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Way to go, Mr Preston! Let Goldman Sachs be the new Northern Rock!!!
Bring them down!

Thanks Robert for continuing to expose the weak spots/malfunctions/irrational behaviour in the worldwide banking sector.
I have been posting and blogging now for over a year to epose some of the madness that takes place in the so-called global financial system.
There are so many immoral and mad aspects in the way the current global financial 'services' sector malfunctions that it is very difficult to understand how this whole sector has been getting away with regularly bankrupting/inpoverishing societies without being seriously regulated and being held to account. That the financial elite is getting away with ponzi schemes/boom and bust schemes is only astonishing if one doesn't analyse the cosy/corrupt relationship between the financial elite and a servatile political elite in all countries. Money easily corrupts decision-makers and big sums of money corrupt and blind almost everyone who can or wants to get a slice of it. Reducing the massive bonuses and incomes of bankers and strict regulation and transparency in the global financial sector is the only way to prevent a repeat of the current financial crisis. It will be difficult enough to get out of this debt crisis, we certainly don't need another repeat in a few years.
Maybe only extensive legal action taken against banks and hege funds, pursuing them agressively though the courts, can expose what really goes on in banks internal processes, exposing their cosy nepotism networks and inform the wider public. Moral reasoning and media attention seems to make no difference. Who could take legal action, on what grounds, and what chance of success? Could one pursuit banks and hedge funds legally for lack of due diligence, misrepresentation, witholding of relevant information and fraudulent surveyance? Any legal practitioners/scholars reading this blog have any ideas?

Please find many more arguments concerning the urgent need for a national and global reform of the banking sector here:

It's not OK to do that sort of thing in America, so they send him over to London to pick a pocket or $841M!

Where's Dickens when you need him? Anyone?

Goldmans defense seems to be that it lost money therefore cannot be guilty of fraud.

I am particularly interested to understand if mechanisms exist whereby Paulson could have committed to underwrite any losses that Goldman may incur by betting on the upside. Goldmans participation in the upside would surely act as an incentive to all the 'sophisticated' investors.

I personally have no faith in the FSA, Goldman Sachs will get off scott free. The FSA exists to protect the banks interest as recent history has shown. If Goldman Sachs is found guilty of any wrong doing will, the odious Angela Knight keep her Job of course she will. With her help the banks have consistently stolen from their customers.

Of course, the extent of FSA involvement is limited, depending on what turns up - aside from a middle ranking Goldman executive, Fabrice "Fab" Tourre.
UK's Financial Services Authority said that it will begin a "formal enforcement investigation" into Goldman Sachs Group Inc. as related to the alleged fraud committed by the US bank. That seems pretty generalized to me, but pretty-generalized investigations have a way of turning up very specific charges - down the line.
The alleged fraud was done in part by a salesman based in its London office, according to the SEC complaint. ABN Amro, now a unit of 84%-owned Royal Bank of Scotland, purchased some of the collateralized debt obligations.
The US Securities and Exchange Commission (SEC) last week charged Wall Street's Goldman Sachs with fraud over the sale of a type of complex mortgage product blamed for the financial meltdown.
In Germany, Chancellor Angela Merkel's government said that the country's financial regulator Bafin had requested further information from SEC on its investigation.One of the banks caught up in the alleged fraud was German lender IKB, which had to be partially nationalized and rescued with billions of euros (dollars) of public money. To compound the matter IKB is no longer state-owned, it was sold. So it would have to examined who exactly might make a claim.
I await news with eager anticipation...

Have I missed something, or has Robert not qualified some of these figures. If their net earnings (presumably profit to you and me) are $3.5bn how can they pay out $5.5bn in bonuses over the same period?

How do you manage to pay out something like 40% of your turnover as bonuses? Are they intending to get all the money out of the company before closing it down to avoid the SEC?

Well, well, well - it seems that 'Gods work' is not so popular with the people.

Pitchforks at the ready.

Max Keiser was calling Goldman Sachs 'frauds' about a year and a half ago - he was seen by some as mad.

...so now madness is the new sanity - well I hope those rich men are begginning to feel it - they can't protect themselves with walls of money from the outrage which is heading their way...

Anything else I have to say is outside of moderateble standards.

Have the FSA read Janet Tavakoli's books ?

