Tag Archives: Carl Levin

Too Big To Jail

One might certainly wonder what the EU regulators want to achieve with their  probe into the big global bank’s shady CDS activity. They can’t launch a criminal investigation anyway. The banks in question – once “too big to fail” – are also “too big to jail”.

Credit rating agencies would weigh in with ponderous warnings, which would scare sources of capital from participating.”

As pointed out in my last post, I’m not sure what’s really going on with the European Commission and the launching of two separate probes into the shady CDS trading of 16 major global banks. Perhaps they’re trying to fill up the bailout-bin with some juicy cash settlements?

That is acctually all the EU Commission can hope for.
Whatever the findings of the CDS investigation might be, there will never be a criminal case against banks like Goldman Sachs, JP Morgan Chase or Bank of America.
Never.
It’s exactly one year since the US Security and Exchange Commission charged Goldman Sachs with fraud related to the subprime disaster.
Two months later, Goldman and the US authorities agreed on a cash settlement of USD 550 million, or – roughly – equal to 3,4% of the banks bonus pool…
And this was supposed to be the biggest crackdown on financial crime – ever!
All the major banks have been facing similar or other criminal charges, but none – I repeat; none – have so far been given more than a slap on the wrist and a cosy little fine.
Unfair? Absolutely. But the fact is, however, there’s nothing else to do.
As Robert Lenzner at Forbes.com points out; a criminal  case would threaten these banks status as an authorized dealers in government securities and would in effect put such a cloud over its role in  buying and selling US Treasury securities that it would damage that gigantic and  crucial marketplace.
Besides, a criminal case, before it was tried or settled, would severely hinder the banks’ ability to borrow money in global markets, as many financial institutions would place it on a restricted list.
“Credit rating agencies would weigh in with ponderous warnings, and most likely scare sources of capital from participating,” Lenzner writes in his comment on the latest Goldman-bashing by the US Senate.
And this, in turn, would drastically reduce these banks ability to trade corporate debt, common stocks, currencies or commodities.
This process would feed on itself even before any sense that the firm was criminal or not.
Additionally, the central bankswould become quite wary of having any of these firms as a counterparts on any transaction.
So would all other market participants.

About 90% of all the derivative transactions in the world are handled by these firms with each other as the counterparts.

And now we have a handful of US banks that are “too big to jail,” a bunch of European banks that are “too stressed to test” and those who once was classified as “too big to fail” are now labeled as “systemically important.”

Honestly? I’m deeply impressed!



Related by the Econotwist’s:

Related Articles:

4 Comments

Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics, Technology

The Truth, Some Truth And Something Like The Truth

All top executives at Goldman Sachs have Tuesday made their testimonies before the Senate members of the U.S. Congress – including CEO Lloyd Blankfein. They all did their best to defend themselves against the legislation brought against them. Here’s the full transcripts of all the prepared statements, and video recordings of the U.S politicians questioning of the Goldman-leaders.

“What you perceive, your observations, feelings, interpretations, are all your truth. Your truth is important. Yet it is not The Truth.”

Linda Ellinor


The CEO of Goldman Sachs testily defended his company’s ethics and business practices during the nation’s financial crisis on Tuesday, saying customers who bought securities from the Wall Street giant came looking for risk “and that’s what they got.”

“Unfortunately, the housing market went south very quickly,” Lloyd Blankfein told skeptical senators on an investigatory panel. “So people lost money in it.”

He was the final witness in a daylong hearing on Goldman Sachs’ behavior, which resulted in a government civil fraud charge earlier this month.

Five present and two former Goldman officials held their ground in hours of contentious testimony, unflinchingly defending their conduct and denying that the Wall Street investment bank helped cause the near-meltdown of the nation’s financial system.

Sen. Carl Levin, D-Mich., the panel’s chairman cited a “fundamental conflict” in Goldman’s selling securities and then betting against the same securities — and not telling the buyers.

“They’re buying something from you, and you are betting against it. And you want people to trust you. I wouldn’t trust you,” Levin told Blankfein.

Blankfein denied such a conflict. “We do hundreds of thousands, if not millions of transactions a day, as a market maker,” Blankfein said, noting that behind every transaction there was a buyer and a seller, creating both winners and losers.

Here’s the full prepared testimonial of  Lloyd Blankfein.

The following Goldman executives was called in on the carpet before the Senate in today’s hearing:

LLOYD C. BLANKFEIN

Chairman and Chief Executive Officer

DANIEL L. SPARKS

Former Partner, Head of Mortgages Department

Prepared testimony

JOSHUA S. BIRNBAUM

Former Managing Director, Structured Products Group Trading

Prepared testimony

MICHAEL J. SWENSON

Managing Director, Structured Products Group Trading

Prepared testimony

FABRICE P. TOURRE

Executive Director, Structured Products Group Trading

Prepared testimony

DAVID A. VINIAR

Executive Vice President and Chief Financial Officer

Prepared testimony

CRAIG W. BRODERICK

Chief Risk Officer

Prepared testimony

All testimonies provided by Zero Hedge.


The senators asking questions was: Carl Levin Chairman (D-MI), Thomas R. Carper (D-DE), Mark L. Pryor (D-AR), Claire McCaskill (D-MO), Jon Tester (D-MT), Tom Coburn Ranking Member (R-OK), Susan M. Collins (R-ME), John McCain (R-AZ), John Ensign (R-NV).

“I’ve Been Targeted”

Embattled Goldman Sachs Executive Director Fabrice Tourre who was sued by the SEC for fraud told the Senate subcommittee today that he will defend himself in court against the suit.

I deny — categorically — the SECs allegation, Tourre said at a hearing of the Permanent Subcommittee on Investigations. I will defend myself in court against this false claim, he said, adding that a deal at the center of the suit was not designed to fail.

Tourre, 31, and six other current and former Goldman Sachs employees will testify before lawmakers about the firms mortgage-securities business in the years leading up to the economic collapse of 2009.

Inside Goldman Sachs

Here’s the morning report from ABC News, featuring clips from Lloyd Blankfein’s testimony:

The Essential Background Material:

Fitch: The Long-Term Goldman-Effect
Will The Goldman-Case Kill The OTC Market?
Conquering The Devil
Goldman’s Collateralized, Securitized And Synthesized Fraud
Obama: “It Is Time”
Goldman Sachs Charged With Fraud – Here’s The SEC filing
Two Thirds of Americans Support Stricter Financial Regulations
Living In A Derivative World


The H5F-TV Toolbar; built-in radio- and TV channels, news ticker and email notifier.

Reblog this post [with Zemanta]

8 Comments

Filed under International Econnomic Politics, National Economic Politics

Goldman-Boss Questioned By Congress – Watch It LIVE Now

Goldman Sachschief executive officer, Lloyd Blankfein, is right now being questioned by the committee members in the U.S. Congress, after making prepared statement.

Watch this historic moment live at CNBC Plus.

Click on the picture or this link to watch the web cast.

LATEST:

DOW JONES DROP MORE THAN 200 POINTS.


The H5F-TV Toolbar; built-in radio- and TV channels, news ticker and email notifier.

Reblog this post [with Zemanta]

2 Comments

Filed under International Econnomic Politics, National Economic Politics