The Client Always Comes First At Goldman... Except When He Doesn't, Which Is Also Always

Tyler Durden's picture

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vegvamp's picture

You guys living in America better DO something about all this...

Problem Is's picture

We are... chetos another beer and watching the ball game...

At least until my SEC friend is done downloading the tranny porn...

Captain Obvious's picture

I plan to pile on some shorts, and watch the nex meltdown with a 6pack. For some of us atleast it will be comical

alien-IQ's picture

This has not been America for a long time. It was sold long ago. However, the purchase came with the naming rights and thus your confusion about this being "America"...The America you seem to be speaking of was served with a cease and desist long ago...this is merely the shell.

SWRichmond's picture

working on it, and within the political process....and as a measure of thanks for my doing so publicly, I expect to be the subject of a no-knock 3am visit by a bunch of heavily armed men wearing body armor and masks anytime now...

Glenjo's picture

Uh oh, looks like the vampire squid European sales desk has expressed some remorse in an email:

 

http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-i...

 

How unfab fab is that?

Reggie Middleton's picture

I was wondering when, and if the GSAMP slide would gain some traction. I wrote about this numerous times (see below). As for a solution, I have also come up with a very simple solution that will end this entire charade in about a fiscal quarter - tie the GS compensation directly to risk adjusted return, with deferral and clawbacks. That is RISK ADJUSTED returns, not revenues!

The Solution to the Goldman (and by Extension, the Securities Industry) Compensation Dilemma

Add to this the requisite Client's best interests/bank as a fiduciary standard (which will make the banks think twice before fornicating the patsy) and we have a recipe for a near instantly reformed financial system.

So, How Many Banks and Analysts Were Bearish On Goldman Before Today?

When the Patina Fades… The Rise and Fall of Goldman Sachs???

For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks,

Reggie Middleton vs Goldman Sachs, Pt. Deux: Buy into a Collapsing Market to Fund Bonuses, PLEASE!!!

Reggie Middleton vs Goldman Sachs, Round 1

digalert's picture

I saw and listened to a good deal of that sloppy CONgressional TV talk show. Not once did I hear the words, deception, lied or even FRAUD. Somehow I think those were carefully avoided by all the hosts and guests.

SayTabserb's picture

Jeff Skilling appeared before a joint committee, testified at great length without a lawyer and without invoking the Fifth, and later was sentenced to about 25 years. You can be assured that words like "unethical" are permissible, but no hard words like "fraud" and no reference to Rule 10b-5, etc.  All prearranged as part of the dog and pony show. The Grand Inquisitor, Sir Combover, gets to thunder self-righteously (hoping we forget his vote for the repeal of Glass-Steagall), strengthen his party's chances in November, and GS leaves mostly intact (with the SEC case slightly weakened, in fact) and can return to their real love, making risk-free money with money supplied by Levin's employer, the federal government. It's all so symmetrical, it makes you want to cry with the beauty of it.

JohnKing's picture

It's just Goldman doing what Goldman does best, playing the shell game, sleight of hand..look deeply at this TRANSACTION, keep your eye on the transaction..

sweet ebony diamond's picture

For the past 70 years or so, Goldman Sachs presented themselves as a respected financial adviser to the world.

Everybody (institutional investors included) called them for help and advice.

What happened?

I have an idea. And I don't agree that we the people (meaning relatively law-abiding, honest citizens) & Heidi Montag must pay for mistakes made.

ghostpirate's picture

the whole notion of self-review is one big pile of bullshit.

Hephasteus's picture

I just watched Bill Clinton yap on about the economy. He is completely full of shit and was defending "Gold Sachs".  He never found a concept he couldn't twist into meaninglessness.

JR's picture

Bill Clinton always slips and slides and twists the stories but he is solid when it comes to Goldman. Clinton’s former Treasury Secretaries, Robert Rubin and Larry Summers, called all the shots from the repeal of Glass-Steagall to the Mexican bailout for the benefit of Goldman after it had plunged billions into Mexican bonds. 