They will get away with it because the banks are able to either "hold" fiat money or trash it. The question is how is that power removed ? they proved it on the Friday GS was accused of fraud - gold should have spiked a high but it was hammered. Governments cant do anything about short selling because it controls both gold (real money) and fiat money - they need to do it otherwise paper money will be trashed; others who are allegedly 'in the know' can profit (alleged fraud) . Plus how is that going to be resolved when you have a situation where no one knows what morals are any more now that they have incentivised destruction with these derivatives ?

Would the powers-at-be- within Goldman Sachs be willing to explain the salary of the cleaner, the mail office staff, the receptionist, the secretary?

I suspect a number of those people are in receipt of tax credits etc and I'd like to know why the company feels unable to pay their staff a decent wage that gives a good standard of living in return for a good standard of work - doubt the place is filty, untidy and will at least look organised!

Is the company struggling to survive or not, doing god's work or not? Don't think god approves of proiteering at the expense of people in or out of the company.

3. At 12:33pm on 20 Apr 2010, spareusthelies

Think Dickens is busy with the stranded travellers today.

Fab is just the patsy.

#5 - seems to be the case

In ten years its only fined HSBC once according to its press releases :

Dec 2005 -FSA fines HSBC 拢100,000 for transaction reporting breaches :-



Yet we know of persons accused of serious fraud who were allowed to have business sole trader accounts and for years before "investors" (NOT the bank) informed the FSA - so much for their over sight of - "know your customer" Up to a 1000 people financially ruined by allowing this to happen - who will be accountable ?

Let鈥檚 think of all those wonderful products sold to us by the financial services sector:
Endowment policies,
Personal equity plans
Payment protection policies
Equity release schemes
Private pensions
Self certification and 100% + mortgages
Unfair bank charges
Unfair mortgage penalty charges

In fact not a week elapses when some financial institution is reported to have ruined some savers or pensioners investments.

The financial industry has been regulated in the past by the following:
The Bank of England
The Financial Services Authority
The Financial Ombudsman
The Treasury
The Basel ll Agreement
The European Union

That鈥檚 an awful lot of people doing an awful lot of regulating.
And let鈥檚 face it, it鈥檚 not worked has it.

The creation of money in private corporate hands = Debt slavery for the majority.

In any event, the plain truth is, if the state (which is us) does not control the creation of money as debt, then the state (which is us) can only ever be at the mercy of those who do.

We need a state bank, we need control of the creation of money.

And to those who have read this before I apologise for repeating it.

Check out Jim Rickards 6.40 into this video :-

Can anyone defend the wages and bonus's these people are paid ???

With remuneration at the levels we see it would be no shock to find fraud and criminal activity, as even when we do find this activity, we seem to pat them on the back and say dont do it again.

We need governments who can stand up to these corporations,honest people who cant be bought......it appears in this fairy tale there will be no happy ending for the tax payers, the dragon has won ......

I wonder if air traffic controllers are paid bonuses?

I guess they're all on paid leave at the moment ;o)

A good Paul Mason blog
/blogs/newsnight/paulmason/2010/04/goldman_scandal_gatecrashes_uk.html

#14

Its never gonna happen...

Who does the current Business Minister spend his holidays with again?

' So the FSA has a legal duty to investigate whether its proper that Mr Tourre should continue to be licenced to ply his trade here.' Totally agree but 'licenced' is a verb so should be 'licensed' or are we spelling in a North American way?

The whole thing is nothing other than obscene. 'The People' should rise up and bring an end to these financial gangsters who should be tried for their crimes just like any other thief.

What are we waiting for?

14. At 1:17pm on 20 Apr 2010, Dempster wrote:
We need a state bank, we need control of the creation of money.
And to those who have read this before I apologise for repeating it.
-----------------------------

Hi Dempster, it's all right to repeat it because it's better than what we have now.

BUT ... it is a solution which is likely to eventually turns agaist people AGAIN. No matter, private or public, any institution empowered to create money will get corrupted, sooner or later. For corruption is embeded in the mechanism of money.

There are other ways, beyond money!

