Why The Goldman Sachs Settlement Is An "Abomination And Insult To All Americans"

Tyler Durden's picture

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the auto-bailout case have weakened the tradition of strong adherence to the rule of law in United States. We believe these factors have contributed to the sharp decline in the rating for the legal-system area.

 

To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized, and heavily policed state.

 

– From the 2014 post: New Report – The United States’ Sharp Drop in Economic Freedom Since 2000 Driven by “Decline in Rule of Law”

The American public should be out in the streets by the hundreds of thousands demanding the resignation of President Barack Obama in response to the total sham settlement just announced by the U.S. government with Goldman Sachs. This farce should be seen for what it really is; a gigantic establishment middle finger waving contemptuously in the face of the reliably neutered and long-suffering American public.

A criminal financial organization that engaged in billions upon billions in fraud against the “muppet” public is once again getting off with barely a slap on the wrist and nobody’s going to do a thing about it. As I’ve said for years and years, until the public says enough is enough nothing is going to change. I suppose that’s simply not going to happen until the next economic downturn, which could emerge in earnest any day now.

David Dayan knows as much about this issue as anyone, and he just penned a scathing assessment of this perversion of justice at the New Republic. Here are a few excerpts from his piece, Why the Goldman Sachs Settlement Is a $5 Billion Sham:

This lack of accountability for Wall Street and the perception of a two-tiered justice system gnaws away at Americans’ trust. But now that the Goldman Sachs settlement Sanders referred to has been finalized, I’m sorry to say that he was wrong. If you are an executive on Wall Street who destroys the American economy, you don’t pay a $5 billion fine. You pay much, much less. In fact, you can make a credible case that Goldman won’t pay a fine at all. They will merely send a cut of profits from long-ago fraudulent activity to a shakedown artist, also known as U.S. law enforcement.

 

Goldman Sachs made far more than $2 billion on the sale of mortgage-backed securities, by the way. Check out this list from the settlement documents of all the securitizations they issued that are covered by the settlement; it comes to roughly 530 securitizations, each of which typically held $1 billion in loans. I wouldn’t insult Goldman’s money-earning prowess by suggesting it only made $2 billion in profit on $530 billion in mortgage-backed securities. So even if you think Goldman is paying some kind of penalty, at best it’s a cut of the profits.

 

And who benefits from Goldman’s payments? Not the investors who were the actual victims of the misconduct; as I noted before they end up paying more money by seeing principal cut on the loans they own. Some homeowners get affordable loans or reduced mortgage debt, even though Goldman Sachs specifically harmed investors. But the biggest beneficiaries in this transaction are the Justice Department, the New York Attorney General’s office, and the other state and federal agencies who receive cash awards, from the civil penalty and the resolution of other claims.

 

The upshot: Law enforcement settled a case on behalf of investors and then walked away with the proceeds, while investors got nothing. Goldman Sachs and the Justice Department get to divvy up the profits of a fraud scheme perpetrated on the public.

 

The Goldman Sachs settlement is the last of a series of enforcement actions hammered out by a state/federal task force on financial fraud, co-chaired by New York Attorney General Eric Schneiderman. Four other banks—JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley—paid similarly dubious fines over the packaging and sale of fraudulent mortgage-backed securities. The origins of this task force represent a failed choice by Schneiderman that let even more damaging misconduct on the part of banks go relatively unpunished.

 

Instead of a vigorous investigation, the Justice Department and 50 state attorneys general moved directly to negotiating a settlement. Schneiderman initially opposed that, but reversed himself. He theorized that the real money wasn’t in foreclosure fraud, but in this criminal packaging and selling of securitizations, this defrauding of investors. So he made a deal to create a task force with enough resources to examine and prosecute that misconduct.

 

All that evidence of fraudulent foreclosures, the largest consumer fraud in American history, turned into the National Mortgage Settlement, a “$25 billion penalty” against five mortgage companies, where only $5 billion was in the form of cash. Despite promises that 1 million homeowners would see principal reductions from that settlement, only 83,000 ever did. But no matter; Schneiderman promised that the task force would result in outcomes “an order of magnitude” bigger. 