And now the world’s most intelligent woman, Hillary Rodham, while she does not have Bill’s gift of gab, is at least true to the Goldman rule.  Hence, with her full complement of press people and door openers she travels the world as the voice of America but trotting along is none other than Goldman Sachs in the person of Robert Hormats, former vice chairman of Goldman Sachs International, who nails down all those foreign entanglements and economic policies to the benefit of Goldman as Obama’s under secretary of state for economic, energy and agricultural affairs.   And wasn’t it Bob Rubin who was Hillary’s campaign advisor?

Lest we forget, it was Rubin under President Clinton who engineered international rescue packages not only for Mexico, but also for Russia and many Asian countries.

Tyler has it right.  It’s a monopoly. Hormats especially is critical for Goldman et al., advancing and protecting its worldwide enterprise. Goldman controls the treasury and all aspects of finance of the U.S. economy. 309,000,000 Americans and their national and foreign policies are keyed to the interests of a small foreign power.

Problem Is's picture

Thank You JR For Connecting the Dots

Thank you for the excellent Goldmanite riddled, Clinton's as puppet props, idiot but too connected not to fail upwards Robert "What Me Worry About Massive Insider Trading at Citi" Rubin analysis...

SilverIsKing's picture

Anyone on that conference call that bought GS' BS will be filing a lawsuit.

buzzsaw99's picture

gs clients are chumps and deserve the screwing imo.

dumpster's picture

slowly the blinders come off the analyst eyes ,

the $250 guys plying their trade .

the slime and ooze has metastasized into noticeable lumps/

also the rank and rank .. the followers the believers , are slowly feeling the blood of the generations of Keynesian plunder coming to the fore,

last as gold makes its claim for  honesty and the scales of value.

the lost zit kids . will succumb and look to the giants . who have given warning from  the past ten years.

the little girl will proclaim that the clothes are missing . and what has been in full view will now be excepted .

the wave has gone out . even buffett is seen naked as a jay bird  

 

jmc8888's picture

What's that I hear?

That's the sound of HR department trash bins being searched for other juicy tidbits across the country/world. 

A new QE has just been announced through Office Max, paper shredders.  Sorry, no discounts with the purchase of a Kindle.

 

chindit13's picture

I believe the key component of Goldman Sachs GSAMP program is that clients may use GS Award Points, aka Lloyd's Lucre, to visit any of a number of GS-run S&M studios where a range of women, sporting the most haut couture Dominatrix-ware this side of Place Pigalle or Kabuki-cho, are available to satisfy the Goldman Customers' ongoing and insatiable appetite for physical, emotional and mental abuse. After all, why else would they be Goldman clients if degradation and humiliation was not the goal in and of itself?

Some people are born to be customers, god bless'em.  Yo, Goldman customers...when you look at Goldman's P&L, prop desk or customer driven, does it look like they left anything at all on the table for you? 

As Swenson's self assessment makes painfully clear, the firm's goal in 2007 was to hose YOU.

 

jippie's picture

Hey Tyler,

What about page 10 of the attachement wher someone talkls about

We were long and needed to reduce risk in a situation where there were few opportunities to shed
the ABX indices we were long. The CDO managers, had not grown concerned by that time. I recognized the enormous
opportunity the CDO market presented us and took advantage of the Index to single-name basis.In November and December of last year, we agressively capitalized on the franchise to enter into efficient shorts in both the RMBS and CDO space.

Doesn't that basically say: "We had all this crap sitting on our books and we needed some suckers to buy it. The CDO managers had no clue what was going on so we used the CDO space to rape all the people investing in that asset class."

Or how about page 11:

2. Personally meet with accounts more often and help our core client base get back on their feet post fall out.

" After we rape our clients, I need to be faster at helping them back on their feet to set them up for the next round"

Or how about the monopoly that GS is and noone seems to care about. Hello Anti-Trust law???

3. continue our dominance as the leading ABS CDS franchise allowing us to capture the extraordinary inefficiencies in the synthetic market

I am simply lost for words.

gimli's picture

Sen. Ben Nelson, like GS, puts the people of Nebraska first.

