Goldman Sachs Wins “Public Eye Award” for Irresponsible Behavior in Finance and Economics

April 21, 2014

Two filmmakers traveled from Germany to Wall Street to award the “Public Eye Award” to Goldman Sachs for Irresponsible Behavior in Finance and Economics

We are here today to deliver the 2013 Public Eye Award to Goldman Sachs. This renowned dishonor, that was voted on the world over by people from disparate nations to single out the most irresponsible instutution in economics and finance, was previously announced in Davos during the World Economic Forum. The time has come to deliver the award itself.

This award was primarily earned by Goldman Sachs through its work in Greece: a commitment that we and the rest of the world believes should stand as an archetypical example of the work of Goldman Sachs around the world. This is but one example of many we could have chosen, to be sure.

With the beginning of the new millennium Goldman Sachs helped Greece to hide a big part of its state debts, as a technical device, hidden from public view, that allowed Greece to get into the Euro. In 2009 this fraud threatened to become public, and as a response Goldman Sachs again helped to find another way to hide its Greek actions, through a letterbox company in London.

So far Goldman’s profit from these transactions was at least 600 million dollars, and Greece owes the bank the tidy sum of 400 million dollars per year until 2037, for a total of more than 10 billion dollars, entirely at the expense of the ordinary Greece people. This behavior was a major contributor to the events that have driven the Greek economy to the abyss it now faces.

Most of the Greek have lost their welfare, the Greek social security system has been destroyed, and hunger and poverty are terrifying and widespread. An entire country is being robbed and enslaved to debt for the sake of extra profits for one corporation.

We should also mention that, on the evening that this award was announced in Davos, the heads of Goldman Sachs gathered in a neighboring hotel to discuss their Greek fraud and robbing as having been perfectly legal.

And this is technically true. But it is also the center of the problem, namely because Goldman Sachs takes part in writing those laws. The company is the epitome of a money machine with an opaque and matchless network of allies in top positions. For example, the head of the Goldman Sachs department which invented the Greek robbery, Mario Draghi, is the current president of the European Central Bank. Also three consecutive EU-Commissioners are former Goldman Sachs top-level employees.

In the United States we see the same progression: Robert Rubin, the US Secretary of the Treasury under Clinton came from Goldman Sachs. Hank Paulson, the former Goldman Sachs CEO, was also the US Secretary of the Treasure during the largest bail-out of the banking system the United States has ever seen, where he oversaw the transference of hundreds of billions of taxpayer dollars into the biggest banks on Wall Street while regular Americans were losing their jobs and home at the highest rates since 1930s.

Because of the above we hereby formally hand over to Goldman Sachs the award for irresponsible behavior in finance and economics.

Jamie Dimon’s bonus too low – shoulda been $100 million at least

[This post, cross-posted from mathbabe, reflects a discussion at Alternative Banking.]

People have been making a big fuss about JP Morgan Chase CEO Jamie Dimon’s recent raise. They seem to think that, what with all the lawsuits that JP Morgan Chase has been involved in this past year, exposing so much fraudulent behavior which directly contributed to so much human suffering, the guy should be somewhat humbled and punished. They even wanna question his right to stock options he shoulda had way back in 2008, when the world was on fire. The nerve!

I mean, maybe by some definition of “earned” he doesn’t deserve those 20 sticks. Maybe they think they have better plans for the bonus money. But from where I sit, the guy should have gotten way more, considering he set the price of fraud by big banks so low and in so many different ways.

I estimate that he should have gotten at least $100 million, using a very basic fact that the regulatory arbitrage which he displayed, and which now exists as a precedent for all bankers for the rest of eternity, benefitted not just him, not just JP Morgan Chase, but all the Too-Big-To-Fail banks. For that reason, every TBTF bank should give him at least $20 million as a reward for their future profitable fraudulent earnings. Since there are at least 5 TBTF banks, I’m just scaling up in a super reasonable way.

I know that might sound weird, for Bank of America and Goldman Sachs, which are generally speaking competitors to JP Morgan, to give Jamie Dimon cash money. And they might want to keep it on the DL for that matter, for the sake of appearances.