That simply didn’t happen.

Of course it didn’t.

So the most wide-ranging financial crisis misconduct was quickly settled without investigation. And despite Schneiderman swearing that the task force would explore all options for accountability, none of its members ever issued a single criminal subpoena. The banks bought their way out of the problem on the cheap, no executive saw a jail cell or had to return a penny of personal compensation, and the law enforcement agencies, not the victims, reaped the majority of the rewards.

As we all know, this is just the latest example of how Wall Street gets away with pretty much anything it wants because it owns the government.

A  Hillary Clinton presidency will guarantee that this stuff will not only carry on, but will get exponentially worse. After all, we all know that…

Screen Shot 2016-04-01 at 3.34.42 PM

The fact that “we the people” put up with this is a national embarrassment.

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pathosattrition's picture

Short drop, sudden stop.

Dubaibanker's picture

Laws of capitalism were broken by the US Govt in 2008 when all major banks and various others were bailed out.

After this, they have allowed these zombie companies to function although real business is required to create jobs and in order to have a peaceful and strong society to function.

Without jobs in these businesses in the real world, the basic tenet of capitalism which is - transfer mechanism of money - from one person to another enabling each individual or family to be able to afford goods such as houses, cars, furniture, clothes etc has declined massively. This has led to masive demand destruction which surprisingly 99% of th epoliticians worldwide remain oblivious to, obviously which is shocking.

The lies propogated by various Govts and politicians of all hues and color has allowed GDP, unemployment, stock indices, but not the stocks themselves, to continue their rise to infinity.

As the society crumbles because the transfer mechanism of money which is the bedrock of capitalism has come to a grinding halt, we see rise in crime, weakening of society, unrest and halt of economic systems whereby domino effect arises and multiple sectors like F&B, real estate, FMCG etc i.e. everything keeps slowing down until most collapse  - because there is no real business except in the minds of the bureaucrats and politicians.

We face our own end, at the altar of faux capitalsim brought to us by our own, so called elected, politicians.

Our own survival is at stake and no one but ourselves are now responsible for our survival.

Sad that society has disintegrated to such an extent globally that nothing but money matters to people running the show.

This is not how we are born, nor are we taught this in schools, so why are some so different than the others that money and power makes them the worst scum than what God or the Universe could have possibly imagined?

From earth we come and to earth we shall return!

Escrava Isaura's picture

 

 

Dubai,

Would you favor for the government to stop issuing bonds and borrow directly from the banks?

 

orez65's picture

"Would you favor for the government to stop issuing bonds and borrow directly from the banks?"

Yes, if "fractional reserve banking" was outlawed.

Then the Government would be borrowing real capital from savers.

The present Federal Reserve and fractional reserve banking are legalized counterfeit of capital.

SILVERGEDDON's picture

They are not legal.

Only Congress has the legal Constitutional right to mint coin.

Legal tender - not fucking FED liar loan fiat fucking shit tickets.

Theosebes Goodfellow's picture

Loretta Lynch is a whore, a common prostitute. Oh, and "global warming" aka "climate change" is a fraud and a lie to be able to steal from the workers and producers.

Come and get me, bitch.

chumbawamba's picture

WELLS FARGO FUCKING STOLE MY HOUSE!

Escrava Isaura's picture

 

 

orez65 Yes, if "fractional reserve banking" was outlawed.

Outlawing America life style “its money” won’t happen. South and Central Americas tried to get from the under the dollar and you saw, and still seeing what’s happening to them.

Anyway, I found this post by dolph911 very telling: Don’t get misled by the minutia of what the stock market is doing, or what the economy is doing on a quarter to quarter basis. Besides it will drive you insane, as these markets are heavily manipulated and swing wildly based on the sentiments of billions of human monkeys who can’t even see their noses in front of them.