Especially the ones who own $6 million in Berkshire Hathaway

 

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/28/AR201004...

jippie's picture

Jesus, I hadn't even started reading further. It just gets better:

1. Dec-Feb: With the desk quite long and ABX trading down from par to 95, we had a rough start to the year. The prevailing opinion within the department was that we should just "get close to home" and pare down our long. During this process, I had the following observations: (1) Given how much ABX we had purchased through the broker market in 2006, the world would think GS was very long for the foreseeable future. We could use that fear to our advantage if we could flip our risk, (2) After unsuccessfully trying to sell our long to some of _ accounts, I realized traditional distressed buyers were no more likely to buy ABX at 85, 75, 65, etc. than at 95. ~was just too binary, so there would be little support if negative momentum began, (3) The fundamentals for mortgage credit were undeniably deteriorating, (4) CDO managers were in denial, saying the ABX index was purely technical and the market for CDOs would bounce back in January. Manager's sentiments would allow us to amass large amounts of cheap single name protection if we desired, and (5) If the market truly tanked, the already large CDO warehouses would have to liquidate, further exacerbating the move and ultimately allowing us to cover. Given these 5 observations, I concluded that we should not only get flat, but get VERY short.

Further proof on how all of the GS deals in 2007 were fraudulent, i.e. sold with the intention of blowing up in the ivestors faces. Now whether legally this can be stablished I'm not sure. But it basically says that thee are two classes of GS 'friends'. Those who get to play with the gig boys and those who are just used to fund the annual bonuses.

SWRichmond's picture

Denial as a market force.  Just like now, with the fiat bugs.

buzzsaw99's picture

I

Keep

Buying

Awful

Crap

Anyway

strannick's picture

Jeff Christian at the CFTC hearings, Lloyd B. at his Senate Hearings.

They keep insinuating that its all a bit to sophisticated for us, they will try to explain it as best they can.

However it seems to keep slipping out in their testimonies that we're dumb not cause its to sophisticated, but cause we assumed they werent crooks.

 

primefool's picture

Suggestion for an updated "Corporate Principles":

" Honor Thy Prey"

vegvamp's picture

Oh Lloyd, we thank you for the food...

Problem Is's picture

Is Lloyd B. God a short fucker? 5' 4"-ish?

He sure has an annoying sqeaky voice like Morey Amsterdam...

laughing_swordfish's picture

World"s Shortest Book -

Goldman Sachs Handbook of Business Ethics

 

Apocalypse Now's picture

This was all foretold by Andrew Jackson.  This farewell speech of his is the most insightful thing I have read about our current predicament.  It was so refreshing to read his warning and description of Gotham, I promise it is worth the time.

This was predicted 173 years ago, the banking system has only become more diabolical.  Andrew Jackson fucking nailed it, he was a genius and deserves a pulitzer.  This human being was a true american hero and would be infuriated about his likeness on fiat currency.  Where are our heros, where are our statesmen?

http://jessescrossroadscafe.blogspot.com/2010/04/quote-of-week-perils-of...

 

AnAnonymous's picture

Imperialists and bankers have developped a love-hate relation for a long time now.

Imperialists are looking for power and control and are dependent on bankers to fund their endless spending spree (often finishing in deficit, fiscal austerity is a no go in war) required to enable their imperialistic policies, always bidding against their future conquest to cover for their spending spree.

Bankers are welcome to enable that. The problem turns up when the imperialist has to face that he is not struggling to put himself in power but will incidentally put the bankers in charge of the new order.

 

Guy is pushing hard to become the boss of the bosses just to face he has pushing up another boss higher than himself.

 

weinerdog43's picture

+1000

Totally agree.  I'm afraid that 90% of the American public couldn't get halfway through because Jackson uses a lot of multi syllable words.  I suspect he would have bitch-slapped that worm Levin and put a bullet through the noggin of Bernanke.   We know that Jackson was certainly capable of killing someone.  How far we've fallen!

JR's picture

The Interrogation of Lloyd Blankfein by Mike Whitney | CounterPunch Apr 28,2010

Tuesday's hearings of the Permanent Subcommittee on Investigations laid the groundwork for future criminal prosecutions of Goldman Sachs Chief Executive Lloyd Blankfein and his chief lieutenants whose reckless and self-serving actions helped to precipitate the financial crisis. Committee chairman Senator Carl Levin (a former prosecutor) adroitly managed the proceedings in a way that narrowed their scope and focused on four main areas of concern. Through persistent questioning, which bordered on hectoring, Levin was able to prove his central thesis:

1. That Goldman puts its own interests before those of its clients.

2. That Goldman knowingly misled it clients and sold them "crap" that it was betting against.

3. That Goldman made billions trading securities that pumped up the housing bubble.

4. That Goldman made money trading securities that triggered a market crash and led to the deepest recession in 80 years.