The financial collapse was caused by the bankers and finanical services industry creating an empty box to insure loans that were destined to fail and using internal appraisals to over-value such properties and defraud investors. Apparently none of that was illegal. No one wants to look at the cause but will nip around the edges and pretend that things will be changed. This is a political show that the banks will pay off with a fine that looks substantial to the public but is petty cash to the banks. When the elected officials are willing to create laws that allow for the attachment of personal wealth and properties of bankers and investors when caught in wrong-doings then we will see more caution on the part of the financial services industry.

HOT NEWS: US bank Goldman Sachs has seen its profit for the first quarter of 2010 nearly double.


Goldman keeps on sucking from the blood of the monetary system.
I say, keep up the God's work, suck all the life out of it and let's be over with this inhumane monetary system much sooner!

Robert, where's the story here? The people here my have overstepped the mark and committed a crime but equally they may not have. surely you have worked out that for Goldmans, like all the others, a good deal is one that gets done - ie one that earns fees which turn into bonuses. The fact that one client or another suffers as a result isnt a detail that troubles investment banks. And clients have known thats the way it works since time immemorial.

If the clients werent bright enough to work out what they were buying into, they should have stuck their money on deposit at the Post Office.


As for the FSA

Bonuses of this sort are surely not just a reward for doing a good job at work. We all try to do that and how many other industries share out their profits on such a scale? Even when institutions lose money?(Certainly not mine!). Are they just mink-trousered philanthropists, who have a burning desire to share their wealth with their beloved employees? I doubt it. I'll bet many of their employees won't see a dollar of this bonanza. These bonuses are so massive, and paid to so few, that you have to question whether they're more of a golden gag - paid to people who get to a certain level and get to know something that bankers would rather was kept quiet.

It's got to stop. This constant gorging on our ever-dwindling money supplies by a pampered few will enrage people to such an extent that it will all end in tears. The French Revolution and the Russian uprising in 1917 were surely precipitated by less than this sort of gross disparity in wealth. The thought of rich bankers waving increasingly large wads in the faces of increasingly poor and debt-ridden people is horribly akin to Marie Antoinette's famous cake advert. Our people are kept silenced by the thought that 'it could be you', but this is increasingly being shown up for the mirage that it always was. Are the bankers doing this deliberately to enrage the public? Are they completely unaware just how unpopular this sort of gesture is? They can't be that ignorant, surely. Or is there a big secret that they're doing their level best to keep quiet? One for the conspiracy theorists!

Hello - 1st post, (exciting). Isnt it good for the treasury? profits and bonuses. All that tax. Maybe we shouldn't all complain about it.

Business as usual - clearly we are heading for a re-run of the recent crash.

Whether or not government should try to stop this conduct I really don't know.

I do think governments - worldwide would be best - should act to ensure that WHEN they crash again we are in a position where we can just let them fold. Never again should there be a situation where these people can make billions when times are good then fall back on the tax payer when things go bad.

Limit their size. Seperate the gambling arm from the consumer arm of banks. etc. etc. I have heard various suggestions. Basically so long as when they crash there is no problem so serious that we can't just let it happen.

#21. ElEnfadado wrote:

"What are we waiting for?"

I think you're all waiting timidly for someone else to make the first move before you join in.

For example, on 25 February, writingsonthewall wrote:

"I am currently on site somewhere watching the RBS headquarters and as soon as the angry public turn up I shall leave my post and join them."

Which is why this popular uprising is never going to happen - you're all too scared.

"Have I missed something, or has Robert not qualified some of these figures. If their net earnings (presumably profit to you and me) are $3.5bn how can they pay out $5.5bn in bonuses over the same period?"

Net profit is usually assumed to be gross profit less overheads, interest, and one-off items for a given time period. I assume the bonuses are regarded as "one-off items" (for the financial year in question).

FDR famously (or infamously) 鈥渟aved capitalism from itself鈥�.

Obviously, finance capitalism did not allow its mind to be "focused by the prospect of hanging in the morning" back in the last Great Depression --- and will hopefully get it just rewards this time.

Alan MacDonald
Sanford, Maine

Do you suppose some of the bankers that of RBS are the ones Hestor claims we need to give bonuses to in order to keep them in clover ?
I certainly hope not.

You've probably heard of top-slicing, now bottom-slicing and how no reasonable government need to take bankers blackmail calls to leave the country too seriously.

