the Atlantic as investors feared further fallout from the investigation.

US benchmark index the Dow Jones Industrial Average fell more than 120 points in early trade.

Joshua Raymond, market strategist at City Index, said: "This news now creates uncertainty in the market in terms of whether there are likely to be any other major banks involved or under investigation.

"Moreover, we don't know what the consequences of this charge will be for Goldman Sachs."

He added: "Whenever there is uncertainty, investors tend to run for the hills and with there likely to be more news on this over the weekend when the markets are shut, investors have sought to move out of their riskier holdings by selling the banks and the miners into the European close."

http://www.independent.co.uk/news/b...charge-sends-ftse-100-into-slide-1946998.html

 

[oildaytrader]

Shame I was turned down for the job of Scum .I could have ruined and wrecked the lives of hundreds of Maxwell pension scheme beneficiaries.It is called God's work and I could have robbed pension funds and schemes.

http://www.trade2win.com/boards/general-trading-chat/90660-traders-quotes-3.html#post1094754

http://www.trade2win.com/boards/general-trading-chat/85162-govt-goldman-sachs-vs-blogger-morgan.html

 

[oildaytrader]

Here is more on the dastardly pigs

http://www.gulagblog.com/?p=124034

 

[oiltanker]

banks shares were perfectly timed as well. paint a new high to get the new high longs in then bang them short.

i wondered why, for apparently no good reason, they were on a bit of steamroller the last few days.

 

[oiltanker]

if they are found guilty of basically engineering the mortgage crash what could happen to them? investors that lost money would sue them into extinction?

 

[montmorencyt2w]

A UK angle:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/04/goldman_may_owe_british_taxpay.html

 

[Waterfield]

http://dealbreaker.com/

http://dealbreaker.com/2010/04/view-the-goldman-s-e-c-complaint/

 

[oildaytrader]

http://dealbreaker.com/

http://dealbreaker.com/2010/04/view-the-goldman-s-e-c-complaint/

Total structured finance packaged could be around several hundred billion dollars and CDO market was around 3 trillion .Only a few thieves in this country get caught and get sent to prison , the rest possibly 98% are never caught.Maybe this is the only one with evidence.

Anybody read Wall street's Den of Thieves?

http://en.wikipedia.org/wiki/Den_of_Thieves_(book)

 

[fayalac]

Well, what can we say oildaytrader?, that is like the war of the bulls against the bears...., the dums will be sent to prison, the rest of them will be scared to be sent to prison and will become an easy target for someone else.
Thats the way things work...

 

[Black Swan]

Carl Sagan - Pale Blue Dot

I've been in reflective mood over the past couple of days mainly sparked by the lack of flights and clear skies. Have had a disturbing recurring dream for years in which I finally feel a sense of true childlike liberalisation and freedom...

The general population is manically racing around a desolate wasteland in an urban area, desperately attempting to get the last flight available, perhaps to be with loved ones, or to make that final nostalgic flight before that form of travel is scrapped to be replaced by nothing, as we havn't managed to (by then) create nuclear powered aeroplanes...Then the chaos stops, the mayhem gently recedes, a silence descends upon the gathering, order is restored and many of us look up to the skies and watch for the final time as the last flight takes off...

The recurring dream always moves me on to thinking simplistically about money, its creation, the supply, who controls it, given it's not backed by a gold standard what *backs is up*? How old is the fiat system/fractional reserve system we have allowed to run amok and when will it face its final flight to safety, on what terms and who will control what's left?

Throughout history the end of every Empire is never a seamless transition, looked back historically it's easy to get lost in the haze of hundred years of memory (distorted by religions or monarchies at the time and since) that x conquered y and we (arguably) moved on as a civilisation to new governance under new rulers.. until a new x came along...

The end of the US domination through sublimal threats, covert means, direct imperialism (cloaked in sophistry as being right for the global or common good) or the power of its economy backed by the dollar is over...Unfortunately the end of this Empire is going to be very ugly, the ugliest ever given it co-incides with the reduction and control of the fossil fuel which has driven its expansion and has directly supported it's currency.. A map of Iran showing it pincered in by troops bordered on Iraq and Afghan, and the US permanently controlling the surrounding waters, is a clue even a blindfolded five year playing pin the tail on a donkey, (that donkey being a map of the Mid East) could easily spot as to the true motivation for occupation...Iran either enters the new world order - US oil domination through its dollar, or suffers the consequences...

Money lost a lot, if not all, of its credibility in late 2008, that credibility and the integrity of the suppliers/creators had its greatest test. Has it *recovered*, can the system, which is less than a hundred years old, (a blink of an eye in relation to how money/units of value has been exchanged for goods for thousands of years) be saved from extinction? If so at what true cost to humanity.? Watch it and weep..not for the ruin, but for the potential to re-build...