But after all, this is the guy who called Attorney General Eric Holder on the phone and negotiated a settlement, for christ’s sake! Who DOES that? That’s really above and beyond the chutzpah of even the most criminal of masterminds. Only the creamiest of the crop, only the most devoted of banker psychopaths can get away with that shit. That is to say, Jamie Dimon, and maybe Lloyd Blankfein (Dear Lloyd: I don’t doubt for a minute that you will have your day too, very soon, and then all the big boys will pitch in for your supersized bonus).

So what are you waiting for, Citigroup? Wells? When are you guys ponying up what we all know Dimon deserves from all of the elite institutions protected from prosecution? I say you guys perform the equivalent of a kowtow in Wall Street terms, which is of course monetized, in the form of a check. Send it on over.

Come to think of it we should also offer extra cash to HSBC’s legal team, and for that matter Eric Holder himself. If it hasn’t already been done.

Martin Luther King’s Words Important Today

“I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin to shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives, and property rights are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.”

Martin Luther King, Jr. speaking at Riverside Church in NYC. April 4, 1967.

Wonderful diagnosis of the problem but the need for this revolution is even more pressing today.

Note: this is the opinion of Josh Snodgrass and does not represent Alternative Banking as a whole.
Josh Snodgrass and other voices of Alternative Banking are posted here on our web site.

Fight TPP and “Fast Track” NOW

[These are Josh Snodgrass's opinions and not necessarily those of Alt-Banking.]

NOW is the time we need to make maximum effort to oppose TPP (Trans-Pacific Partnership). A crucial step to blocking it will be to stop Congress from passing “Fast Track” legislation that would allow it to be considered under rules that speed it up and prevent or restrict amendments. A bill was just introduced so now the time to make our opposition clear.

Go to Trade Justice’s web site, and Facebook pages to see what’s up. Get on their e-mail list:   info@tradejustice.net

Here is a great blog post about just one of the many bad aspects  to it:

GLOBAL BAN ON LEFT WING POLITICS

Note: the blogger is English so he is focused on the Transatlantic treaty, not TPP. The issues are the same and Fast Track would enable both to pass.

Some crucial Congressmen have expressed their opposition to the current bill. This is very good. But, personally, I am concerned that some of them will propose a “compromise” Fast Track that will pass. We need to stop Fast Track in any form.

Join Trade Justice in this effort. STOP FAST TRACK! Now is the time!

10 Worst things about Wall Street in 2013 (and 5 Silver Linings) #OWS

Written by the Alternative Banking group of Occupy Wall Street. Crossposted on Mathbabe and Altbanking.net.

Compiling a list of the 10 Worst Wall Street Actions of 2013 should be easy–there are so many to choose from!  The problem is, it often takes years to see which financial activities and innovations have been the most destructive and destabilizing.  Therefore, the following should be considered merely a sample of the ways Wall Street has maneuvered, manipulated, defrauded and deceived us during the past year.

Bottom 10 things we found out about Wall Street in 2013

  1. In Washington, It’s a Wash
    One of the most obvious examples of Wall Street influence on Congress was HR 992 to roll back some of the derivatives restrictions on banks. The NY Times discovered that Citigroup had drafted most of the language, some of which was accepted almost word-for-word. The House passed it with bipartisan support. Meanwhile, bank lobbyists had excessive influence on the agencies writing and enforcing the Volcker rule.

  2. Still Too Big to Jail
    The financial system in general, and the mammoth banks in particular, are still just too damn big. In 2013, JP Morgan Chase was the poster child for this problem, with its numerous legal problems, for which they set aside on the order of $28 billion dollars just to pay legal fees. The London Whale debacle, which involved Dimon lying to shareholders and Congress, showcased both how banks make their biggest money from pure speculation, and how they are enabled by lawmakers and regulators through their “Too Big To Fail” status.

