Goldman Sachs on The Huffington Post

Arianna Huffington: Christmas 2009: We Know Who's Been Naughty... Nice Is a Little Harder to Find

2009-12-23T16:56:56Z

A recent CNN poll found that during this economically troubled holiday season 68 percent of Americans are buying gifts that their friends and family need, compared to 27 percent who are buying gifts they think they would enjoy.

As for me, as part of my annual tradition of getting gifts for my favorite -- and not so favorite -- public figures, I'm going for the middle ground, choosing gifts they need... and that I think you might enjoy.

Here's this year's list:

Joe Lieberman, Ben Nelson, Mitch McConnell and the other congressional obstructionists: a DVD of Mr. Smith Goes to Washington, so they can see the proper use of a filibuster -- to fight corruption, not promote it.

Health insurance and drug company lobbyists: Nothing -- they're getting enough from the Senate and the White House this Christmas.

Lou Dobbs: Just a simple "feliz navidad."

Mark Sanford and Tiger Woods: Love-sick emails that self-destruct 60 seconds after you send them. "Soul mates" they are actually married too.

Jenny Sanford and Elin Nordegren: Husbands they can trust. An at home HIV test. The best divorce lawyer money can buy.

Joe Wilson, Kanye West, and Serena Williams: Impulse control.

Meghan McCain: More attention for her fabulous cleaving takes (Karl Rove is a "creepy" Twitter follower; Dick Cheney should "go away"), and less attention for her fabulous cleavage.

Taylor Swift: a Harry Winston-designed mace holder for her next awards show meet-up with Kanye West.

Tareq and Michaele Salahi: a Photoshop class -- it's a much less obnoxious way to get a picture of yourself with Obama and Biden.

Chesley "Sully" Sullenberger: the pilot's seat on my next flight. And the next one. And the next one...

The Iranian people: a green uprising that turns into a velvet revolution.

The American people: Real health care reform (Medicare For All).

Carrie Prejean: New breast implants, so she can give back the ones the Miss California pageant bought for her.

Roman Polanski: a cellmate who also believes that plying someone with champagne and a Quaalude and anally penetrating them is "making love."

Larry Summers: a Goldman Sachs pension -- after all, he's earned it.

Richard and Mayumi Heene: Parenting classes. Behind bars.

Falcon Heene: Classmates who've never watched TV.

David from "David After the Dentist": Classmates who've never watched YouTube.

All the cable anchors who spent endless hours expressing their deep concern for Balloon Boy: the names of some of the 13 million children living in poverty in this country who desperately need their concern and attention, and some time in the media spotlight.

Erin Andrews: a lifetime supply of masking tape. And a plush hotel robe -- floor length.

Orly Taitz: Someone to tell her that her 15 minutes expired months ago.

The cast of Jersey Shore: a copy of "Dummies for Dummies." Vasectomies for the guys and a lifetime supply of birth control pills for the girls.

Members of the GOP: an Xbox 360. They might as well occupy themselves with something, since they've decided to do nothing in Congress.

Lady Gaga: Guy Ritchie -- she's already stolen everything else that used to belong to Madonna.

The recipients of the 3.9 million foreclosure notices sent to homeowners this year: A cramdown amendment that isn't killed by banking lobbyists.

Goldman Sachs: $23 billion of taxpayers' money. Oops, sorry -- that's what we gave them last year.

That's my list. Now it's your turn to play Santa. Who's been naughty and who's been nice? Please post your gift ideas for your favorite -- and not so favorite -- public figures in the comments section and we'll collect the best ones and unwrap them on Christmas Day.

Janet Tavakoli: Treasury Cover-Up of Goldman's Role in AIG Crisis?

2009-12-22T07:20:13Z

In November 2009, I wrote in the Huffington Post that Goldman Sachs Group nearly bankrupted AIG. In December, the Wall Street Journal explained to the general public that Goldman fueled AIG's gambling and played a much bigger role in the mortgage bets that nearly felled American Insurance Group (AIG) than the Treasury, the Fed, or Goldman itself publicly disclosed.

The TARP Inspector General's November 17 report missed the most damaging facts. Intentionally or otherwise, it was evasive action or just plain whitewash. The report failed to clarify Goldman's role in AIG's near collapse, and that of all the settlement deals, the U.S. taxpayers' was by far the worst.

Goldman originated or bought protection from AIG on about $33 billion of the problematic $80 billion of U.S. mortgage assets that AIG "insured" with credit derivatives, about twice as much as the next two largest banks involved.