Carl Sagan - Pale Blue Dot
http://www.youtube.com/watch?v=p86BPM1GV8M&feature=fvw

 

[adalat]

Re: Carl Sagan - Pale Blue Dot

Black Swan, a very interesting thought provoking, reflection. Financial institutions aside, Even our governments are at it, look at the pension funds fiasco.

If and when Goldman culprits are found guilty, the sentence will be a laugh, they would have stashed the millions they made somewhere safe , with good behaviour, serve 4 years of their 10 year sentence and retire in some sunny holiday resort when they come out. That's the perfect trade for them.

 

[oildaytrader]

32,000 victims of one pension fraud , a few greedy beneficiaries.The thieves don't care how much they hurt other people and how many victims they hurt .

Maxwells 'used pension funds to shore up empire'.Pension funds are easy targets for thieves, people with pension rights are not there to protect their investments from giant vampire scum.

http://www.independent.co.uk/news/business/news/the-real-victims-of-the-maxwell-scandal-689669.html

http://www.guardian.co.uk/money/2003/jan/11/pensionsincrisis.pensions

The attitude rob the poor and let the rich get richer has always been there.

Robert Maxwell robbed the mirror pension funds.

There was an investment bank playing some role in some capacity, do we know the role?

http://www.encyclopedia.com/doc/1G1-78965574.html

The ultimate victims of major frauds are often the employees of the defrauded companies. Careers and finances of many mid- and senior-level employees can be destroyed for life. Big frauds are orchestrated at the top for the benefit of the owners or senior management, not for the employees. The biggest defense may be an educated workforce, so employees are their own watchdogs.

http://www.calcpa.org/Content/24898.aspx

 

[meanreversion]

I recall during the height of the credit crunch, I started spending money like crazy (holiday, car) because it seemed inevitable that a collapse in the financial system and/or rampant inflation was on the way.

This fiat experiment has only been with us for 30-40 years. We have now arrived at a point where promises will start to be broken. This can take the form of raising retirement age, reducing public sector pensions (this might not be legal), laying public sector workers off, drastically altering the range of services the public sector provides and ultimately, default. I'm not just talking about the UK, this applies to most "rich" Western countries. The unfunded liabilities in the US are some $50trio - clearly this can not be accommodated without high inflation and/or default.

This is a slow motion train crash and it's going to get ugly. We've already seen riots on the streets of Greece.. think it can't happen here? I checked up on the net how much our government spends on public sector salaries, it's around £500bio a year. Give them all a 10 pct pay cut, and you instantly save £50bio. Hang on a minute though - those people are up in arms when their pay increases aren't ABOVE the rate of inflation, imagine what a pay cut would do.

From what I can tell, only the Irish have so far grasped the enormity of what they need to do, and fair play to them. The rest of us are living in denial, hoping for miraculous growth to pull us out of this.

It's not going to happen, it can't happen - there is far too much slack and inefficiency in the system - until we go through a substantial and painful re-adjustment. It hasn't even started yet.

 

[oiltanker]

..Give them all a 10 pct pay cut, and you instantly save £50bio...

one might say that about financial wages? after all which industry caused it in the first place? but their wages keep going up even though it is in effect a nationalised industry that would collapse without the massive public backing?

 

[oildaytrader]

Couldn't they keep printing I O U's and increasing government debt infinitely?

We are already at the stage where today's spending is coming from the people's pensions and future generations lumbered with I O U 's .When interest rates went to zero , the governments robbed the savers by reducing interest income of pensions , to give to the current generation.

The pensioners were promised a means tested pensions, they got robbed.The Governments are operating a ponzi scheme, Obama a created a new health ponzi scheme.

We can keep on printing money indefinitely in the fiat system.

 

[meanreversion]

..Give them all a 10 pct pay cut, and you instantly save £50bio...

one might say that about financial wages? after all which industry caused it in the first place? but their wages keep going up even though it is in effect a nationalised industry that would collapse without the massive public backing?

Agree .. there's a serious danger of capitalism being subverted now. Nothing is allowed to fail, with the result that the governments have written a nice big fat free put option for all the banks.

 

[gooseman]

these are all very large aspersiosn here. The too big to fail mantra doesn't quite ring true. Lehamn's wasn't too big to fail, JP Morgan never was going to fail and neither were Goldman. both took TARP (cheap) money they didn't need and both since have said they were wrong to take it. Then again if someone offered me cheap money I'd probably take it whether I needed it or not knwoing I could get a better return elsewhere (beauty of carry). The supposition was that institutions were too big to fail all at the same time. There is no issue securitising or insuring debt as long as the risks are understood AND you have the available balance sheet to fund it. The problem arises when you rely on short-term funding in the money markets and are leveraged 20-30 times. Love them or hate them JP and Goldman saw problems on the horizon and reduced their holdings and involvements. Other institutions were not so prudent and suffered. I think a move back to the separation of investment banks from deposit banks is much needed-then, and only then will it be ok to let investment banks reap what they sow.

