Glenn Beck: Goldman Sachs
July 14, 2009 - 12:46 ET
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GLENN: Here's the first shot. This is how it's going to come apart. What was his name? Clayton? Stu, do you have this? Clyburn. Congressman Clyburn is leading the charge. Congressman Clyburn, by the way, one of the guys that they credit with Obama's win. He helped save Obama's campaign. He has just filed a letter to the administration saying these minority broadcasters, they need help.
They can't get funding normally. But now they really can't get any funding. What is Telemundo going to do? Well, they are these Hispanics that just would want to have a radio station so badly and they can't get any funding. Oh, the African American community, there needs to be more African American radio stations owned by minorities! Can't we help them?
Of course we can.
Companies like Clear Channel just got too big and they're all white. We should break them up and then sell those stations to minority broadcasters and we'll help fund that. Oh, that is great. Congressman Clyburn, thank you so much for that idea. That's fantastic! Oh, by the way, it's a complete coincidence that congressman Clyburn, his daughter was just appointed to the FCC. Complete coincidence.
Complete coincidence today that Goldman Sachs has their profits go up by 65%. Goldman Sachs.
Well, let's just take you down this tree. I'm going to do this tonight at 5:00. You call everybody you know and you tell them you watch because this is a web and this is the way our entire government is being structured. When you see it, you'll be amazed. Let me just give it to you here. I'll tell you it. See it at 5:00.
Secretary Paulson runs the treasury. Secretary Paulson comes from Goldman Sachs. Secretary Paulson is saving all of these institutions, but Lehman Brothers, no, no, no, Lehman Brothers, that's got to fail. They gotta fail.
Lehman Brothers, who was Lehman Brothers' biggest competitor? Oh, Goldman Sachs.
Who is Goldman Sachs' biggest competitor? Oh, Lehman Brothers. Lehman Brothers, they can fail.
The very next day AIG, they can't fail. AIG needs to be saved! So the former employee of Goldman Sachs, now secretary treasury Paulson decides to bail out AIG. Who is one of the first companies that get the money from the bailout from AIG? Who does AIG pay off, one of the first ones in line? Oh, my goodness, what a coincidence. Goldman Sachs.
So AIG pays Goldman Sachs.
Then the former Goldman Sachs employee, now treasury secretary Paulson says we've got to appoint somebody to really oversee and design this TARP thing; who could I get, who could I get, who could I you know what?
I'm going to hire somebody from Goldman Sachs.
He will design TARP. At the same time Goldman Sachs calls their former employee who is now designing TARP and their former employee who's now the treasury secretary and says, you know what, we should be a bank holding company. A bank holding company? What? Are you kidding me?
In the coming months that will take GE almost two days to have that happen. What, are you crazy? Wal Mart's been trying for years! "Okay, we'll do it." So the two former employees from Goldman Sachs now allow Goldman Sachs to be a bank holding company. Well, why would they want to be a bank holding company? Well, now they can get even more funds from the government. They cannot only get the TARP funds but they can also get FDIC funds.
Oh, and there's also this other little pesky thing. The SEC, the SEC doesn't oversee bank holding companies. The Federal Reserve oversees a bank holding company as long as it's the Federal Reserve where what town is Goldman Sachs? Oh, New York? Yeah.
So you'll be overseen by the Federal Reserve chairman of New York who, oh, my gosh, what a coincidence! He's on your board of directors!
Oh, well, that's great because he will know all of the stuff and he will be able to see if there's any kind of wrongdoings going on. The guy overseeing is on your board of directors, which is against the law. Boy, that's a bad thing that that's against the law. What are we going to do? Oh, oh, I just remembered. Not a problem!
Because former Goldman Sachs employee is now the treasury secretary.
So he just has to sign a waiver that says, "Don't worry about that! He doesn't have to get off the board. He doesn't have to sell any of his stocks.
He will just have the former Goldman Sachs employee write a waiver to the Federal Reserve so the Federal Reserve chair can stay on the board and not only keep his stock but he can buy hang on just a second 52,000 shares of additional stock."
Yeah. So now the guy who's overseeing Goldman Sachs, the watchdog, buys 52,000 shares more which up until today only made him three million dollars. I can't even imagine with a 65% profit increase how much money he's made. That's fantastic.
Oh, by the way, the biggest thing that Goldman Sachs was doing was derivatives. Derivatives, derivatives, what are derivatives? Oh, my gosh, derivatives, why do I know that? It seems like a bad thing. Is that CBO, isn't that the D and the C he owes? Isn't that what caused all of this mess?