Goldman acted as middle-man on $14 billion of that amount, after it took the risk of mortgage assets originated by other banks and insured all of it with AIG. Goldman may wish to claim it "was only following orders," but since Goldman also originated many of the mortgage assets ultimately protected by AIG, it should have been well aware of the risk posed to itself and to AIG. The risk was then Goldman's. If AIG failed, Goldman Sachs would have had to make good on those trades. Goldman stuffed so much risk into A.I.G. that Goldman nearly killed its own "hedge."

In November 2008, the New York Fed paid 100 cents on the dollar for the $14 billion of mortgage assets related to Goldman's trades. Goldman estimated the assets had lost $9.6 billion, or around two-thirds of their market value. Overall, the government's bailout out of AIG allowed Goldman to avoid losses on its trades covering $22 billion in assets.

The U.S. taxpayer deserved a much better deal. In late July 2008, SCA, another bond insurer, settled similar contracts for only around thirteen cents on the dollar. In August 2008, Calyon, a French bank also involved in AIG's transactions, settled disputed financial guarantees with FGIC, a bond insurer facing bankruptcy, for only ten cents on the dollar. Ambac, another bond insurer in need of capital, recently canceled similar trades for ten cents on the dollar.

Defenders argue that circumstances surrounding AIG were different from the other bond insurers. They are correct; the circumstances were worse. The Fed should have made sure any payments that originated from AIG, before or after the bailout, were only temporary loans to be repaid as soon as possible.

This link provides a snapshot from January 2008 of two of Goldman's value-destroying securitizations that were protected by AIG. (You will have to enlarge the image after clicking, and the document is a bit awkward.) The first is Abacus 2005-2; Goldman originated and bought protection on these mortgage assets. The second is Davis Square Funding IV. Goldman originated this deal, and French bank Societe General bought protection from AIG against it.

Inside Goldman's mortgage assets were value-destroying assets created by other Wall Street firms. Everyone bought each others' junk so prices stayed artificially high, and the risk could be dumped on someone else. Of course, this doomed strategy eventually fell apart. At the time of the AIG bailout, losses were quickly eating away at the insides of these products cooked up in Wall Street's financial meth labs.

Among the many shards of glass masquerading as gems, you will find Tourmaline CDO 2005-1. It was managed by Blackrock, the manager of the AIG assets that the Fed purchased with public money. Perhaps the Fed's theory in handing out no bid contracts to Blackrock has something to do with the diligence displayed by a fox watching a hen house.

The Fed gave the U.S. taxpayer a raw deal. At the time Goldman got its give-away, Henry Paulson was treasury secretary -- he was also Goldman's CEO when it put on its trades with AIG -- and former Goldman chairman Stephen Friedman was then chairman of the New York Federal Reserve Bank. Goldman CEO Lloyd Blankfein was the only Wall Street executive at one of Paulson's bailout meetings. Goldman was inside the tent advising on the most self-serving way to save itself and gain unfettered access to public funds.

In the fall of 2008, Goldman Sachs became a bank holding company before switching to a less regulated financial holding company in August 2009*. This prevented a run on Goldman Sachs and gave it permanent access to Fed funds, taxpayer money. Goldman pays rates near zero for short-term borrowing while it earns profits on the higher rates paid on the capital it is required to deposit with the Fed. Goldman also issued nearly $21 billion in debt guaranteed by the FDIC. Most valuable of all, however, is the perception that Goldman is so well-connected, that the government will never let it fail.

Goldman paid mega bonuses in past years subsidized by selling hot air. Now it proposes to again pay billions in bonuses based on earnings made possible by taxpayer dollars.

Now that the crisis is over, we should ask Goldman Sachs -- and all of AIG's other trading partners involved in these trades -- to buy back these mortgage assets at full price. Alternatively, we can impose a special tax. Instead of calling it a windfall profits tax, we might label it a "hot air" profits tax.

A Goldman spokesman denies it could have known these mortgage assets were a problem, but Goldman also acknowledged I had warned about them -- and the grave risks they posed -- at the time they were created. It said my opinion was in the "minority." As it happens, Goldman's opinion was proved tragically wrong, and mine was proved correct. It is not in the public interest to rely on Goldman's opinion about the greater risk it now poses to the global markets, and the Treasury should exact a much greater financial cushion.

The global financial crisis and the special circumstances surrounding AIG's bailout were extraordinary. It is unconscionable to reward value destroying activity that damaged not only AIG, but enabled massive damage to the U.S. economy. It is in the public interest to claw back public money. Goldman should buy back these mortgage assets at full price, or we should impose a reparations tax. Furthermore, Goldman should pay off its FDIC guaranteed debt, and once again become an investment bank with no access to Fed borrowing, before it pays taxpayer-subsidized bonuses to its employees.