Company A has 100 bankers who make 拢100 million pounds profit (on combined budgets of 拢500 million,...as if...)
Bonuses are 拢100,000 each per person, but some bankers are not happy. They want more.
All you do is take the bottom say,5, performing bankers and put the budgets of these people back into the top 5 bankers of the next year.
[So, bankers ranked 96-100,who have made only say, 拢250,000 profit on a budget of 拢5 million are released to the welcoming world.
Bankers 1-5, who make profits to the company A of say,拢2million, have an increased budget of 拢10 million, they perform next year at the same rate and produce double profits individually.
From this,they are allowed double their bonus(拢200,000) and the company makes an increased profit(拢110million, less increased bonuses of 拢1million=拢109million).
This modus operandi can carry on for a number of years, bottom-slicing the personel and rewarding the top guys.

There is the vexed problem of having, eventually, all your eggs in the one basket, sorry, top banker, but that's a good problem to have.
Forinstance, increased bonus perecentage payments can be made. the bankers should be happy and the company/government should be happy.
Wages up, profits up, tax-take up.

[Needless to say, it works for reducing losses as well, although it should be noted that any banker that makes losses may find the ''conversion'' to being ''a profitable banker'' more difficult than they think, depending on market conditions and indivdual stategies deployed(Newbury).]

Furthermore,universities are turning out high-class MBA graduates, and other graduates, every year and competition for jobs is high.
[btw:RBS target price remains at 60-65 pence per share2010, 80-85pence per share 2011.]

Is anyone able to provide me with the logical case proving why the creation of what is (essentially) "toy" money should be a well paid profession?

I'm a member of British Mensa and I am unable to...

Comment 14 Dempster.
The only way the reform is going to happen is if we all stop buying the products mentioned. I agree with you every one of those products mentioned has performed miserably, but that was the plan all along!
They want your cash back, they pay it to you in the form of wages.
Then they immediatly take it back selling you these crap investments! Objective is simple keeping everybody in hock and debt.
Thats how the system works rob the poor to line the pockets of the rich.
I HAVE LOST ALL FAITH IN THE FINANCIAL SERVICES INDUSTRY A VERY LONG TIME AGO, they sell crap and collect commission !

RBS and other British banks were only able to pay out the money they had lost to hedge funds and the like, by using taxpayers money. If the banks had been allowed to go to the wall these debts would not have been honoured and the hedge funds would have got their deserts. The administrator would have been able to get the retail side of the banks working again.

Mr Preston says this is an embarrassment for Goldman's but that's all it is. We're still yet to see any real evidence of the new, no-nonsense, hard-line FSA that was promised in the wake of the financial crisis and I don't believe we ever will see it.

Individuals are driven to do everything possible to exceed their targets as the rewards in the form of bonuses are so high. Individuals and companies will continue to sidestep, bend and break rules to achieve this, until there is a disincentive to do so. Until the likelihood of punishment and the severity of punishment outweigh the rewards of such behaviour, the financial sector will continue to steam forward and cases such as this will continue to be a regular feature in the press.

I don't understand. Goldmans lost $75m investing in this CDO but nobody got fired for either setting up the fund or choosing to invest in it. All that has happened is that "Fab" got tranferred to London.
I thought these big US investment banks were a bit more ruthless than that.

29. At 2:57pm on 20 Apr 2010, rbs_temp wrote:

"Which is why this popular uprising is never going to happen - you're all too scared."



Hush sweetcheeks. . . be patient. We're all still waiting for the bill to arrive.

Morals and money do not mix.

Mere mortals not in the banking industry (me included) cannot understand how a bank can work with a hedge fund to create a 'bad' fund which is then made to look good and sold on to others in the industry, presumably with a friendly ratings agency giving it a Triple A.

If that isn't criminal it should be. Market manipulation at its worst.

The City stinks with seemingly constant mis-selling, smoke and mirrors presentations/products that no-one understands, especially senior management who happily take their salaries/bonuses and pensions and probably a golden goodbye.

My firm has been asked, in the last year, to provide courses for very senior people in a nameless international bank (but could apply to probably all banks)for Market Risk Management and Measurement - an Overview. Unbelievable that the senior people needed something so basic - just shows that the people at the top really do not understand Risk and probably do not understand the exotic instruments their 'brightest' people create.
Unfortunately our politicians do not understand the City either and will not take the time out to learn about it from independent people. They seem to feel more comfortable with people from within the establishment - I wonder why?!