Wait a minute, wait a minute. No, the derivatives didn't cause that. That was the oil. Wait a minute, hang on just a second.
Goldman Sachs was the biggest derivatives and also weren't they the biggest in oil speculation as well?
Wow, they were in two of those. Huh. Well, it's a good thing that we're out of derivatives and oil and energy. They've learned their lesson. They've learned their lesson because they are onto something brand new. They are onto cap and trade.
They are the biggest supporters of cap and trade next to GE, which is also weird because that's part of the government now, too. But anyway, they've gotten out of the derivatives and they've gotten out of oil speculation because they learned their lesson.
Now they are just going to start creating the biggest derivative market of invisible gas for energy. That doesn't sound like there's a problem there at all. Wait until you see this web, and this is what's happening to our government. There is a web that is being created and you are the fly.
And they are just, they have stuck their fangs in you just to make you sleepy enough to put silk around you and then once you can't move, they will suck every bit of blood out of your body. More importantly because I meet enough people who say you could suck all the blood out of my body if it would leave my children alone. Your children will not have a chance if we continue to allow the spending, if we continue to allow people like Sotomayor getting in when she says I rule we all know you rule from the bench. You make laws on the bench. But then yesterday saying,
"Oh, no, it's fidelity of the law." Which one is it? Why are we accepting things that we know are lies? They have lied to us over and over again and yet we do nothing! Is it because they have put that little sleepy juice into our necks? Slap your neighbor across the face and say wake up, man; you're caught in a web.
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The above post was posted as follow up to this post:
Sunday, July 5, 2009
Goldman Sachs...Busted...The Real Story Comes Out
In Rolling Stone Issue 1082-83, Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs. The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it." Here, now, are excerpts from Matt Taibbi's piece and video of Taibbi exploring the key issues.
The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.
Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.
They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.
The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement. It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control. Goldman's role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar. And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed. The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman. But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind. Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliché that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline the committee to save the world. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits. After the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle. It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers — one of Goldman's last real competitors — collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed. Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bank-holding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding — most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs — and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret. Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite. The collective message of all of this — the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." Fast-forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs. Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance. (See Comments below for further Goldman Sachs crooked deals)
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By Greg Farrell in New York
Published: July 13 2009 23:33 | Last updated: July 13 2009 23:33
Executives at Goldman Sachs sold almost $700m worth of stock following the collapse of Lehman Brothers last September, according to filings with the Securities and Exchange Commission.
Most of the sales occurred during the period in which the investment bank enjoyed the support of $10bn from the troubled asset relief programme.
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The surge in selling among Goldman partners, at a time when the US government had thrown a lifeline to Wall Street, is likely to draw criticism from lawmakers on Capitol Hill. Having survived the crisis, the bank is expected to report strong second-quarter earnings on Tuesday on rebounding trading profits.
For the eight-month period for which figures are available, Goldman partners sold more than $691m in company stock, even as the firm expanded its public float from 395m to 503m shares in several capital raises.
For the comparable period between September 2007 and April 2008, when the average share price was substantially higher, Goldman partners sold about $438m in stock.
A spokesman declined to comment on the sales, other than to note that Goldman partners receive a big share of annual bonuses in stock, and that for many, stock sales are an effort to diversify their holdings.
Some of the sales could have been motivated by margin calls, which are said to have afflicted a number of Goldman executives who used company stock as collateral for loans.
Stock sales by partners have been a sensitive topic at Goldman Sachs, but never more so than since last September after the collapse of Lehman’s. According to a disclosure in Goldman’s most recent proxy statement in March, the bank took the unusual step of buying back investments in illiquid employee funds made by Jon Winkelried, former co-chief operating officer, and Gregory Palm, general counsel, for $19.7m and $38.3m respectively.
Goldman agreed to the unusual buy-backs last September to obviate the need for the two officers to sell stock on the open market, the company said in March. “Stock sales would easily have covered their requirements but, given the turbulent market conditions, we and they were concerned that such sales would be misconstrued by the market as indicating a lack of confidence in Goldman Sachs.”
Employee ownership has been an important component of Goldman’s “partnership” culture, a vestige of the investment bank’s history as a privately held firm. It went public in 1999.
But Goldman’s culture was severely tested last year. For the period during which executive sales were allowed, from September 17 to October 24, Goldman partners sold some $250m worth of stock.
A bigger wave of selling occurred during the window between December 2008, after Goldman reported its first quarterly loss as a public company, and mid-February. In that two-month period, when Goldman’s share price sunk to near-historic lows, partners sold more than $280m worth of company stock.
