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Goldman Sachs profits hit ... |
'Doing God's Work'The world says they are guilty - yet bankers protest their innocenceCompare and contrast Capitol Hill's grilling of 'Golden Sacks' with the UK's absence of separation of powers, and its servile - toothless - Parliamentary committees beholden to the Executive. Goldman Sachs did not make "big money" from betting on the collapse of the mortgage market, its chief executive insisted last night, after coming under fire from angry lawmakers and protesters on Capitol Hill. |
Goldman Sachs has reported a sharp fall in second-quarter profits after being hit by the UK's bonus tax, a US fine and poor trading revenues.Goldman Sachs profits hit by tax, fine and poor trading
It couldn't happen to a nicer bunch of sociopaths. Pass me the Kleenex.
Net income came in at $613m (£404m), down from $3.4bn a year ago.
But even ignoring the $600m accrued tax in the UK, and the US regulator's record $550m fine, underlying profits fell by nearly half.
The result was driven by a drop in revenues from Goldman's traders, which fell 39% from a year ago ...
Accrued employee compensation for the quarter - which includes the bonus pool - was $3.8bn, down 43% from a year ago.
This means that average accrued pay per employee at the firm for the first six months of the year was $273,000 ...
BBC NEWS 20 July 2010 Wealth Log
• Commodity speculators push cocoa to 33-year highHedge funds accused of gambling with lives of the poorest as food prices soar
• Bets 'risk the most vulnerable in the world starving'
The WDM's Great Hunger Lottery report says "risky and secretive" financial bets on food prices have exacerbated the effect of poor harvests in recent years. It argues that volatility in food prices has made it harder for producers to plan what to grow, pushed up prices for British consumers and in poorer countries risks sparking civil unrest, like the food riots seen in Mexico and Haiti in 2008.
Deborah Doane, WDM director, said: "Investment banks, like Goldman Sachs, are making huge profits by gambling on the price of everyday foods. But this is leaving people in the UK out of pocket, and risks the poorest people in the world starving.
"Nobody benefits from this kind of reckless gambling except a few City wheeler-dealers. British consumers suffer because it pushes up inflation, because of unpredictable oil and raw material prices, and the world's poorest people suffer because basic foods become unaffordable."
Guardian 19 July 2010Take the highest stakes, riskiest economic behaviour ever devised, and marry it to the most fundamental basic need of humankind, and you have the subject of this report.Food Speculation
Executive Summary
Over the past decade, the world’s most powerful financial institutions have developed ever more elaborate ways to package, re-package and trade a range of financial contracts known as derivatives.
A derivative is not based on an exchange of tangible assets such as goods or money, but rather is a financial contract with a value linked to the expected future price movements of the underlying asset.
Derivative contracts are traded on a growing number of underlying assets, from share prices, to mortgages, bonds, commodity prices, foreign exchange rates, and even index of prices.
Derivatives trading has been one of the most lucrative parts of the financial industry, but it is the increasingly complex, opaque and disconnected nature of these and similar products that ultimately triggered the collapse of the banks and the worst financial crisis in human history.
Of course, the financial crisis has been an economic disaster of seismic proportions for millions around the world, plunging many countries into recession causing millions to be thrown out of work, soaring public debts and cuts in vital public services.
But while betting on the value of sub-prime mortgages or foreign currency values undoubtedly leads to disastrous consequences, there is another area where the speculative behaviour of the world’s largest banks and hedge funds represents a threat to the very survival of people: food commodities.
In The great hunger lottery, World Development Movement has compiled extensive evidence establishing the role of food commodity derivatives in destabilising and driving up food prices around the world.
This in turn, has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.
Nowhere was this more clearly seen than during the astonishing surge in staple food prices over the course of 2007-2008, when millions went hungry and food riots swept major cities around the world.
The great hunger lottery shows how this alarming episode was fueled by the behaviour of financial speculators, and describes the terrible immediate impacts on vulnerable families around the world, as well as the long term damage to the fight against global poverty.
In the report we describe how the current situation came to pass, the risks of another speculation induced food crisis, and what specifically can be done by policymakers here in the UK as well as in the US and EU to tackle the problem.
But at its heart, The great hunger lottery carries a very straightforward message: allowing gambling on hunger in financial markets is dangerous, immoral and indefensible.
