Free Republic

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us? First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America. Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away. Third, it shows that by rescuing...

A new order is emerging on Wall Street after the worst crisis since the Great Depression — one in which just a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry. On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government’s effort to halt a collapse has also set the stage for a narrowing concentration of financial power. “One theme here is that Goldman Sachs and JPMorgan really have emerged as the...

New York Fed Board Chairman Stephen Friedman resigned yesterday amid controversy he owned stock and served as a board director of Goldman Sachs -- an entity he was served with overseeing as a Fed regulator. From Friedman's resignation letter: "…although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper." It was improper says our guest, William Black, associate professor of Economics and Law University of Missouri, Kansas City. Bottom line: It's a clear conflict of interest for private banks to own an arm of the Fed,...

The former director of the government's pension agency took the Fifth Amendment at a Senate hearing where lawmakers quizzed him about allegations that he had inappropriate contacts with three Wall Street firms. ### The former director of the government's pension agency took the Fifth Amendment Wednesday when senators asked about allegations that he had inappropriate contacts with Wall Street firms while running the operation, which insures the pensions of 44 million Americans. Charles E.F. Millard denies that he had improper communications with the firms that recently won multimillion-dollar contracts to advise the agency on a new strategy to invest its...

Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms. A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm. Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it...

Well, kind of. Goldman Sachs (GS) Group Inc. and Societe Generale SA extracted about $11.4 billion from American International Group Inc. before the insurer’s collapse as the firms demanded to hold cash against losses on mortgage-linked securities, according to regulatory filings. Goldman Sachs got $5.9 billion and Societe Generale received $5.5 billion of about $18.5 billion in collateral paid by AIG in the 15 months before the September bailout. The payments helped settle AIG’s obligations on $62.1 billion of credit-default swaps that the Federal Reserve later removed from the New York-based insurer as part of the rescue. Officials at AIG,...

Quietly and almost unnoticed by most Americans, the US Federal Government introduced a fourth branch to its political structure in 2006. As you know we already had three branches; they are: § The Judicial: the Supreme Court § The Executive: the President § The Legislative: Congress This pretty much has us covered in terms of political strategy… but what about financial issues? Everyone knows Congress has no clue how to allocate capital. And the Executive Branch doesn’t exactly have a great track record when it comes to financial matters either (we’ve run a deficit virtually every year since 1970). Shouldn’t...

Goldman Sachs (GS) recently said that media reports that its employees would make huge sums based on the firm’s 2009 earnings were not true. It turns out that they probably are. In an article in The Wall Street Journal, the paper says Goldman “is on track to pay out as much as $20 billion this year, or about $700,000 per employee.” Goldman is just asking for trouble. Somewhere along the line, large banks which plan to pay their employees richly this year and, in some cases, offer tremendous compensation packages to retain top talent must have missed the Congressional and...

A Goldman trading scandal? Posted by: Matthew Goldstein Did someone try to steal Goldman Sachs’ secret sauce? While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs. The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and...

Goldman Sachs has not seen its business or clients harmed by the activities of a computer programmer being held in custody for allegedly stealing secret trading codes from the firm, a source familiar with the situation said. Sergey Aleynikov, 39, was being held in federal custody on Monday, pending the posting of $750,000 bail. Aleynikov was ordered by U.S. Magistrate Kevin Nathaniel Fox in Manhattan on Saturday to post a personal recognizance bond to be secured by three financially responsible people, according to court documents. The bond also was to include $75,000 in cash, and Aleynikov was ordered to surrender...

Goldman Sachs is expected to report record profits this week. Rolling Stone's Matt Taibbi calls the giant investment bank a "vampire squid," and notes how many Goldman alumni were involved in last year's financial bailout, which benefitted the firm. Taibbi concludes: 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...

Goldman Sachs, the Wall Street leviathan that is heavily invested in the cap-and-trade carbon market scam, has admitted it has developed and used software that can manipulate such financial markets. The revelation came during proceedings in a legal case with enough plot twists to make even John Grisham proud; it was made, not by Goldman, but by an assistant U.S. Attorney. "(B)ecause of the way this software interfaces with the various markets and exchanges, the bank has raised a possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets...

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. 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...

Goldman Sachs Group (NYSE: GS) has just come out with a quarter that will please everyone. Unfortunately, this was telegraphed by recent analyst calls with above-estimate forecasts. The investment banking giant, a.k.a. ‘bankless’ bank holding company, posted earnings at $4.93 EPS versus $3.54 estimates on revenues of $13.76 billion versus estimates of $10.6 billion. The huge gain came in net revenues from trading and principal investments with a 93% gain. Investment banking was stronger than recent quarters, but down 15% from a year ago. The big drop was in financial advisory operations, which saw a 54% decline. Another growth for...

We missed this when it happened but, via Zero Hedge, here's a great clip of Charlie Gasparino going off on Goldman Sachs (GS), and how even they're fallible. He seems to be insinuating that CNBC is protecting the bank from criticism right around the 3-minute mark. Either that or he's just speaking vaguely about all the adoration they receive for being so smart.

Have they learnt nothing?” goes the cry, as profits and pay at Goldman Sachs surge to near record levels. The investment banks that have survived the crisis have returned to their bad old ways, paying outrageously high bonuses, that encourage excessive risk-taking at institutions that are too big to fail. Much of this is nonsense. Profits certainly have recovered remarkably quickly and if the markets hold up for the rest of the year the bonuses will surely follow. The size of these payments will be very hard for many ordinary mortals to stomach. After all, Goldman has benefited massively from...

They will never admit to this at Goldman Sachs (they don’t really fess up to much over there at the Big G) but in the fall of 2008, just after the Lehman Brothers bankruptcy gave the world a lesson in systemic risk, Goldman, the world’s greatest risk taker, was finished too. That’s right, it was toast. Finished. Kaput. Until, that is, the firm that was built on wheeling and dealing in some of the most esoteric investments the world of high finance had ever seen, needed a government bailout to stay afloat, which included $10 billion in cash from the...

Yesterday saw one TARP recipient, Goldman Sachs, report $3.44 billion in profits even as another, CIT, teeters on the edge of either bankruptcy or another taxpayer bailout. Which way CIT will tip remained unclear as we went to press, but its very plight shows how the government's approach to systemic risk has created groups of financial "haves" and "have nots." What the Goldmans of the world have in addition to profits is the widespread belief that they are too big to fail. Both Goldman and CIT converted into bank holding companies at the height of the financial panic last fall,...

Earlier this evening as I headed back to my hotel, I passed through the mall area of the Prudential Center in Boston. At one point, there was a kiosk in front of me that contained Russian Matryoshka dolls. I noticed a guy hitting on the sales clerk at the doll kiosk. As I passed by, in total amazement, I heard the guy say to the girl, "Even the central banker of Italy used to work for Goldman Sachs." Whether they know it or not, Goldman has a PR problem. When you have a guy hitting on a girl by displaying...

See: July 16, 2009: Pyramid Economy Glenn Beck's BUBBLE WEB