Keep your eyes on the big picture:
1) Transition away from American empire, and eventual implosion of America into civil war
2) Relentless resource decline
3) Inevitability of resource triage and war, and breakdown of globalization and reversion back to nation state/regional block power

That is the narrative. As long as you keep those things in mind you will get most other smaller details correct. 

https://ourfiniteworld.com/2016/03/29/why-we-have-a-wage-inequality-problem/comment-page-15/#comment-86247

 

 

Dubaibanker's picture

Escrava,

Bonds are like any other loan but just tradebale.

Once we created a debt based monetary system in the 1970's, there has been no turning back. The zeroes have only multiplied and now gone exponential.

One person's debt is another person's asset. It is the greatest slavery of mankind. Even worse than blacks or people of color :),  being enslaved. 

Govt should not be in the business of bonds or debt. Look at China, they do not issue as much or look at Russia or until lately the oil rich Middle East.

Debt creation is the sign of the weak. Because it enslaves the nation to another nation.

Today China owns most US bonds which is not good. But thats the way it is.

Borrowing directly from the banks is also not a solution because they don't have money and they could not survive for one day without the "lender of last resort" function of the Central banks globally.

Borrowing from anyone is a convoluted way of running the show without any guilt of repayment.

America has set a very bad example for others to follow and unfortunately most have started following and we stare into the abyss in the very near future for all mankind.

The answer to your question is negative for both. Instead, US should start paying back the debt but that is impossible hence we have a deadlock, stalemate.

There is nothing but sadness for US in the future.

Debt is the ultimate form of slavery. Borrowing from banks or printing, both are awful solutions to a very difficult to solve problem.

Generations form now, while chaos will still rule this planet, the peaceful days of society due to the days without debt will be fondly remembered, just how we today remember that society functioned normally for thousnds of years without debt but in a short 50-60 year span of time we humans have ruined everything for ourselves and our own children.

All for the sake of control, power and the ultimate drug - money.

Escrava Isaura's picture

 

 

Thanks Dubai.

 

Dubai, the problem with bonds is that you pull money from the economy. And it becomes a gambling tool.

Sounds like you favor Sovereign Money, because there’s no debt creation. Anyway, I do; but it won’t happen. I said borrowing from the banks because the government would be creating new money. Then, if no growth can be achieved to pay it back, default, and have the Fed buy it.

Agree with you, America has set a very bad example, and it will only gets worse because of its exponential. Then, having it as the global reserve currency, now the whole world is pretty much finished, as well. Unless, if the world walks away from it. But the general population has been so brainwashed that debt is an honor thing that, the general population have no clue that this debt is impossible to pay. So, when I hear the blame on socialism, or on the students that borrow without understanding of something that should have been taught in third grade, readers be aware, these posters have no clue what they’re talking about.

 

“America is a mistake; a gigantic mistake, it is true, but nonetheless a mistake” — Sigmund Freud, 1955.

 

Dubaibanker's picture

Thanks Escrava.

It is not that I favour sovereign money or lack of debt. I support everything under control and in moderation.

Borrowing from banks UPTO  A LIMIT or from Fed UPTO A LIMIT is ok. Why? Because this is productive debt and is useful for society to continue. Canada and Russia are good examples. They paid off their debts over the last 20 years. China is also a great example of hard work and has added trillions to itself by providing service and goods to the entire world and is now creating productive debt UPTO A LIMIT (they have trillions in reserves and have created trillions in productive debt) Everything looks gigantic in China because of their population. This is why I favour China, because they are the best bet in town with the least problems.

Imagine, a student who went to school with student loans in the 1960's or 1970's he / she did very well and earned well and lived well. Fast forward to 2010 and the same student who borrowed and borrowed but could not find a job and could not repay the loan. Why? Because situation has changed.

There is more people chasing less jobs hence we have diminishing value of returns. We have thus been unable to pay back the student debt since no one is living well and is asked to borrow regradless of consequences. This has created a mountain of debt which is simply unpayable. We wish the loans were moderated a decade or two ago but they were not. In fact people were encouraged. This is where I blame the Govt and the policymakers.