And it needs to be stopped before any more people suffer to satisfy the greed of the banks.
WDM: Full Report .pdf July 2010
Corporate Sociopathy Economic Democracy Fractional Reserve Banking Wealth LogWDM
Choc Finger's Big Bet
Goldman Sachs
Goldman Sachs: Annual Report .pdf
Goldman Sachs last night agreed to pay $550m (£356m) to settle the fraud charges that rocked the Wall Street giant, and admitted it had misled investors in one of the multi-billion dollar mortgage deals at the heart of the credit crisis.Goldman to pay $550m to settle SEC fraud case
Petty cash!
The penalty was the largest ever extracted by the Securities and Exchange Commission, Wall Street's regulator, but the sum was lower than some in the industry had feared, and Goldman shares surged on the news ...
No Goldman executives will lose their jobs as part of the settlement, and Lloyd Blankfein, the company's embattled chief executive, stays in place ...
The payment – which will be split $300m to the US government, $250m to compensate Abacus investors – is small compared with Goldman's profits.
The company earned $13.4bn in 2009, and $3.3bn in just the first three months of this year.
Independent 16 July 2010 Corporate SociopathyRBS could sue Goldman ...
Clients Worried About Goldman’s Dueling Goals
As the housing crisis mounted in early 2007, Goldman Sachs was busy selling risky, mortgage-related securities issued by its longtime client, Washington Mutual, a major bank based in Seattle.
Although Goldman had decided months earlier that the mortgage market was headed for a fall, it continued to sell the WaMu securities to investors. While Goldman put its imprimatur on that offering, traders in the same Goldman unit were not so sanguine about WaMu’s prospects: they were betting that the value of WaMu’s stock and other securities would decline.
Goldman’s wager against its customer’s stock — a position known as a “short” — was large enough that it would have generated at least $10 million in profits if WaMu collapsed, according to documents recently released by Congress. And by mid-May, Goldman’s bet against other WaMu securities had made Goldman $2.5 million, the documents show.
WaMu eventually did collapse under the weight of souring mortgage loans; federal regulators seized it in September 2008, making it the biggest bank failure in American history.
Goldman’s bets against WaMu, wagers that took place even as it helped WaMu feed a housing frenzy that Goldman had already lost faith in, are examples of conflicting roles that trouble its critics and some former clients ...
NYT 18 May 2010 Corporate Sociopathy Log
Goldman Sachs boss faces an ambush at the AGM
In the absence of economic democracy, CEO's like Lloyd "I'm doing God's work" Blankfein can put two fingers up to "shareholder proposals" safe in the knowledge that fellow corporate investors will remain on side, on the understanding that the new "business standards committee" is empty corporate spin. This, after all, is the firm that worked both for the Greek government, and against it. All in the interests of corporate profit.He once joked that Goldman Sachs was “doing God’s work”, but yesterday Lloyd Blankfein came face-to-face with the Lord’s representatives on Earth.
A stream of Christian shareholders held him to account at the bank’s annual meeting in Manhattan, exhorting him to work “for the many, not just the few” ...
In hopes of deflecting further criticism from shareholders and the wider world, which he knew would be watching the meeting closely, Mr Blankfein said that Goldman would create a new business standards’ committee to conduct a comprehensive review of business practices at the firm and come up with recommendations to the board ...
Mr Blankfein looked remarkably more relaxed throughout than he did during his recent grilling by the US Senate.
He responded politely but rejected all shareholder proposals.
By the end, he looked unbowed, but relieved all the same that he had successfully got through another day in the spotlight at the Goldman Sachs circus.
Times 08 May 2010 Blog Corp Sociopathy Log Economic Democracy
Goldman trader’s email slur
In a series of damaging emails released yesterday, Tourre also compared the products to a “Frankenstein” monster that had “turned against his own inventor”.
Other emails that emerged yesterday showed Lloyd Blankfein, Goldman’s chief executive, boasting about the money the bank made from the housing market collapse.
“Of course we didn’t dodge the mortgage mess,” Blankfein wrote in November 2007. “We lost money, then made more than we lost because of shorts (bets against housing).” ...
Meanwhile, it has emerged that five senior directors of Goldman Sachs, including Michael Sherwood, the co-head of its London office, sold shares in the bank after the SEC first warned that it may take action over the fraud claims. The watchdog issued a “Wells” notice, an official warning, in July last year.