The hearings lasted for 8 hours and included interviews with seven Goldman executives. Every senator had the opportunity to make a statement and question the Goldman employees. But the day belonged to Carl Levin. Levin was well-prepared, articulate and relentless. He had a game-plan and he stuck to it. He peppered Goldman's Blankfein with question after question like a prosecuting attorney cross-examining a witness. He never let up and never veered off topic. He knew what he wanted to achieve and he succeeded. Here's a clip from his opening statement:

"The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities.....It profited by taking advantage of its clients' reasonable expectation that it would not sell products that it didn't want to succeed....

“Goldman's actions demonstrate that it often saw its clients not as valuable customers, but as objects for its own profit....Goldman documents make clear that in 2007 it was betting heavily against the housing market while it was selling investments in that market to its clients. It sold those clients high-risk mortgage-backed securities and CDOs that it wanted to get off its books in transactions that created a conflict of interest between Goldman's bottom line and its clients' interests." (Senator Carl Levin's opening statement for the Permanent Subcommittee on Investigations)

Levin's entire statement is worth reading, but these two paragraphs distill his plan for exposing Goldman. He was determined to "go small" and repeat the same points over and over again. And it worked. From a purely strategic point of view, Levin's battleplan was flawless. The Goldman execs never knew what hit them. They swaggered into the chamber thinking they'd breeze through the hearings and have a few laughs over cocktails afterwards, and left with their heads in their hands. They were outmatched and outmaneuvered.

Senator Carl Levin:

"These findings are deeply troubling. They show a Wall Street culture that, while it may once have focused on serving clients and promoting commerce, is now all too often simply self-serving. The ultimate harm here is not just to clients poorly served by their investment bank. It's to all of us. The toxic mortgages and related instruments that these firms injected into our financial system have done incalculable harm to people who had never heard of a mortgage-backed security or a CDO, and who have no defenses against the harm such exotic Wall Street creations can cause....

“These facts end the pretense that Goldman's actions were part of its efforts to operate as a mere 'market-maker,' bringing buyers and sellers together. These short positions didn't represent customer service or necessary hedges against risks that Goldman incurred as it made a market for customers. They represented major bets that the mortgage securities market - a market Goldman helped create - was in for a major decline. Goldman continues to deny that it shorted the mortgage market for profit, despite the evidence...

“The firm cannot successfully continue to portray itself as working on behalf of its clients if it was selling mortgage related products to those clients while it was betting its own money against those same products or the mortgage market as a whole. The scope of this conflict is reflected in an internal company email sent on May 17, 2007, discussing the collapse of two mortgage-related instruments, tied to WaMu-issued mortgages, that Goldman helped assemble and sell. The 'bad news,' a Goldman employee says, is that the firm lost $2.5 million on the collapse. But the 'good news,' he reports, is that the company had bet that the securities would collapse, and made $5 million on that bet. They lost money on the mortgage related products they still held, and of course the clients they sold these products to lost big time. But Goldman Sachs also made out big time in its bet against its own products and its own clients." (Sen. Carl Levin)

Levin had all the facts at his fingertips and put them to good use. Goldman's execs were on their heels from the start and never really regained their footing. Even worse, the hearings showed that Goldman cannot be trusted. Their reputation is in ruins. Levin proved that if Goldman has junk in its portfolio, it won't hesitate to dump it on its clients and then pass around high-fives at the prop-desk. Here's a typical exchange between Levin and the former head of Goldman's mortgage department, Dan Sparks:

SEN. CARL LEVIN: June 22 is the date of this e-mail. "Boy, that Timberwolf was one shitty deal." How much of that "shitty deal" did you sell to your clients after June 22, 2007?

DAN SPARKS: Mr. Chairman, I don't know the answer to that. But the price would have reflected levels that they wanted to invest...

SEN. CARL LEVIN: Oh, of course.