  3. Banks Manipulate Commodities, Fed OKs It
    Banks like JP Morgan Chase and Goldman Sachs have manipulated access to commodities such as aluminum and electricity in order to increase their profits.  The Federal Reserve has permitted the biggest banks to postpone complying with such regulations as still exist to limit banks’ involvement in commodities, or to ignore them altogether.  Minimal fines the banks have paid are simply the cost of doing business and are far outweighed by the money they’ve made.

  4. Zombie Foreclosures
    The banks continued to exploit underwater homeowners. One of the worst abuses is called “zombie foreclosures” where the bank pretended to foreclose — evicting the owner — but then didn’t file legal papers. This allowed the banks to continue to rack up interest, fees and penalties because the homeowners, reasonably, stopped making payments because they thought the homes were no longer theirs. To add insult to injury, when the banks sent out checks to homeowners in restitution for past misdeeds, they bounced.

  5. Pillaging of Detroit
    Detroit’s largest creditors, UBS and Bank of America, made it clear just how far they’re willing to go to collect on debts from highly-risky interest rate swap deals they made with Detroit’s leaders before the 2008 financial collapse: they’re coming for the art! Creditors, led by Detroit’s imposed “Emergency Manager” Kevyn Orr, sent Christie’s auction house to the Detroit Institute of Arts to valuate the works, which are all held tightly in public trust by the city. It still remains to be seen whether the approximately $900 million works – we think they’re priceless! – will be sold off to pay off debts or in some hostage deal to pay threatened but constitutionally-protected city worker pensions.

  6. Killing Credit Unions
    According to MSN.com, credit unions offer low rates on loans, higher rates on savings, better credit cards deals, and lower fees. Perhaps because of these competitive benefits, the American Banking Association ran an ad campaign to revoke the tax exempt status for America’s credit unions.

  7. Court Evasion
    There’s a familiar yet still outrageous lack of criminal prosecution for (pick your favorite settlement). But let’s concentrate on an exception that proved the rule, specifically what has been termed the “Bank of America/ Countrywide hustle”. Here Countrywide deliberately and desperately gamed underwriting standards to dump loans on Fannie and Freddie, and got caught. Worst of all, jury found defendants guilty in about 3 hours. If only more cases had been brought to trial: juries are chomping at the bit to find banks guilty. Which is probably why more weren’t.

  8. Never on Hold
    U.S. Attorney General Eric Holder was an egregious case study in how Washington kowtows to Wall Street. When JPMorgan Chase wanted to settle their many legal difficulties, CEO Jamie Dimon had a private meeting with Holder to negotiate; the final settlement involved admission of illegal activity by JPMorgan but no criminal charges — just fines mainly paid by shareholders. Holder also admitted to Congress in March that the megabanks were too big to prosecute. While he later retracted the statement, his actions — never bringing criminal charges despite admitted criminal activities — speak louder than his words.

  9. Writing the Rules
    The banks, among other corporations, pushed for the Trans Pacific Partnership (TPP) treaty that will greatly constrain efforts by the U.S. and other countries to regulate. For instance, it would prevent the imposition of a “Robin Hood Tax” on stock trading, it would roll back some of Dodd-Frank and prevent a return to Glass-Steagall. TPP would also forbid public banks such as the Bank of North Dakota or a return of the Post Office Bank. No wonder we aren’t hearing more details.

  10. Ongoing cultural confusion
    AIG’s President and CEO Robert Benmosche compared criticism of AIG bonuses to lynchings in the Jim Crow South. Mistaking a papercut for a crucifixion is the inevitable delusion of a pampered and under-prosecuted criminal upper class.

5 Silver Linings

  1. Occupy the SEC Gains Ground
    Occupy the SEC‘s impact on the Volcker Rule (which originally aspired to banning proprietary trading and ownership of hedge funds by banks) could not be more evident. When the Volcker Rule was finalized in December, the hard work Occupy the SEC did writing a 325-page comment letter on paid off. The letter was cited  284 times by the regulators. In some cases, the final rule adopted their recommendations while in others the rule was modified in the direction of Occupy’s suggestions.