The executives sold shares worth $65.4m between October 2009 and last February. Goldman’s shares dropped almost 13% after the SEC claim was filed in court 10 days ago ...
Royal Bank of Scotland has been ordered to hand over thousands of emails and documents to the SEC as part of an investigation into its sub-prime mortgage business in America.
RBS, which is 84% owned by taxpayers, yesterday confirmed that it had been under investigation for more than two years.
RBS, through its Greenwich Capital subsidiary in the US, controlled about 6.2% of the market for collateralised debt obligations ...
Times 25 Apr 2010Fabrice Tourre defends his 'Frankenstein products'
US banks pouring millions into bid to kill Barack Obama's finance reform bill
Goldman Cited ‘Serious’ Profit on Mortgages
Goldman Sachs
Goldman may owe British taxpayers $841m
British taxpayers have a direct material interest in the outcome of the fraud case brought against Goldman Sachs by the US financial watchdog, the Securities and Exchange Commission ...
... the material fact to dwell on for now is that on 7 August 2008, just before Royal Bank was semi-nationalised, it paid out $841m to Goldman Sachs to settle a claim on credit insurance provided by ABN, the Dutch bank which Royal Bank had acquired (or to be more precise, it had bought a big bad chunk of ABN in the autumn of 2007).
Goldman then passed this $841m to the ultimate beneficiary of the insurance contract, the giant US hedge fund, Paulson & Co.
Now the SEC claims that the insurance contract would never have been written, and therefore the loss would never have fallen on RBS, if Goldman had told the truth about certain financially important elements of the investment product that was being insured ...
Robert Peston 16 Apr 2010Securities and exchange commission charges Goldman Sachs with conflict of interest in sub-prime mortgage asset sales ...Goldman Sachs charged with $1bn fraud over toxic sub-prime securities
The SEC's accusations are levelled against the firm as a whole and against a French employee, Fabrice Tourre, 31, who is now an executive director in Goldman's London office.
The allegations revolve around a collateralised debt obligation called Abacus 2007-AC1 that was created by Goldman three years ago and proved a spectacularly poor investment for clients. Within nine months, 99% of the mortgages in the package had been downgraded and investors lost more than $1bn. Paulson, in contrast, made a profit of about the same amount.
Robert Khuzami, director of the SEC's enforcement division, said: "The product was new and complex but the deception and conflicts are old and simple. Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio." ...
Guardian 16 Apr 2010Eager to increase his bets against subprime mortgages, the investor, John A. Paulson, canvassed firm after firm, looking for new ways to profit from home loans that he was sure would go sour.Investor Who Made Billions Is Not Target of Suit
Only a few investment banks agreed to help him. One was Deutsche Bank. The other was the mighty Goldman Sachs.
Mr. Paulson struck gold. His prescience made him billions and transformed him from a relative nobody into something of a celebrity on Wall Street and in Washington.
But now his brassy bets have thrust Mr. Paulson into an uncomfortable spotlight. On Friday, the Securities and Exchange Commission filed a civil fraud lawsuit against Goldman for neglecting to tell its customers that mortgage investments they were buying consisted of pools of dubious loans that Mr. Paulson had selected because they were highly likely to fail ...
NYT 16 Apr 2010Goldman Sachs banker stripped of licence
Jeremy Warner on Goldman Sachs
Darling resists calls to ban Goldman from Treasury
Goldman to pay Tourre bonus despite fraud charge
Goldman Sachs implicated in shorting Lehman shares
Goldman doesn't get it
Goldman under fire on all sides
What really scares Goldman Sachs
The bank that thought it ruled the world
Goldman Sachs: a history of controversy
Top Leaders at Goldman Had a Role in Mortgage Unit
Goldman Sachs prosecution threatens to open the floodgates on Wall Street
Brown and Merkel attack Goldman Sachs
Goldman Sachs finds $5bn for pay and bonuses amid fraud investigation
For Goldman, a Bet’s Stakes Keep Growing
US regulators suspected Stanford in 1997
RBS lost £545m in alleged Goldman fraud
Goldman charge sends FTSE sliding
S.E.C. Accuses Goldman of Fraud in Housing Deal
Bankers are doing "God's work"
Public must learn to 'tolerate the inequality' of bonuses
Goldman Sachs