DAN SPARKS: ... at that time.

SEN. CARL LEVIN: But you didn't tell them you thought it was a shitty deal.

DAN SPARKS: Well, I didn't say that.

SEN. CARL LEVIN: Who did? Your people, internally. You knew it was a shitty deal, and that's what your...

DAN SPARKS: I think the context, the message that I took from the e-mail from Mr. Montag, was that my performance on that deal wasn't good.

SEN. CARL LEVIN: How about the fact that you sold hundreds of millions of that deal after your people knew it was a shitty deal? Does that bother you at all; you sold the customers something?

DAN SPARKS: I don't recall selling hundreds of millions of that deal after that.

Levin was just as tough on Blankfein, reiterating the same question over and over again: "Is there not a conflict when you sell something to somebody, and then you bet against that same security, and you don't disclose that to the person you're selling it to? Do you see a problem?"

At first, Blankfein acted like he'd never considered the question before, as if "putting himself in his client's shoes" was something that never even entered his mind. His look of utter bewilderment was revealing. Then he launched into the excuses, the evasions, and the elaborate, long-winded ruminations that one expects from schoolboys and hucksters. But Levin never gave and inch. He kept pushing until Blankfein finally gave up and responded.

"No," he stammered, "In the context of market-making that's not a conflict."

Blankfein's answer was a triumph for Levin, and he knew it. To the millions of people watching the sequence on TV, Blankfein's denial was as good as an admission of guilt. It showed that Wall Street kingpins don't share the same morals as everyone else. In fact, Blankfein seemed genuinely confused that morality would even be an issue. After all, it wasn't for him.

Levin covered some old ground, pointing to Goldman's dealings with Washington Mutual's Long Beach unit which was a "conveyor belt" for garbage subprimes which frequently blew up just months after they were issued. It's clear that Goldman knew the mortgages were junk that were “polluting the financial system”, but that made no difference. Goldman feels that it's responsible to its shareholders alone, not the people who bailed it out.

All in all, it was a bad day for the holding company that's come to embody everything that's wrong with Wall Street. Goldman entered the hearings as the most successful financial institution in the country, and left with its reputation in tatters and its future uncertain. Its CEO came across as shifty and jesuitical while his executives seemed arrogant and uncooperative. At no point during the hearings did any of the Goldman throng look at ease with themselves or their answers. They remained rigid and sullen throughout. On top of that, they were unable to defend themselves against the main charge, that they don't mind sticking it to their clients if it means a bigger slice of the pie for themselves.

The truth is, the Golden boys were handled quite capably by an elderly statesman who took them to the woodshed and gave them a good hiding. Levin's stunning performance is likely to draw attention to the upcoming SEC proceedings and, hopefully, build momentum for more subpoenas, indictments, arrests, and long prison sentences.

http://www.counterpunch.org/

pan-the-ist's picture

I like most of what counterpunch has on its site, especially the stuff by Pam Martin and Mike Whitney.  I just wish it was a forum...  Maybe Mr. Whitney would consider publishing his stuff here too...

Marvin_M's picture

Alas, we are witnessing theatre of the absurd.  A corrupt, crony government putting on a show for the sake of the poor dumb mob who are shouting for blood.  A bought and paid for President surrounded by agents of Wall Street trying his best to keep his head down while appearing to be "angry as hell".  Where is FDR who begged the bankers to hate him, dared them to defy the government's and the people's wrath when the banking criminals last rose to this level of power.

From what I have read the SEC case is lame, probably by design.  It will be found that technically nothing illegal happened.  Charges of "moral crimes" coming from this immoral government will fall by the wayside just as any honest attempt to expose or change the trajectory of the militarist, corporatist, banking criminals who have seized control of the planet has been successfully trampled.

mephisto's picture

Reading Fabs review makes me sad, compared to the MDs he is clearly just a kid doing what he was told. Probably a good, smart, diligent VP, now SVP in London.

It makes less and less sense to pick one junior guy from the rest.

pan-the-ist's picture

It could be the purpose of his life is an example to everyone else of "why you don't get in bed with the beast."