The following is a December 21, 2009 FoxBusiness video:

*Corrected earlier typo showing date as 2008

Taxpayers Help Goldman Sachs Reach Height Of Profit In New Skyscraper

2009-12-22T01:37:29Z

In the first six months of 2010, about 6,000 employees of Goldman Sachs Group Inc. will take a break from their spreadsheets and move across the southern tip of Manhattan to a new 43-story, steel-and-glass skyscraper.

The building was a bargain -- and not just because the final cost is expected to be $200 million less than the $2.3 billion price the company had estimated when construction began in November 2005. Goldman Sachs also benefited from the government's determination to avoid losing jobs in lower Manhattan after the Sept. 11, 2001, terrorist attacks.

Daniel Adler: What Do Professional Athletes Have in Common With Bankers?

2009-12-21T23:28:33Z

Today, we will examine two industries. Neither produces a tangible product. Both have close ties to the government and receive billions of dollars in government assistance. Both pay their top performers millions of dollars.

Wall Street firms such as AIG, which received $90 billion in government funds, and sports teams such as the Dallas Cowboys, who received roughly $325 million to build the monument to excess that is Cowboys Stadium, have more in common than being run by white males. Employees in both industries reap huge benefits due to government assistance.

Recently, Goldman Sachs has come under fire for paying lucrative year-end bonuses to their employees. They plan to pay $16.7 billion, an average of $700,000 per employee. Of course, this comes not many months after the US government, by way of AIG, paid Goldman $12.9 billion. Predictably, there has been much populist outrage and Goldman has taken steps to quell public anger and (far more worrisome to them) government regulation. Goldman should not be expected to spurn the government funds, but it seems quite inappropriate for the government to clean up someone else's (in this case, AIG's) mess. The government is essentially funding those high salaries. Why is a company that receives billions in government support paying their top employees far more than the usual rate for labor in other industries?

In the sports world, let us consider the example of the Cowboys. This season, they opened what may be the most impressive stadium in history. To pay for the $1.2 billion palace, they received $325 million in government funds. Last season, the Cowboys spent $146 million on players. Why is a company that receives hundreds of millions in government support paying their top employees far more than the usual rate for labor in other industries?

The Cowboys are not the only team to receive government funding for their stadium. The Yankees and Mets each opened new stadiums this year and received plenty of government assistance; through some creative bond financing, the Yankees will save $787 million and the Mets $513 million. The New York teams ranked first and second in total payroll last season. The savings on the stadium and high spending on players is not necessarily directly connected, but it is certain the Cowboys, Yankees, and Mets were not exactly in dire need of government money.

It's not just the high spending clubs that receive government subsidies for their stadiums. In an article in the Journal of Economic Perspectives, Siegfried and Zimbalist state that during the 1990s, $21.7 billion was spent (or planned to be spent) on 95 stadiums in the four major sports (MLB, NFL, NBA, and NHL). Of this massive figure, roughly two thirds came from public funds. Without government funding for stadiums, payrolls across the league could not be nearly as high as they are today.

Certainly, there are many advantages to a city having a professional sports team, some of which are not easily measurable. How do you quantify the value of a winning team to a region? I know surly Bostonians are more pleasant after a Red Sox victory. Siegfried and Zimbalist do find that new stadiums provide an economic boost to the area around the stadium, but generally come at the expense of other forms of entertainment and nearby neighborhoods, so the funds spent do not increase the tax base.

Sports salaries are at ludicrous levels because the entire system is predicated on a large portion of team costs being covered by the government. Why do we as fans accept this transfer of taxpayer funds to players (with the owners taking a little for themselves along the way)? In the UK, the government has taken action to limit bankers' pay by taxing their bonuses at a very high rate. I am not advocating that for athletes (or bankers). However, to say that athletes are deserving of high pay because, "that's what the market supports," is a little misleading. The market for pro athletes, like most markets, is heavily impacted by government activity. As long as the government is funding some stadiums, even those teams that do pay for their own stadiums (such as the San Francisco Giants and New England Patriots) are forced to pay more for players.

In both sports and finance, salaries are artificially high due to government support. Wall Street may not get large bailouts every year, but it seems likely that salaries are higher due to repeated government actions that signal to the banks that they unlikely to fail. Neither the teams nor banks are really at fault; we cannot blame them for asking. If someone offered me billions, millions, or even tens of dollars, I would also accept. It seems ridiculous that in both industries, government funds subsidize salaries that are far higher than necessary to keep the top talent.