In cases of individuals, when they have excessive debt, they commit suicide due to stress or somehow pay it. In cases of companies, they shut down (which was not allowed in US - which is a grave mistake).

When it comes to countries, committing suicide is not an option. They have only 2 options, Lie or keep increasing the debt. 

Countries like India and US are doing both.

Once this debt strangles a country, it leads to a spiral effect and everything must collapse. Because there is no way out of this quagmire.

Everyone is taught to take loans and study with a HOPE that it can be repaid. Ask anyone who graduated since 2005 how they or their friends are doing. they are living a life of hell whether in US or outside. Degress or qualifications do not matter, political connections into the top executives matter who are the only blue blooded people who get jobs and some pretty women too. Aside from that there are no jobs.

To end, loans were good in the past but for various reasons mentioned above today the same loans are not beneficial but a guaranteed death wish.

Katos's picture

If our Congress would accept it's responsibility,  it would take over the printing of money, and take it away from banks. If the government issued money, which is its responsibility,  we wouldn't be paying massive interest to these banks.

Bastiat's picture

That's a nice pic of Hillary but it needs some numbers under it.

ersatz007's picture

Yeah but, but, but that would mean our congress-critters would actually be accountable for the money they spend and we can't have that!!! Don't you know anything?? The fed was established to make it look like our leaders were doing something about the overreach of the private banks such as GS and JPM, etc...when in fact what it truly did was to give them more control while enabling congress to relieve themselves of any direct blame for the economy. Pretty brilliant when you think of it even if it is evil.

adanata's picture

 

 

For a People who thought they were free, the light is dawning as reality sets in... hence Trump. Not the answer of course, just the next step. God knows 'Mericans are ignorant... but not necessarily stupid and there is a difference. It's easy to be cynical yet it is very possible the Barons have underestimated the hearts, courage and ingenuity of the Sheeple they have dominated so readily up until now. We all know the oligarchs live in one world and we live in another; when there's a disaster people rush to help each other; we've all seen it; the human heart...the Barons don't get that; they really don't. Of course there is great evil out there but there is also something else.... I'm taking bets fellas. This ain't Germany or Russia or Venezeula. This is a whole other place.

Yes, I know I'm an aging sentimental idiot... but I still think that spirit is underneath all the crap. We'll see.

unicorn's picture

adanata

take a look at cooperation theory animations of Nowak. Get rid of sentimentality. Defectors are taking over, thats whats happening now. But a society of defectors cant survive, cooperators will take over slowly slowly again. cicle after cicle. good to study history as well. look at what happened after WWII, all the big dirty bosses got their jobs back, like now GS, nobody really "important" went to jail.

ps you can still be a supercooperator after all...

adanata's picture

 

 

unicorn... I appreciate the thought, I really do, but I don't have any intention of living in a theoretical world nor even a high tech one. I like the warmth, love and appreciation shared with my spouse, children and grandchildren. I see and feel their Spirit and hearts and know this life force is every bit as real as a computer and more powerful and valid than any theory of animatrons.  I wish I could save them. I know I cannot. They will have to wise up and fight or die or die anyway as the lemmings run them over the cliff. So be it.  I wouldn't have missed the trip but I'm ready to go.

It's good to be old...

Theonewhoknows's picture
Theonewhoknows (not verified) pathosattrition Apr 13, 2016 3:19 PM

So we all know that the ship is going down but the music keeps playing. Just like in the "Big Short" banks even when they lose they make circumstances so that don't. I guess it's time to be a bear or at least lear how to be to prevent learning the hard lesson http://independenttrader.org/is-time-to-short-already-here.html

Escrava Isaura's picture

 

 

$5 billion?

How about the $8 trillion dollars house bubble with no income to ever pay for it?

How about the next AOL, Facebook, $324 billion dollars market cap?