  2. Radical Eminent Domain
    Richmond, California Mayor Gayle McLaughlin ignited a fury on Wall St and in Washington by employing an eminent domain threat to force intransigent banks to renegotiate – and reduce principal – for underwater homeowners. The move has sparked everything from lawsuits and threats of mortgage lenders leaving town to copycat actions in other underwater cities as far away as Irvington and Newark, New Jersey. Supporters of the promising tactic are calling it the Reverse Eminent Domain Movement and even Occupy 2.0.

  3. No Highchair for Larry
    Larry Summers did not become the new Fed Chair in 2013. It was a close call but Larry Summers may finally have made too many obvious and ridiculous mistakesderegulating financial derivatives to pave the way for the financial crisis, for one, and aiding criminal fraud in Russia for another – to be made, once again, one of the most powerful people in the world.

  4. Journalists Expose the Banks
    Several journalists deserve extra praise this year for their coverage of Wall Street’s illegal and undemocratic behavior:: Matt Taibbi, Bill Moyers, Yves Smith, Gretchen Morgenson, the International Consortium of Investigative Journalism, ProPublica and Wikileaks. Taibbi alerted us to the HSBC settlement proving the drug war is a joke, Moyers highlighted how people can provoke change and, with Smith, exposed the dangers of the Trans-Pacific Partnership. Morgenson skewered payday lending and many other unsavory financial practices. The International Consortium of Investigative Journalism and WIkileaks exposed documents that the banks want to keep secret — for good reason — about enormous amounts held off-shore and TPP drafts..

  5. Occupy Finance and Strike Debt

Stanley Fischer, poster boy for austerity, leading candidate for Fed vice chairman

In 1997, several East Asian countries had currency collapses and debt crises — something about banks borrowing too much short term money, sound familiar?

The International Monetary Fund (IMF) swooped in to the “rescue” them by imposing austerity. Stanley Fischer was the technocratic #2 and enforcer of those terms. He became the poster-boy for how the IMF and US were imposing harsh terms which forced the end of subsidies to keep food and fuel prices low.

He later said  ”Every place you turn you read the same story, that we came in, that we made things worse,” said Stanley Fischer, ”We frequently get the blame, some of it well-deserved”

The New York Times reported: “Once, the I.M.F.’s critics were largely found in Africa and South Asia, were the fund was often viewed as arrogant; today they include Wall Street’s biggest players and top officials in the most powerful economies of Asia and Europe.”

He is now reported to be the front-runner for the number 2 post at the Fed. He is the second coming of Larry Summers. He would be a terrible choice for the Fed.

 

When Is $13 Billion not $13 Billion

There is a lot of news about the JPMorgan settlement for $13 billion and how tough the government is (finally) being.  Well, I’m not sure how much the settlement really is but I know it is much less because:

  • Some of it is not new. They’d already agreed to $4 billion of it
  • Most of it is restitution. That is, compensating people for harm they did. They owed that money and they are not paying all they should. If I took $100 from you and then the police made me give $50 back, would you think they were doing their job?
  • They are deducting most of it from their taxes. So, the government is essentially giving them a discount on it and treating it as a normal business practice.

There is one piece of potentially good news. JPMorgan asked the government to absolve them from criminal charges. The government refused. JPM actually agreed to help the government make a case against some past employees. This could conceivably be good if the government actually follows through and if they prosecute senior executives. I’m not holding my breath.

P.S. The Too-Big-to-Fail subsidy is worth tens of billions of dollars every year to the megabanks. (I think the $83 billion Bloomberg estimate is too high but it’s the right order of magnitude).  JPM — the biggest of the megabanks — surely gets a decent chunk of that. EVERY YEAR. That puts the $13 billion fine (that really is costing them much less) in proper perspective.

P.P.S. According to the New York Times, the JPM board thinks that Jamie Dimon is a hero for arriving at this settlement. You can understand why.

“The bank’s board remains steadfastly behind Mr. Dimon, who holds the dual roles of chairman and chief executive. That support traces to a widespread belief among board members that the deals represent a victory for the bank as it tries to move past its woes.”