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Les Leopold: Wall Street's 10 Biggest Lies of 2009

2009-12-21T16:06:43Z

Say goodbye to 2009, the worst economic year since the Great Depression.

Say hello to the billionaire bailout society in which the super-rich gamble, lose and get bailed out by the rest of us.

To save the system from total collapse we poured trillions of dollars into the financial sector. The result? Banks still are refusing to lend. Thirty million Americans are looking for full-time jobs and 49 million are skipping meals including one out of four children. But Wall Street again is reaping record profits and bonuses.

Not only are we richly rewarding those who wrecked our economy, but also, we have to put up with hundreds of fabrications about how the big banks got us here. Here is my biggest, fattest lies list for 2009:

1. "Government programs for low-income home buyers caused the financial crash." Wall Street defenders were quick to blame the Community Reinvestment Act, which urges banks to loan money in minority communities. In fact, almost none of the CRA loans are sub-prime and the vast majority are doing well, thank you. Blaming government programs deflects us from the real cause: Wall Street's incredibly reckless creation, marketing, selling and trading of "innovative" new securities that supposedly removed the risk from pools of risky debt. It didn't work. Wall Street, not the poor, crashed our economy.

2. "Income inequality is good for everyone." Lord Brian Griffiths, Vice-Chairman of Goldman Sachs at least had the nerve to say what so many of the super-rich really believe:

"We have to accept that inequality is a way of achieving greater opportunity and prosperity for all."

Unfortunately, the facts suggest otherwise. There is a high correlation between the mal-distribution of income and economic crashes. The last time our wealth and income distribution was as skewed as it is today was 1929, and that's not an accident. When too much money is in the hands of the few it runs out of real world investment and gravitates towards speculative investments. This inevitably creates asset bubbles and crashes. Record pay and bonuses on Wall Street and high unemployment are connected. (See The Looting of America Chapter 11).

3. "The rising number of billionaires is a sign of economic health." It's accepted media wisdom that the more billionaires the better. China with 130 billionaires now trails only the US, which has 359, according to Forbes magazine. But in our billionaire bailout society, the rising number of billionaires signals a collapsing middle class. Ponder this statistic: In 1970 the ratio of the compensation of the top 100 CEOs compared to the average production worker was 45 to 1. By 2006 it was an astounding 1,723 to one. Does that look healthy to you?

4. "Paying back TARP means banks are no longer on government welfare." Bank after bank is rushing to repay TARP funds during the worst economic year since 1937. They want to get out from under the Pay Czar (not that he's been sufficiently tough on the banks under his purview.) Banks that were insolvent only a few months ago now say they have the financial strength to refund tens of billions of dollars to the government. Where did all that money come from? Much of it comes from other government welfare programs for Wall Street (over $12 trillion worth) that aren't publicized. (See Nomi Prins's excellent accounting.) It may be the case that our banks are paying us back with our own money. Now that's financial innovation.

5. "Wall Street's freedom to innovate must be protected." Congressional leaders are tripping all over themselves to say new regulations will not discourage Wall Street innovations, something they claim is vital to our economy. Oh really? Do those "innovations" add anything useful to our country other than new casino games for the super-rich? Former Federal Reserve Chairman, Paul Volker, recently blew the whistle on this fabrication:

"I hear about these wonderful innovations in the financial markets and they sure as hell need a lot of innovation. I can tell you of two - Credit Default Swaps and CDOs - which took us right to the brink of disaster: were they wonderful innovations that we want to create more of?

.... I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information....

The most important financial innovation that I have seen in the past 20 years is the automatic teller machine... How many other innovations can you tell me of that have been as important to the individual?" ("What Has Financial Innovation Done for You?")

6. "To retain critically needed talent, Wall Street must be free to pay top salaries and bonuses." Where would they flee if they just got paid like normal people rather than like gods? The British are putting in place a 50 percent tax on bonuses. Also, compensation is much, much lower in the European Union. But the real lie is that we need such "talent" in the first place. That kind of "talent" just crashed our economy. That kind of "talent" is widely overpaid - no way should bond traders receive 10 to 100 times what is earned by the best neurosurgeons in the world. Something is really wrong and it starts with the lie of banking "talent."

7. "Overpaid American workers are the real cause of unemployment." The New York Times writers who concocted this argument didn't think they were lying. But this is one of the most preposterous ideas put forth during 2009. ("American Wages out of Balance" New York Times November 11, 2009) Edward Hadas, Martin Huchinson and Antony Currie informed us that:

"American manufacturing workers should take average real wage cuts of as much as 20 percent to get into global balance."