The lawyers have been waiting patiently for their turn at the trough.
Now they have been called.
They must be wondering how much is left.

29. At 2:57pm on 20 Apr 2010, rbs_temp wrote:

Which is why this popular uprising is never going to happen - you're all too scared.

When their hunger overwhelms their apathy...

It is about time everyone stopped using the stupid word 'compensation' in relation to bankers' bonuses. Compensation denotes that there has been some sort of loss incurred by them when clearly this is not the case. Why not call a spade a spade and stop trying to hide behind the bankers' idiotic vocabulary, which they excel in inventing ( CDO's etc etc) when it is meaningless?
If the commentators in the media started to use the proper word (bonus) then we would all be clearer as to what is going on. Bankers are conning us all out of our money. Don't let them con us out of using our language properly.

38. At 3:47pm on 20 Apr 2010, warwick

it can start slowly and build up :-)

29. At 2:57pm on 20 Apr 2010, rbs_temp wrote:

"For example, on 25 February, writingsonthewall wrote:

"I am currently on site somewhere watching the RBS headquarters and as soon as the angry public turn up I shall leave my post and join them."

Which is why this popular uprising is never going to happen - you're all too scared."

Well I'm still here waiting - as soon as the crowd arrives I'll be straight down.

I don't know what you're still doing here rbs_temp - I mean after all it is "Only a recession" isn't it? Surely it's all over by now and we can all go back to normality.

...except it isn't is it - there is no recovery and never was. The whole GDP growth was a monetary expansion caused by QE - which has produced the (un)desired effect of inflation.

....or are the record prices at the pumps a myth?

....or is the preparation for Greek bailout another myth?

.....or is it all the fault of an Icelandic volcano?

Wherever you look the root cause of everything is the same - Capitalism which has run it's course and can produce no further growth. It's finished, it's over.

I do apologise it's not happening quickly enough for you but the crisis keeps on getting boosts from our inept Government which is delaying the inevitable.

...but as Warwick pointed out (and I did earlier) the people are waiting for the bill and the cuts.
They may not recognise daylight robbery by banks and inflationary measures - but they do recognise cuts and large tax bills.

You shall have your wish - rest assured....

27. At 2:42pm on 20 Apr 2010, Blade wrote:
Hello - 1st post, (exciting). Isnt it good for the treasury? profits and bonuses. All that tax. Maybe we shouldn't all complain about it.

Great for the treasury PAYE

Not so great for:
Your pension fund. Check out its performance over the last 10 years
People who have lost their jobs or houses or both because of the recession.
The value of any savings you may have.
Public sector services over the next decade
The worldwide reputation of the UK
Small businesses trying to get loans
First time buyers trying to get mortgages
The purchasing power of the pound

I'm pretty sure there are plenty more reasons

Being someone who is skint. I fail to see why there is so much coverage over why they're paying bonuses when the company has made a profit. They may or may not have made a profit legally which is a matter for the courts whilst we're on the subject of courts. Isn't the assumption that everyone is innocent until proved guilty? Surely if people don't trust a certain supplier then why would they continue to use them . . .. oh yes i know why because they stand to make a profit from using GS' services. Remember the warning that HAS to be displayed on ALL financial products "remember the value of investments can go down as well as up" i would have thought that is as true when you spend 拢100 as it does when you spend 拢100m

If the all allegations are true GS appears to have sold a product where if it succeeds they win fees+ and if it fails their insurer pays them fees+. I think we should all pack in productive work and start this sort of incestuous pranking. Working for a living just doesn't pay enough, not only in this world but presumably there's a pay off in the next one for doing God's work.

Unless somebody was to find out.

Masters of the Universe? I don't think they'll remain Masters of their Underpants.

Robert,
I find it amazing that the turn-around in all these banking results, not least Goldman Sachs, from last year to this, is so fantastic; especially as the level of business and activity is so much lower.
Isn't it time you explained how results can be manipulated by 'provisioning'?; ie make a huge bad debt provision one year and the next year, as if by magic, many of those previous year's provisions appear not to be necessary and may be written back to profit.
Some of those provisions, of course, are not necessary because the taxpayer (from whichever country) has taken the toxic debts onto the 'national' balance sheet.
Just how much of the brilliant results are due to this 'fancy footwork'?
And if this is true of debts then there is a fair chance it might be true of the valuation and revaluation of capital assets!