The morals of selling securitised debt are not in question, the morals of selling knowingly awful securitised debt is. The motives of real money buying this crap have to be examined and perhaps linking pay of real money portfolio managers to longer-term performance might be the solution.

It would be unwise to write the system off just yet....

 

[meanreversion]

You've got some things mixed up there. First of all, the TARP money was expensive (same with the special liquidity the BoE provided here, I forget the acronym). Goldman took the money under duress, i.e. was forced. Barclays, if you recall, could not be forced to take the government's money here.

After the Lehman debacle (this was partly due to Fuld having too many enemies), the US and UK realized that disaster was too close for comfort. Goldman was never going to be allowed to fail, even though it came very close, simply because Hank Paulson was Treasury secretary. Lehman now means every bank is underwritten by the taxpayer, it's a tacit agreement. The banks are now making out like bandits, partly because spreads are wider, but also because the value of their toxic junk is starting to recover.

Whichever way you look at it, the man on the street is getting a raw deal here. There is a very strong case for nationalising the payments system.. then, if banks want to punt their shareholders money, that's between them and the shareholders. As it is, they are still leveraged and punting their deposits, safe in the knowledge it is all government underwritten.

Unfortunately the government has shown itself incapable to organising a p*ss-up in a brewery, so I would not trust it to run a payments system. The only solution is to break the banks up and impose very strict capital controls on the retail/payments side of the business.

The bankers are getting away with murder right now, but they probably knew all along the government would step in. That's why Lehman was such a shock, but it soon passed with huge dollops of taxpayers' money.

 

[gooseman]

You've got some things mixed up there. First of all, the TARP money was expensive (same with the special liquidity the BoE provided here, I forget the acronym). Goldman took the money under duress, i.e. was forced. Barclays, if you recall, could not be forced to take the government's money here.

After the Lehman debacle (this was partly due to Fuld having too many enemies), the US and UK realized that disaster was too close for comfort. Goldman was never going to be allowed to fail, even though it came very close, simply because Hank Paulson was Treasury secretary. Lehman now means every bank is underwritten by the taxpayer, it's a tacit agreement. The banks are now making out like bandits, partly because spreads are wider, but also because the value of their toxic junk is starting to recover.

Whichever way you look at it, the man on the street is getting a raw deal here. There is a very strong case for nationalising the payments system.. then, if banks want to punt their shareholders money, that's between them and the shareholders. As it is, they are still leveraged and punting their deposits, safe in the knowledge it is all government underwritten.

Unfortunately the government has shown itself incapable to organising a p*ss-up in a brewery, so I would not trust it to run a payments system. The only solution is to break the banks up and impose very strict capital controls on the retail/payments side of the business.

The bankers are getting away with murder right now, but they probably knew all along the government would step in. That's why Lehman was such a shock, but it soon passed with huge dollops of taxpayers' money.

I mean the TARP was cheap relative to where they could offset it in the market. (Uk was SLS)

Lehman failed because they were leveraged to the hilt and were caught long of loads of crappy home loans they couldn't sell. Not to mention their horrific property portfolio. And no way to fund collateral they had to post.

I don't share the view that Goldmans would go under. There were many reasons certain institutions were not allowed to fail-AIG being one of the largest.

I don't mind banks riding into the sunset with wads of cash but they have to know they can fail. That is why I think the Glass-Steagal Act should be brought back ni-investment banks can go and run merry hell if they like as long as they don't start shutting down cashpoints when they run into bother.

I agree the government have made a huge pigs ear of this by bailing the banks (even further allowing behemoths like RBS to operate like they were) and those aided by the governmetn should have certain restrictions placed upon them but that would then limit their performance. So be it. There certainly needs to be a debt:capital ratio enforced. What irks me is that the govt seem intent on collapsing bonuses on bona fide money makers. Oh also they seem to be less vocal at tax collection time....

One solution I think that may have avoided a whole heap of this was that the central banks could have at the outset guaranteed the short-term money markets which would have avoided the crippling lending requirements back in Q3 08.

Everyone seems to be directing their anger at the big boys when in reality you only need to look at how many regional banks have been busted out in the US.

I am also avoiding the issue of ridiculous fees and the wholesale free-for all in the lead up to this crisis-that for me is somethig caused by Greenspan and I am simply coming at the issue from the trading side-not the classic investment banking side.

 

[gooseman]

reading back over that there was a breakdown in regulation plain and simple. 1999 was the key date. maybe this crisis was the shake-out needed......