They don't mention that the average non-supervisory worker has already taken an 18 percent cut in real wages between 1973 and 2007. What's worse, they claim that if workers don't take these additional cuts, these "overpaid" working stiffs will be the cause of another Great Depression. They write:

"But if American wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching Depression-era levels of unemployment."

Not a word is mentioned about how Wall Street's gambling caused all of this unemployment and how the continued failure of Wall Street banks to lend is stalling job growth, right now.

8. "I'm doing God's Work." Lloyd Blankfein, Chairman of Goldman Sachs said what too many Wall Street leaders truly believe: that they are so privileged and entitled that it seems as if the heavens bless their work. Why else are they earning hundreds of millions of dollars? Mr. Blankfein believes he is creating a virtuous circle by raising capital for corporations who create jobs and help our society prosper. But Goldman Sachs, JP Morgan Chase, Morgan Stanley and the rest of the apostles helped to bring the entire world economy to its knees. Does that mean God likes unemployment and widespread hunger?

9. "We're out of money." Who's we? Yes, the middle class is tapped out but the super-rich haven't even begun to pay their fair share for the mess they created. Yet the top 400 richest Americans alone are sitting on $1.27 trillion or so in wealth. Here's a dangerous thought. What if we had a very steeply progressive wealth/income tax that reduced the net worth of the super-rich to "only" about $100 million each? You wouldn't be suffering if you had $100 million kicking around. Now do the math: The 400 richest x $100 million each would equal $40 billion. That would leave about $1.23 trillion to help pay back the country for the Wall Street meltdown that we, our children and their children will be subsidizing.

10. "We are becoming a socialist economy." Somewhere between 68 and 78 percent of the US GDP is private sector activity, the highest among developed nations. And much of the government expenditures go to private contractors as well. But there's a kernel of truth in the socialist scare: What do you call a society that encourages the private accumulation of wealth without limit, and then when the super-wealthy get into serious trouble, we bail them out with taxpayer funds - largely from a declining middle-class? That's not free-enterprise. That's not socialism either. It's something new and it deserves to be called the billionaire bailout society.

Here's hoping that in 2010 we can begin to undo it.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009. u

AIG Emails: Spitzer, Blodget Debate Whether AIG's Internal Documents Should Be Published Online For Public Review (VIDEO)

2009-12-21T13:45:58Z

In a New York Times op-ed over the weekend, former New York attorney general and governor Eliot Spitzer and two law professors, Frank Partnoy and William Black, urged the government to publish AIG's internal emails and accounting documents online. Disclosing the documents, they argued, would facilitate an "open source," participatory probe into the insurance corporation's collapse and subsequent rescue.

This morning, Spitzer continued to press that the documents should be released for public scrutiny on Dylan Ratigan's "Morning Meeting", where he debated the point with Henry Blodget, editor of The Business Insider.

While Spitzer and Blodget agreed that the public -- we own an 80 percent stake in AIG -- has a right to understand what happened when the company was bailed out and why, Blodget insisted that emails were just "one piece of the puzzle" and that additional evidence such as meetings and voicemails should be considered.

Spitzer agreed the emails were only part of the investigation, but insisted that they are "a critical piece that will permit us to put this story together" and will address crucial questions surrounding the AIG bailout:

"What was the relationship between AIG and Goldman, AIG and the Fed, AIG and Treasury, what was known bottom to top. These are critical questions that the taxpayer deserves to know...We deserve to know because our financial future depends upon it."

At issue, according to Spitzer and Blodget, is the extent to which Goldman Sachs was exposed to AIG's risk -- and whether the government's decision to pay 100 cents on the dollar for AIG's contracts with banks was done to forestall Goldman's collapse.

Here's Blodget:

"The allegation is that AIG was trying to solve the problem on its own, going to Goldman, saying, 'Take sixty cents.' Suddenly Geithner charges in, says, 'Don't worry, we'll make you completely whole.' That is a huge problem, and to Eliot's point, we have to know what happened there, why that mistake was made, because I think it's universally viewed as a mistake."

And if Goldman's survival did hinge on AIG's rescue, Spitzer said, "it puts them in a whole different position, at so many different levels, in terms of salaries, what they do, regulatory status -- and it reframes the entire debate and sheds light on how they've conducted their business."

Watch Spitzer and Blodget discuss the merits of airing AIG's internal documents for public review below:

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Citigroup's Warrants Provide Low Returns For U.S. Taxpayers

2009-12-21T11:43:52Z

Warrants the U.S. holds in Citigroup Inc., once the most valuable bank in the nation, may provide the lowest return for taxpayers who stepped in with $45 billion to save the company when no one else would.