I suggest you read page 55 of the prospectus (aca-aquarius-2006-1-ltd-prospectus.pdf). You have read the prospectus Preston, haven't you? It says,

"The Credit Default Swap Counterparty and its affiliates may .....act with respect to such business in the same manner as if the CDS Transaction did not exist, regardless of whether any such relationship or action might have an adverse effect on any Reference Obligation ...."

In other words, the Counterparty could do whatever it wanted, but the idiot investors (RBS included) signed up. The SEC (and the wonderful FSA) haven't a case.

(re 45) Devil - thanks for replying to my post. However, what you say has nothing to do with GS profits for recent quarter.. (That is what I was commenting on).
Perhaps you are talking generally about the recession. Or making some other ambigious comment.

No... I was relating their profits to all the areas I mentioned.
Sorry you can't see it. Keep digging.

"So it's the poor American underclass that are to blame for the Financial meltdown. How dare they accept loans offered to them if they are unable to guarantee repayment.

Maybe we should demand compensation from them ? "

Devilsinthedetail, ask someone to lend you a crayon and you can send them a begging letter.

Do you really believe it was only the "American underclass" who borrowed more than they could repay?

I just got through reading about Goldman Sachs' first quarter profits. It boggles the mind, doesn鈥檛 it?
But still and all, Goldman-Sachs has a big legal case pending because the company鈥檚 business model is saturated with conflict of interest.
If I know this (and I鈥檓 just a regular person), its clients must have long known, but where (perhaps) hesitant to complain: Goldman uses its knowledge of markets to trade for its own profit, often in my opinion, against the interest of its fee-paying clients.
It鈥檚 one thing (evidently not important to Goldman-Sachs) to have clients whining about your business practices, but it鈥檚 quite another to have the SEC file a case that seeks financial penalties from Goldman and that charges specific Goldman executives, in this case Goldman Sachs Vice President Fabrice Tourre, with offenses that carry substanial penalties.
I鈥檒l bet you鈥檝e noted that this case extends well-beyond Goldman. So far Wall Street has been very successful in arguing that the financial crisis could not have been anticipated. To hear Wall Street CEOs weave their financial tale, you鈥檇 think the whole financial catastrophe was an act of God 鈥� like Iceland鈥檚 volcano. I don鈥檛 know if anyone believed this, but evidently the SEC didn't. In its charges against Goldman Sachs the SEC says that it just plain does not buy the act of God defense. There was real fraud at work. Companies and individuals should pay the price.
Wall Street has been hoping that its defense would hold, but this week鈥檚 Congressional hearings included former Washington Mutual executives who detailed the extent of conscious mortgage fraud at Goldman鈥檚 wasn鈥檛 perceived by Goldman as a major problem. There seemed to be a feeling of letting Congress investigate all it wanted to; nothing would come of it. But something has come of it.
Most damaging perhaps is that the SEC charges come just as Wall Street is trying to fend off meaningful regulatory reform in Washington and to line up its regulatory insiders at the Federal Reserve and the US Treasury to fight against the tough international rules on capital proposed by the Basel Committee on Banking Supervision in what鈥檚 called Basel III.
Note: The comment period for Basel III closed the same day as SEC filed its charges, and it is well-known that the United States never even tried to implement Basel III.

This comment was removed because the moderators found it broke the house rules. Explain.

52. At 8:41pm on 20 Apr 2010, Ally Gory wrote:
Do you really believe it was only the "American underclass" who borrowed more than they could repay?

No. Read the thread

Moderators, with regard to my #54, upon re-reading it I agree that the content might be considered by some to be currently defamatory, will you be re-instating the comment when it subsequently turns out to be true ?

The financial global collapse was born and raised in the USA? Global Hedge funds managers and all global banks' managers dived into it.

The chain of deals, basically put, is that if you only recycle waste and sewage in the same and related trading rooms - you get uncontrolled infection?

I appreciate the activities of Goldman Sachs are extraordinarily complex and probably beyond the understanding of we mere mortals.

In my humble opinion, however, Goldman Sachs have been engaged in nothing short of financial paedophilia - abusing their position of trust so as to satisfy their base desires.