I am an Atheist so appreciate the allegory.

primefool's picture

I fear that all this hand-wringing will lead to regulation that impose Fiduciary obligations on market makers. Then average investors will be truly treated like idiot-children and be led sheep like into "safe" products only . After all if you are a broker and have a legal fiduciary responsibility and the client wants to buy SKF ( double inverse ETF) - you really should'nt let him do that - too risky. At the end of the day if folks want to be treated like children and be kept "safe" bu the govt. they will get their wishes.

pan-the-ist's picture

Some investors aught to be treated like idiot children.  Just look at the funds most investors have to choose from (401k etc)  There is an awful lot of dumb money to prey on.  My guess is that Wall Street salivates when they see these piles of cash sitting there, and stay up nights trying to think of schemes to take it.

This clearly defines the the problem with the relationship that Wall Street has with its clients.

primefool's picture

short ETFs, Commodities, foreign currencies and other purely speculative investments - oh - and especially gold ( no earnings, no dividends). Not suitable for regular investors. No fiduciary should allow average investors to buy such dangerous products or the SEC will be all over him like a cheap suit. So treauries ( at a 4 basis point yield) will be deemed safe as will munis ( from bankrupt states). Of course the large international hedge funds ( who would have moved to Asia by then) will do whatever the hell they want and live like kings.

primefool's picture

Hmm maybe these hearings are really a stage setting exercise so the govt can then impose all kinds of investment constraints to protect hard-working, regular folk from predators like GS. No more casino like wild gambling. Treasuries and munis for folks over the age of 52 1/4 ( unless you are blind in which case it will be 49 1/2). Brokers , with a dramatically lower trading volume will necessarily have to charge larger comissions for the sale of treasury /muni funds to Joe 6P. Sounds fair enough right? Bernanke will maintain rates just high enough , so after paying brokerage comissions and fund expenses the average investor will receive a Zero interest ( in nominal terms) . Since inflation will never again arise by law - this seems fair enough.

primefool's picture

As for taxes - since investment income will become non-existent - it would only be sensible to raise tax rates on earned income. Hey the govt needs the money - OK?

primefool's picture

Since it will become practically impossible for even people with substantial savings to earn investment returns to pay for the escalating healtcare, food and energy costs ( note: this is most definitely NOT inflation - OK?) - the govt will have to set up project style housing blocks where formerly well-off , prudent , savvy investors can get their allotted 500sf of living space and 2 hot-meals a day ( in the govt canteen). Apple pie on July 4 of course!

primefool's picture

But - we can all be thankful - At least we are Safe - due to the tireless efforts of our govt.

Temporalist's picture

 

Barofsky Says Criminal Charges Possible in Alleged AIG Coverup

 

“The definition of insanity is repeating the same actions over and over again and expecting a different result,” Barofsky says. “If the goal of TARP was to make sure we don’t have another financial collapse, well, obviously it’s made the likelihood of that much, much greater.”

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVHMZwNcj2B0

 

williambanzai7's picture

The bottomline is no one should believe that Goldman is anything higher or mightier than the rest of the pack when it comes to business ethics. Its the law of the jungle, full stop.

GOLDMAN BOILEROOM

http://williambanzai7.blogspot.com/2010/04/goldman-boiler-room.html

THE SQUID WITH THE SCREAMING BRAIN:

http://williambanzai7.blogspot.com/2010/04/squid-with-screaming-brain.html

 

primefool's picture

I think Mr Mike Whitney of Counterpunch is way off the mark though. Look if a hedge fund goes to GS and wants to buy xyz - and Goldman believes xyz is "crap" - what are they supposed to do. No sir I cannot sell you xyz because I believe it is crap and will not suit you?!!!!! This is what Blankfein kept trying to explain to Sen.Levin. But ofcourse Sen. Levin has already made up his mind to leave as his legacy the "Levin Amendment" - imposing fiduciary duties on market makers. Thats what troubles me.

primefool's picture

Of course not being a mrket player, perhaps Levin does not realize that what is or is not "crap" is usually perfectly obvious 2 years AFTER one buys it! For instance I firmly believe that 10 year US Treasuries are the biggest piece of crap there is. We'll find out if Iam right or wrong in a couple of years!! But of course , if Levin imposes fiduciary responsibilities on brokers - then no responsible broker should sell 10 year Treasuries to his clients!!