Andrew Ross Sorkin: Morgan Stanley, Goldman Sachs Were On The Verge Of Collapse Last Fall (VIDEO)

2009-12-21T11:30:24Z

Don't buy the assertions that banks like Goldman Sachs would have survived the financial crisis without a taxpayer bailout.

According to Too Big To Fail author and New York Times scribe Andrew Ross Sorkin, who sat down with Newsmax TV recently, the world was dangerously close to the "financial abyss" last fall. So close, in fact, that both Morgan Stanley and Goldman Sachs were very close to going belly up, Sorkin argues.

After Lehman Brothers collapsed, Sorkin says, there was a widespread fear on Wall Street that Morgan Stanley would be the next to go under. Goldman Sachs CEO Lloyd Blankfein was reportedly so spooked that he called up Morgan Stanley chief John Mack and urged him to "hang on, because I'm thirty seconds behind you."

Sorkin says that Hank Paulson, who was Treasury Secretary at the time, and then-New York Fed President Timothy Geithner -- nicknamed "e-harmony" for his matchmaking efforts -- spent the weekend brainstorming potential mergers for the vulnerable banks. One possibility called for the absorption of Goldman Sachs by Citigroup; another for the marriage of Morgan Stanley to JPMorgan.

At the time, Sorkin added, policymakers feared that if major financial institutions continued to domino into bankruptcy, even non-financial corporations like General Electric could be vulnerable.

WATCH Sorkin's interview:

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Dan Silverstein: The Goldman Sachs Investment You Haven't Heard About Yet

2009-12-20T10:32:56Z

There is no industrial sector more myopic, self-absorbed, conceited or lacking in aesthetic appreciation than Wall Street.

In Tom Wolfe's generation-capturing book The Bonfire of the Vanities these transactors of capital had the hubris to characterize themselves as "Masters of the Universe." It's a cultural identification that persists; but no matter how superior they think they are, it's fairly obvious they lack the chromosome that triggers empathy, or conscience.

Lately, the iconic transactor of capital, Goldman Sachs, has seen its pre-eminence challenged by a populist movement deluded by its belief that demonizing those who are able to profit from their mastery of a capitalist economy will somehow improve the lot of those who haven't.

It used to be that women were most likely to carry a grudge against the company. For years Goldman's reputation was that of a work environment incompatible with women. It wasn't so much that they were treated with overt disrespect as it was so workplace-centric that no woman could compete unless she had a wife at home to support her.

To be fair, the company's integration of women executives -- now representing about 35% of its workforce -- has attracted exceptionally high achievers. It also has a long tradition of charitable giving. Several years ago, under the leadership of Lloyd Blankfein, chairman, a company-wide discussion was initiated to identify how its core competencies and massive funding potential could be harnessed as agents of change, beyond the impact of check writing.

Searching for a cause

Of all the possibilities this storied bastion of testosterone production might have selected, educating women entrepreneurs surely qualifies as one of the more astounding. Nonetheless, according to a 2009 Harvard Business School case history an internal research study entitled Womenomics -- prepared in Goldman's Tokyo office -- triggered a companywide thread of dialogue that reached top management. In 2007 Mr. Blankfein, along with members of his senior management, agreed that educating women and girls was the highest and best execution of their commitment to stimulate sustainable global economic growth.

Seasoned UN humanitarian agency staffers realized long ago that the way to affect profound change in a single generation is to educate girls. But, for a corporation so far removed culturally from this mindset to arrive at the same conclusion is testimony to an intellectual tenacity that merits attention.

What resulted from these internal discussions was a 2008 initiative called 10,000 Women.
Funded with $100 million it can do just about anything it pleases. According to Goldman's Global Head of Corporate Engagement, Dina Habib Powell, what it has chosen to focus on are women who have overcome the enormous hurdles faced by anyone with the guts to start a business. From that vast pool of candidates it selects those who appear most likely to benefit if they are given half a chance. She said that they see it as "an investment in the economic and social potential" of these courageous self-starters who are a largely overlooked subset of commerce in the developing world referred to as "the missing middle".

10,000 Women offers access to a superb business education delivered through a network of business schools throughout the world. By affiliating leading universities with schools of the highest regional caliber women selected for the program gain access to the vast resources of the larger partner. This arrangement allows for something else that is critically important: It leaves in the hands of its local partners the final decision on curricula offered to their students. Those do-good organizations that impose pre-conceived ideas on what should be offered to local constituencies usually end up neither doing good nor feeling good.