It’s not the laws, it’s our monetary system, stupid.

 

 "Give me control of money (dollar) and I care not who makes it's laws (anywhere in the world)." — Mayer Amschel Bauer Rothschild .

 

Herd Redirection Committee's picture

In Christianity, you don't merely ask God for forgiveness (as GS has asked the Federal Gov't, in this case).

No.  A crucial step known as REPENTANCE is required.

You swear you WON'T COMMIT THE SAME SIN again.  It means you REGRET your past actions and WON'T repeat them.

"repentance results in a change in behavior."

Hmm, I wonder why GS did not admit guilt, OR repent????  Hmmm........

Miles Ahead's picture

Nah.  Jesus died for our sins.  No works get you in to Heaven. We're covered.

End of.

HectorCamachoTrump's picture
HectorCamachoTrump (not verified) Miles Ahead Apr 13, 2016 4:37 PM

Ah the xtian satanic mantra, stolen from juden.

Believe in a fairy sky god, and you can do anything with a clear conscience.

Xtians are more mentally ill than jews, and thats saying a lot....lol

Life of Illusion's picture

 

On and On and ON

just last few days....

https://www.newyorkfed.org/markets/ambs/transaction-summary.html

Agency MBS Transaction Summary Gross purchases from March 31 through April 6, 2016: $4,058 million 
Sales (dollar rolls) from March 31 through April 6, 2016: $0 million https://www.newyorkfed.org/markets/ambs/purchasesarchive/ambs_purchases....
Winston Churchill's picture

The FedRes only bought the phoney RMBS trusts, the ones with absolutely nothing in them.

They are worth nothing, so how could they sell them ?

junction's picture

New York Attorney General Eric Schneiderman is a clone of former AG Holder.  Schneiderman sold out the public not going after the fraudsters who have made tens of millions of dollars off the "World Trade Center" trademarks a Port Authority executive bought for $10 each thirty years ago.  Currently, AG Schneiderman is breaking the law by refusing to honor most FOIL requests, to hide from the public the pervasive and criminal corruption in his office.  

Omen IV's picture

can you explain this post further as to the trademarks purchased and by whom

SILVERGEDDON's picture

I give this rant a one out of ten.

Not enough swearing, and no mayhem at all whatsoever.

Fucking milk toast.

Mike, gimmie a call, an I will sort you out, sir.

New title. " Thieving Mother Fucking Banker Klingon Cocksuckers From Uranus Dodge A Bullet, Only To Get Caught In A Civilian Barrage Of Firepower. "

Season the article liberally with colorful language as to accurately convey rage - lots of fuck, for instance.

Karma is a bitch, and I don't mean the girl you were banging after all them tequila shooters either.

maskone909's picture

Wow i am shocked mike isnt posting about how much he loves bernie sanders.

pods's picture

I am with you on this one. You or I light up a joint in public (or pick a victimless crime) and we are booked and fucked for life.

GS scams people out of God knows how many and they only have to pay a fine?

Who gives a fuck how little or much it is.  You are fining a bank in the coin they have the authority to counterfeit.  

This one should have led to a total takeover of all assets of GS.  And have the board, and anyone above VP to be hung in public.

No worries for GS though.  The Tribe holds power.  I will not go any further as it seems Francis was banned again.  AIPAC must be hounding Tyler again.

pods

LetThemEatRand's picture

"You or I light up a joint in public (or pick a victimless crime) and we are booked and fucked for life.  GS scams people out of God knows how many and they only have to pay a fine?"  

It's even better than that.  You can guarantee that the people who made the money from the scam are not paying the fine.  At best, the fine may slightly impact management's bonuses this year, probably on the upside.  GS stock has been up since the news of the fine, which tells you everything you need to know about the impact of the fine on the business as a whole.  They made money doing the scamming, and will now be rewarded again for using their connections to ensure that the fine does not impact the bottom line.

