Thursday, March 1, 2012

Breaking The Law! Wall Street Edition

NEW YORK (TheStreet) -- Goldman Sachs (GS_) was the Winner among the largest U.S. financial names early Thursday afternoon, with shares rising over 4% to $120.04.

KBW analyst David Konrad on Thursday reiterated his "Outperform" rating for Goldman, with a $140 price target, despite a couple of negative disclosures in the company's annual 10-K filing on Wednesday.

Goldman disclosed that it had received a Wells notice from the Securities and Exchange Commission, regarding its offering documents for a $1.3 billion subprime mortgage securitization in 2006, and added that it expected to face additional regulatory action and litigation in connection with the mortgage pool. Konrad said that "although the headline is negative, GS is well reserved for potential litigation and should not be materially impacted by the investigation."

Goldman was also named in a class action lawsuit springing from the bankruptcy of MF Global, in connection with to offerings of MF Global convertible notes, for failing to adequately disclose MF Global's European debt exposure. With the notes in question totaling $575 million and Goldman's underwritten portion totaling $214 million, Konrad said he didn't "believe this issue [was] material.

As you may (or may not) recall, Goldman Sachs also bet on a housing meltdown in the U.S. via AIG credit default swaps and then had those swaps made good by Uncle Sam as part of the banking bailouts.

McClatchy's inquiry found that Goldman Sachs:

Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.

Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.

Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.

Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.

The firm benefited when Paulson elected not to save rival Lehman Brothers from collapse, and when he organized a massive rescue of tottering global insurer American International Group while in constant telephone contact with Goldman chief Blankfein. With the Federal Reserve Board's blessing, AIG later used $12.9 billion in taxpayers' dollars to pay off every penny it owed Goldman.

This proving, once again, that it pays to have high friends in places.

Anyone need some hope with their spare change?

(Cross-posted at Whiskey Fire. Mouse over pics for captions, and click them for larger versions.)

UPDATE: Scott Horton at Harper's has 6 questions for Tom Engelhardt, author of The United States of Fear.

2. In diagnosing the “National Security Complex,” you suggest that America’s democratic institutions are under a quiet but steady assault. What do you mean by this concept, and where do you think it’s taking us?

In my book, I say that we are now in a “post-legal America” when it comes to the National Security Complex. What that means is simple enough. The U.S. legal system, which still applies to you and me, really no longer applies to the national-security state.
Thought of another way, only one prosecutable crime exists today—under the Espionage Act, no less—for anyone in the complex: whistleblowing. In other words: do what you want, just don’t tell Americans what goes on in these precincts or we’ll take you down.

Further Update: White Riot



Randal Graves said...

I'm sick and tired of this being called a banana republic, where are the bananas, I love to chop them up & toss 'em on my corn flakes.

ifthethunderdontgetya™³²®© said...

We used to get bread and circuses, R.G.

But the bread (including the banana bread) was a lavish expense in the opinion of our overlords.

So, no more.

Substance McGravitas said...

What if Tim Geithner ate a granny's liver?

Big Bad Bald Bastard said...

What if Tim Geithner ate a granny's liver?

That would involve force feeding her to get a nice foie gras, and the last thing he wants is for mooching granny to get a free lunch.

ifthethunderdontgetya™³²®© said...

He has one every Tuesday evening, Mr. McGravitas.

mikey said...

There are far too many examples of these truths in American society, but I think the most telling one isn't even at the national level.

Remember (if you are old enough) how we used to stop and talk to the nice policemen? Sure, they wore a uniform and had a gunbelt, but it was just a blue (or tan) suit and a revolver. You could stop and talk to them - they were friendly and helpful. You could ask directions, you could just have a conversation. He didn't fear you, and he didn't seem to hate you, and most of all he didn't SUSPECT that you were a "dirtbag".