In addition to academic training, these women enjoy "wrap around services"; that is, networking events that foster direct contact with local business leaders who probably wouldn't have given them the time of day under other circumstances, mentors, advisory services, and - most critically - access to capital. These women not only get an opportunity to join the old boy network, they get to build an old girl network of their very own design.

In agreeing to allocate such an enormous sum, particularly when the financial world was collapsing, Goldman's board of directors made it clear the 10,000 Women management team had better not fritter away the money. With the program barely a year old quantifying its efficacy is still a work in process. Initial scoring, coupled with anecdotal evidence, indicates they are off to a good start. What they can't yet measure fully, and possibly never will, is the intangible results that accrue to women who taste success in business, like self-confidence, dignity, the elevation from wife to partner in the household, and, certainly, the empowerment of a woman who controls capital.

Mentoring and Meaning it

The intangible effect works both ways. Through an initiative they launched a number of years ago called Community TeamWorks each Goldman Sachs employee is allowed to take a day off every year to volunteer for a worthy cause. For those who choose to become mentors with 10,000 Women the nurturing process is longer, demanding more from everyone; it's a committed relationship. Nonetheless, there's a waiting list of Sachsers eager to contribute their time largely because the psychic rewards are so great, and stimulated by compelling word of mouth testimonials.

Those testimonials must ring loudly in the ears of skeptics who wonder if it's all done for effect. Mr. Blankfein is quoted as saying that he thinks the biggest competition for his best staff is public service.

Maybe they're human after all.

Huff Radio: Left, Right & Center: Health Care, Copenhagen, Fat Cat Bankers

2009-12-18T22:13:08Z

Is health care doomed? Democrats are revolting (Tony agrees with the double meaning of that), and as the left positions itself to fight for a public option will the health care reform baby go down with the bathwater? Can there be a health care do-over?

Is Copenhagen going into overtime? Can there ever be an agreement on how to address climate change when half the planet doesn't think global warming is real? And what about those fat cat bankers who Obama scolded?

Michael Winship: Happy Holidays from America's Banks

2009-12-18T15:27:28Z

Never mind Barack Obama's Audacity of Hope. It's the audacity of the banks that takes your breath away. Mean old Mr. Potter in "It's a Wonderful Life" seems like Father Christmas by comparison.

A recent report that Citigroup and Goldman Sachs may have received preferential treatment getting doses of the swine flu vaccine was enough to give Ebenezer Scrooge the yips. Then came news that in order for us to get back the taxpayer bailout money we loaned them, Citigroup is receiving billions of dollars in tax breaks from the IRS.

And there's a new study this week, "Rewarding Failure," from the public interest group Public Citizen, revealing that in the years leading up to the financial meltdown, the CEO's of the 10 Wall Street giants that either collapsed or got huge amounts of TARP money were paid an average of $28.9 million dollars a year.

In 2007, that amounted to 575 times the median income of an American family. Now, thanks in part to the banks' monumental malfeasance that led to our economic swan dive, food stamps are now being used to feed one in eight Americans, and a quarter of all the kids in this country. A new poll from the New York Times and CBS News reports that more than half of our unemployed have borrowed money from friends and relatives and have cut back on medical treatment.

The Times wrote that, "Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work... causing major life changes, mental health issues and trouble maintaining even basic necessities."

Yet according to the non-profit Americans for Financial Reform the reported $150 billion that Wall Street is paying itself in compensation and bonuses this year would be enough to solve the budget crisis of every one of the fifty states or create millions of jobs or prevent all foreclosures for four years.

All of this wretched excess is occurring as more and more people can't afford a roof over their heads. Foreclosures were up another five percent in the third quarter -- 23 percent more than a year ago. Fewer Americans are willing to buy foreclosed properties, and the Obama administration's foreclosure prevention plan has been a bust so far - way too timid, critics say, and many of the banks won't play ball, refusing to negotiate in good faith with homeowners desperate to hold on.

We got a first hand look at the crisis this week, when thousands lined up at the Jacob Javits Convention Center just a few blocks from our Manhattan offices to attend a mortgage assistance event sponsored by the non-profit Neighborhood Assistance Corporation of America (NACA). So many showed up for this leg of the "Save the Dream Tour" that on many days, staff and volunteers stayed to help until one in the morning.

NACA has had success getting homeowners and banks together to work out a deal to prevent foreclosure. But the big banks' return to the government of the TARP bailout money with which we underwrote them over the last 14 months is a mixed blessing -- great to have the cash returned so quickly, terrible because any leverage Washington held over the banks because of the loans virtually vanishes with the payback. They're back in the saddle and not inclined to be of much assistance helping anyone else out, especially those in mortgage trouble.

