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The Secret Goldman Sachs Tapes
An anonymous reader writes: The radio program "This American Life" has published an extraordinary investigative report on how the U.S. government regulators in charge of keeping an eye on the banks actually interact with powerful financial institutions (podcast here). Financial journalist Michael Lewis describes the report thus: "The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems. Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them. The report quotes Fed employees saying things like, 'until I know what my boss thinks I don't want to tell you,' and 'no one feels individually accountable for financial crisis mistakes because management is through consensus.'"
most people here anyone have known for a long time that the banks and government have a symbiotic relationship. I guess its nice to see some proof for once. I cant say I am shocked in the least however.
have you seen my sig? there are many others like it but none that are the same
Our government clearly lacks the balls to regulate the banks and provide leadership. This is just sad.
Isn't it nice ... if you destroy one persons life, you get penalty big enougf to ruin your life - if you ruin 100'000 you get a "golden parachute".
Number of prosecuted persons (from last bank breakdown - and one before that - and next) is just appalling.
Carmen Segarra was hired to to clean up the poor oversight of the banks. Instead, she was fired for doing her job. Read the prepublica articles. It's a shame. Contact your senator and tell them to launch an investigation into the retaliation against Carmen!
I pledge allegiance to my share
of the United Stockholders of America
and to the profit for which it stands
one stock, Class-B non-voting, with a golden parachute for our CEO
Amen.
> The report quotes Fed employees saying things like, 'until I know what my boss thinks I don't want to tell you,'
No shit, its called top-down management. The minions don't do, say or think anything until instructed by their boss (or their boss's boss, or their boss's boss's boss)
Did anyone seriously expect anything else out of a system which STILL (probably will NEVER) hasn't nailed anyone to the wall for the financial crash?
Obama or Biden a former GS executive ? I'd like to meet your crack dealer.
I'm going over the headlines today working on my pandering campaign platform. So far as president I promise to fire the entire forest service, prosecute the phoebus cartel to the fullest extent of the law and demand that my banking regulators not only do their jobs properly but to antagonize the bankers as much as possible (Up to and including stabbing them in the face if they feel it's required.) I predict this will be fairly popular on the internet but end up receiving no campaign contributions. How's that working so far?
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Warren Buffet, a government employee and/or consultant? Please
Warren Buffet has probably one of the few people who has always gotten the best of Goldman Sach's because whenever they really fuck things over, he squeezed them for top of the line deals. Pretty much what Goldman Sach's did to anyone else given half the chance.
I happened across this before it got on here and listened to the entire thing. Here's a brief summary:
1. This American Life is a great show. My favorite, you should listen to it often.
2. Managers at the fed seem to be terrified of the banks
3. The lady doing the recordings is aggressive and speaks her mind.
4. There are many "Old Guard" people at the fed that have a cozy, friendly relationship with the banks they work with.
5. The banks actively cultivate this relationship because they realize friendly regulators are less likely to press issues.
6. She uncovered the fact that GS had no formal definition for "Conflict of interest" which is a violation of Fed rules.
7. The fed worked for months gathering evidence and there was consensus that they needed to force GS into creating a policy
8. Suddenly one day her management agreed GS did have a policy just not a good one.
9. She was called in and her boss tried to bully her into changing her report to say they did have a policy.
10. Not too long after she was fired.
11. I believe the suggestion is that GS has control over management and who gets hired/fired at the fed.
A friend of mine worked on Wall Street and said that her firm had a guy at the fed whom they slipped bribes to in exchange for information about the interest rates. Apparently this is widespread.
Timothy Geithner never worked for Goldman Sachs and off the top of my head I can also see Warren Buffet never worked for Goldman Sachs or the Obama administration, Robert Rubin never worked for Obama, Rogert Altman has neither worked at Goldman Sachs or the Obama administration.
Might want to check that list again to see what other missteps are there.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
He did this in 2008, http://online.wsj.com/articles..., an easy $500 million that no one else would be able to get.
Perhaps you didn't notice those names were in ALL CAPS, which makes his allegations very, very serious.
The biggest selling point they gave me was that if I played nice after 10 years I could leave the Comptroller's office and get a huge paycheck from one of the major banks.
Goldman Sachs has captured something much much bigger than a regulatory agency. The Federal Reserve is a massive financial operation with a charter from the people of United States to maintain the monetary conditions for a stable and robust market economy.
Goldman got the General Counsel of the New York Fed to force the dismissal of an investigator who was brought in specifically to stop the kowtowing. She was fired for asking follow-up questions and telling her superiors to change her reports themselves if they wanted them changed.
In the background of this scandal, Goldman Sachs was engaged in a transaction with the sole purpose of allowing a European bank to pretend that it was not overextended and so avoid recapitalizing to meet European-Union capital requirements. In other words, a European bank was risking an economic catastrophe that would have forced the EU to conduct a too-big-to-fail rescue, and Goldman Sachs enabled that bank to circumvent European banking authorities.
Every investment in securities involves risk, and risk reduces the price at which paper trades. The Fed is now a guarantor of financial investments, making them more valuable than they might be if true risks were incorporated into the pricing. And the Fed is just one of the sovereign assets controlled by Goldman's posse of financial institutions.
Meanwhile, we have neither a stable nor a robust economy. We just have incredible liquidity for investors in securities.
Listened to segment on NPR this morning, what I got out of it was the Fed is afraid of the big investment banks, when it should be the other way around. I was honestly a bit shocked by how timid and afraid the Fed people were, it was embarrassing.
'The unexamined life is not worth living' - Socrates
Let's not the forget the stupid risks those other institutions took included insuring overvalued GS securities that GS knew would make a loss. Who insured most of the GS securities? AIG. What happened to GS for conducting large-scale insurance fraud? Their debts were covered by the US government, nothing more.
Summary of the GFC: An influx of customers allowed banks to create a massive tranche of debt securities, causing profits to rise. Many institutions wanted to re-invest their profits in AAA-rated securities, increasing demand. To satisfy this demand banks created more debt securities using NINJA borrowers and pretended they were AAA-rated. Financial institutions created other unsound investments to increase their profits during this glut of money. When the fake securities didn't pay-out, the unsound investments also didn't pay-out, magnifying the losses.
We saw it at Arthur-Anderson, Enron & WorldCom, and GS: When the profits are above average, the rule-book is thrown away. Corporations silence conflict of interest, risk management, even legal constraints, when the money says "you can't lose". And if they didn't break a lot of laws, corporate welfare can be bought cheap.
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When you wrote: "...the banks and government have a symbiotic relationship... you seem to have missed the fact that neither side in this story was "the government"
The Federal Reserve Bank is NOT a part of the Federal Government; it is a bank that is run by the banks. This highly market-manipulating entity which would otherwise run contary to all the antitrust laws that Teddy Roosevelt gave us only LOOKS to the public to be part of the government because of [1] its name, [2] the bank allows the US President to nominate its chairperson, and [3] the Federal government allows its "notes" (those dollars in your wallet) to be used as the currency of the land. (THESE entanglements DO involve government, but that's not what is in the article). The artical involves a bank (Goldman Sachs) getting easy treatment by the (non-government) "Fed" (the privately-owned and hyper-secretive economy-manipulating Federal Reserve Bank, which is owned by the banks)
Can your say conflict of interest? I knew you could.
Although TIME Magazine had him as runner up for the Person of the Year in 2008 they also listed him as one of the "25 People to Blame for the Financial Crisis"
Why is Snark Required?