FreeMoney's picture

You would think that if GS made 10% on the transactions that they made $50+ Billion from the fraud.  Typical fines are way more than any profit you would ever make.  I suspect a $100B or $200B fine would put GS out of commission for good.  It is also very telling that there are no criminal prosecutions.  How can this be?  How can fraud occur and there is no criminal activity?  I seem to think I remember many government forms indicating a $10,000 fine and up to 5 years in prision for providing false information.

 

Unfortuantely this clown show will go on a lot longer before the Joe sixpacks wake up and realize they have been screwed.

Omen IV's picture

"this clown show will go on a lot longer before the Joe sixpacks wake up and realize they have been screwed."

 

how about forever or until the money runs out

TruthHunter's picture

If corporations are "persons", here's a habitual criminal. What's a life sentence for such a"person"?

 

johnnymustardseed's picture

If I steal $600 dollars, I get charged with a felony and go to jail. Banks steal trillions, nobody goes to jail.  What I don't understand is why most on this blog feel that giving relief to students  on high interest rate student loans is horrible, but these fucking banks steal money every single day rigging markets and getting free money from the Federal Reserve?

Miles Ahead's picture

No, if you take a loan from your parents for your mortgage downpayment, you go to Guantanamo Bay.  Or misrepresent anything on your application, you're done.  For Life.

It's 'Murica babe.  Love it or leave it I say.

LetThemEatRand's picture

It's always easier to get mad at your fellow peasants, and ZH is often just as guilty as the MSM in fostering the divide and conquer strategy employed by TPTB.    If I recall, Reagan gained popularity by talking about welfare queens, and then promptly gave trillions to the military and bankers.  The peasants who voted for him for saying he would crack down on welfare cheered him on and did not see the irony.  It works.

Flakmeister's picture

Where is Phil Gramm when you really need him?

oh yeah, he just became an advisor to Cruz...

Rainman's picture

What's the problem, Mike...? You do not understand how totalitarianism rolls ?

Handful of Dust's picture

At least Low-Retta indicted a handful of criminal bankers this time.

... Gafaw...gafaw...Gafaw...

....had you fooled didn't I!

SillySalesmanQuestion's picture

Just more "skim" payments for the Squid and their slippery, slimy friends.

Berspankme's picture

Let's face it, the american people are an international embarrassment. Just bend over and spread 'em

runnymede's picture

.gov: "You will accept a .gov administered and approved subsistence living or there will be blood. You choose. There is no other choice. You cannot not play. Sorry."

Mr.BlingBling's picture

I hope that the Truth & Reconciliation Committees will recognize and repudiate such Odious Settlements.

Herd Redirection Committee's picture

I've said it for  a while.  Our society needs a debt jubilee AND Truth and Reconciliation hearings.  Ending in executions, or worse, sentences of hard labor, for the guilty banksters and politicos.

Loucleve's picture

Still paying TAXES?  I'am not:)

Flakmeister's picture

Yeah, first you have make about $20,000 a year or so...

Sir SpeaksALot's picture

how in hell we landed in this fucked up world of today?

Miles Ahead's picture

You were a bad Buddhist in the last life...

Haka Matohi's picture
Haka Matohi (not verified) Apr 13, 2016 3:29 PM

And what could be better than to have
Ted Cruz vs. Hillary Clinton? Goldman vs. Goldman

YOU THINK THE PUBLIC SAYING ENOUGH IS ENOUGH WILL SUDDENLY CAUSE THE CHAINS TO FALL OFF? Remove your head from between your butt and think again.

"The American public should be out in the streets by the hundreds of thousands demanding the resignation of President Barack Obama in response to the total sham settlement just announced by the U.S. government with Goldman Sachs. This farce should be seen for what it really is; a gigantic establishment middle finger waving contemptuously in the face of the reliably neutered and long-suffering American public.

A criminal financial organization that engaged in billions upon billions in fraud against the “muppet” public is once again getting off with barely a slap on the wrist and nobody’s going to do a thing about it. As I’ve said for years and years, until the public says enough is enough nothing is going to change."