Today he is dressed like a soldier in combat, armed to the teeth, armored and anonymous. If you try to talk to him he will threaten you with arrest. If you try to take his picture he will take your camera and threaten you with arrest. If you don't get out of his way fast enough he will search you, check your ID and threaten you with arrest. If you annoy you, he will beat you, electrocute you or spray you with caustic chemicals. And threaten you with arrest.

This is the society we have let them build for us. This is what we will face when the time comes that we have had enough, and we try to take it back. This is the logical outcome of the things we said we wanted.

ifthethunderdontgetya™³²®© said...

I don't disagree, mikey, but I think our corrupt corporate media deserves a big share of the blame.

It's a big club - and you ain't in it. You and I are not in the big club. By the way, it's the same big club they use to beat you over the head with all day long when they tell you what to believe. All day long, beating you over the head with their media telling you what to believe, what to think, and what to buy. The table is tilted, folks! The game is rigged, and nobody seems to notice. Nobody seems to care.

George Carlin

mikey said...

Yeah, me too. We disagree specifically about the media's role in the Iraq invasion and occupation, but in general the dishonesty and corruption of the American media serves as both an accelerant and an amplifier for the decline of human and civil rights and the massive increase in inequality in our society.

The reason I don't hammer on it as much as you do is that there is nothing - NOTHING - that can be done to change it. Like the gun lobby, they hide behind the constitution - "You can't pass laws to control us" so there is no power that could reach them, even if there was the will to try.

Besides, you can follow the chain of corruption on up from there to the 2-party system, the ridiculous national electoral process, a highly manipulable, obsolete system of governance that has been very easily co-opted and a political system that requires so much money and allows for so little political risk that the full time job of those who achieve political power in America is the retention of that power.

It has become a closed and hardened system that is only allowed to serve the wealthy and powerful, regardless of the harm it causes the nation and the generations to come. One need only look as far as infrastructure investment - one of the primary roles of government, but it is SO important that the wealthy not contribute ONE PENNY to the common good that we are voluntarily allowing our roads, bridges, ports, electrical grid, sanitation system - even our public health system to deteriorate before our eyes. When those in power become that short-sighted and overwhelmingly greedy there is nothing left to be done but burn it all and start over.

ifthethunderdontgetya™³²®© said...

All the power's in the hands
Of people rich enough to buy it. While we walk the street
Too chicken to even try it.

(White Riot by the Clash added to post.)

The Bush Administration took us way right past the Constitution, mikey. With their incredible failure versus Bin Laden as the excuse! And thanks to Obama, these abuses are now bipartisan and cemented in stone.

mikey said...

The Bush Administration took us way right past the Constitution, mikey.

Not sure what the point of that statement is - you do recognize I'm agreeing with you, right?

But if you're questioning my earlier statement, don't think for one second they won't hide behind the constitution when it suits them. As I said, the gun lobby and the media have, between them, the second and the first amendments they can cower behind if anyone challenges them. That does NOT mean, for one bloody second, that they CARE one whit about the constitution, it just means that, when it suits them, they can find an argument rooted in that document, and we give that argument a lot of leverage.

Thunder, seriously, you should try to identify people who are agreeing with you and not piss on them. It might lead to, well, who knows, right?

ifthethunderdontgetya™³²®© said...

I wasn't disagreeing with you, mikey.

I was expanding on my earlier remarks. Maybe tomorrow I'll piss on the press some more.

zombie rotten mcdonald said...

I received a copy of Feingold's "While America Sleeps" from Wife Sublime for HOLIDAY gifting....haven't had the opportunity to dig into it yet, but it looks to be a similar work to Engelhardt's.

Perhaps you and I should write a book, thunder, called "America will fuck you and your dreams"

Kathleen said...

so depressing

Kathleen said...

I would buy that book

ifthethunderdontgetya™³²®© said...

I've been meaning to write a comment hatin' on the press, because I said I would. However, I also haven't quite figured out what mikey and I were fighting about.

It was important, though!

P.S. President Drone Strike's version of A.G.A.G.A.G.**, today.

** Attorney General “Abu Ghraib” Alberto Gonzales