By Pam Martens and Russ Martens: January 29, 2020 ~
(Left to right) Three Most Recent CEOs of Goldman Sachs: Henry (Hank) Paulson; Lloyd Blankfein; David Solomon, Current CEO.
Yesterday, the nonprofit Wall Street watchdog, Better Markets, released an in-depth and scathing analysis of the past 20 years at Goldman Sachs. A bold headline summed it up as follows: “$874 Billion in Bailouts, 36 Major Legal Actions,
$9.8 Billion in Fines and Settlements with Billions More Coming.” One key takeaway from this crime spree, write the authors, is this:
“Goldman Sachs has amassed a RAP sheet showing that the financial crash of 2008 did little if anything to slow the pace of illegal activity that was well underway in the years leading up to the crash. Goldman Sachs was heavily engaged in illegal activity before the crash; they reached new heights of lawlessness in connection with the crash; and they continued to violate the law in the post-crash era….”
Senator Bernie Sanders has repeatedly stated that the business model of Wall Street is fraud. We’ve refined that to the business model of Wall Street is monetizing fraud. And based on this latest report, Goldman Sachs takes the top prize for its panoply of innovations in monetizing fraud.
The Better Markets report raises serious concerns on multiple fronts. First, it traces the Goldman Sachs’ crime wave from 1998 through 2019. Three separate CEO’s served during that period, all of whom became obscenely rich and none of whom curbed the crime wave. Despite all of the federal and state investigations that arose as a result of the Wall Street corruption that brought on the crash of 2008, the report found that the pattern of illegal conduct actually increased at Goldman Sachs after the 2008 crash.
Henry (Hank) Paulson was the CEO at Goldman Sachs from 1999 until he took his seat as U.S. Treasury Secretary under President George W. Bush in 2006. (His full career at Goldman Sachs spanned 32 years.) Failing up is the new normal today on Wall Street. (See Goldman Sachs: The Vampire Squid’s Alum Control Two Fed Banks, the U.S. Treasury, the European Central Bank and the Bank of England.)
Paulson could not have timed his exit any better. Goldman’s role in shorting subprime debt that it was selling to its customers as a solid investment had yet to be exposed so its publicly traded stock had not yet collapsed. Right after Paulson’s confirmation as U.S. Treasury Secretary by the Senate, he filed to sell approximately $500 million of his Goldman stock. Under rules established for private sector persons having to sell their stock holdings to take a position in the federal government and avoid conflict of interest concerns, Paulson was going to be able to potentially save upwards of $200 million in capital gains taxes on that $500 million stock sale.
Blankfein, who had served under Paulson as President of Goldman, took the reins as CEO when Paulson left. Blankfein became the wily defender of the Goldman Sachs’ crime wave and a billionaire in the process, avowing at one point that he was “doing God’s work.” Blankfein stepped down in 2018 – a few months ahead of Malaysia filing a criminal indictment against the firm in the 1MDB matter. According to media reports, Goldman is expected to settle the criminal investigation of that matter by the U.S. Department of Justice early this year.
The new CEO at Goldman is David Solomon, who served as President under Blankfein, and has been with the firm for the past two decades of its crime wave and thus likely knows where all of the smoking guns are buried.
Better Markets provides the following sampling of the legal actions against Goldman Sachs since the 2008 crash under the tenure of Blankfein and Solomon:
“Manipulation of U.S. Dollar ISDA Fix: In December of 2016, the CFTC [Commodity Futures Trading Commission] issued a consent order against Goldman Sachs for its attempts to manipulate a leading global benchmark used to price a range of interest rate derivatives, all for the benefit of Goldman’s trading positions. The violations extended from 2007 into 2012, and involved multiple traders, including the head of the bank’s interest rate products trading group in the U.S. The sanctions included a $120 million civil penalty.
“Pay- to-Play: In 2012, the SEC issued a consent order against Goldman, with a $12 million fine, for violating pay-to-play rules, when a Goldman VP made extensive cash and in-kind contributions to the gubernatorial campaign of the Treasurer of Massachusetts, who then steered securities underwriting work to Goldman; Goldman earned more than $7.5 million in underwriting fees as a result of this illegal activity.
“Price Fixing in GSE [Government-Sponsored Enterprise] Bond Market: In 2019, Goldman Sachs paid $20 million to settle a lawsuit alleging that it engaged in a widespread conspiracy to fix the prices of bonds issued by Fannie Mae and Freddie Mac. As a result of the price-fixing, Goldman’s victims, including several pension funds, paid severely inflated prices, bilking the savings of millions of hard-working Americans.
“Violations of Client Trust: In 2018, Goldman Sachs paid a total of $110 million to the Federal Reserve and the New York Department of Financial Services to settle allegations of widespread misconduct by its FX [Foreign Exchange] traders. This misconduct included disclosure of customer trading information to other institutions, allowing Goldman Sachs to profit at their customers’ expense.”
The U.S. Department of Justice needs to carefully consider the recidivist history of the Goldman Sachs crime factory when weighing whether to bring criminal charges against Goldman Sachs in the 1MDB matter. The Better Markets report notes that 1MDB has been called “one of the greatest financial heists in history” and that Goldman played a “central, decisive and wide-ranging role.” The authors explain:
“Not only were billions of dollars looted from funds raised by Goldman, but hundreds of millions of those dollars were allegedly diverted and used as bribes to steal an election. That enabled the allegedly corrupt prime minister of Malaysia to remain in power for five additional years – a period during which his opponents were crushed and at least one prosecutor was brutally murdered, suffering ‘a horrific death.’ ” (Read a Better Markets separate report on the 1MDB scandal here.)
There is only one thing worse than the reality that Wall Street continues its crime wave after creating the worst economic collapse in the U.S. since the Great Depression. It’s the reality that essential work like that of Better Markets’ researchers is censored by mainstream media. We could not find one mainstream media news outlet that carried this story yesterday or today.
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