As Andrew Ross Sorkin of the New York Times wrote in the wake of President Obama's Monday meeting with Wall Street's top guns (three of whom failed to show up because of airport delays), "Executive compensation, leverage limits and lending standards were all issues that Washington said it planned to change -- and when the taxpayers were the shareholders of these firms, it probably could have done so. But now the White House has been left in the position of extending invitations, rather than exercising its clout. And in the figurative and literal sense, it is getting stood up."

Afterwards, Obama said, "The problem is there's a big gap between what I'm hearing here in the White House and the activities of lobbyists on behalf of these institutions or associations of which they're a member up on Capitol Hill."

That's putting it mildly. This week, the American Bankers Association sent out an update and "call to action" memorandum crowing over its success watering down the bank reform bill that was approved by the House and urging its members to beat back similar legislation in the Senate. Self-righteously, it concludes, "As one of your New Year's resolutions, please vow to do everything in your power to show, and to have your colleagues in your bank show, your Senators the right path to true reform."

It helps when the right path is paved with silver and gold. As "Crossing Wall Street," a November report from the Center for Responsive Politics notes, "The finance, insurance and real estate sector has given $2.3 billion to candidates, leadership PACs and party committees since 1989, which eclipses every other sector...

"The financial sector has also been a voracious lobbying force, spending an unprecedented $3.8 billion since 1998, while sending an army of lobbyists to Capitol Hill to make its case. That's more money than any other sector has spent on influence peddling. Not even the health care sector, which spun up a lobbying frenzy this year over health reform, has spent more."

The banks are making a list and checking it twice. And lest we forget, during his run for the White House, the finance sector filled Barack Obama's stocking with $39.5 million dollars worth of campaign contributions, more than any other presidential candidate.

God bless us, every one!

Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers. Research support provided by producer William Brangham and associate producer Katia Maguire.

Trading Profits Up 11 Percent For Banks; JPMorgan Chase Leads The Way

2009-12-18T13:27:04Z

Despite controversy surrounding the financial instruments known as derivatives -- and legislation that might finally start to regulate them -- the nation's top five banks are, for now, maintaining their stranglehold on the derivatives market, accounting for 97 percent of the $204.3 trillion in total volume last quarter, the Office of the Comptroller of the Currency reported Friday.

The lobbyists for the nation's biggest banks are fighting ferociously against legislation that would regulate the over-the-counter derivatives market. What is now essentially a market in which traders deal directly with one another would instead be diverted to public exchanges or other central facilities, though major loopholes remain.

Overall, the nation's banks saw an 11 percent increase in their trading revenue last quarter, turning a $5.7 billion profit -- their fourth-best quarter ever.

JPMorgan Chase led the way in the third quarter, making nearly $3.1 billion off its trading and derivatives activity, a 60 percent increase from the previous quarter. The banking behemoth has earned more than $8.1 billion trading thus far this year, already eclipsing its year-end totals for each of the last two years.

Goldman Sachs's profits declined 37 percent to $691 million, due to big losses on its foreign exchange trading, according to the report. Those losses were hedged by profits on interest rate contracts, but they weren't enough to make up for the substantial decrease in overall profits.

Citibank continues to lose money off its trading and derivatives contracts. The partially-taxpayer owned bank lost $211 million last quarter and $238 million in the second quarter, the report shows.

Bank of America made $467 million last quarter, a $650 million swing from its second-quarter loss. Wells Fargo, on the other hand, turned a loss, losing $78 million in the third quarter compared to its $306 million profit during the second quarter.

At Goldman Sachs, trading continues to make up a significant part of the banks' profits. Trading revenue accounts for 59% of Goldman Sachs' overall revenues, according to the report. The firm, which last year became a bank in order to accept TARP money, is the beneficiary of taxpayer-funded guarantees. Goldman Sachs owns a bank; its deposits are guaranteed by the Federal Deposit Insurance Corporation. The firm also has access to the Federal Reserve's cash, just like Main Street commercial banks. And it still has more than $22 billion in taxpayer-guaranteed debt, thanks to an FDIC program instituted last fall.

Financial and economic luminaries like former Federal Reserve Chairman Paul Volcker argue that banks with access to taxpayer cash shouldn't be allowed to also engage in trading activities like the kind the nation's biggest banks engage in every day. Though some movement is afoot in Congress to make this change, Volcker's arguments are largely falling on deaf ears in Washington.

Les Leopold: Have We Forgotten How To March?

2009-12-18T11:28:59Z

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street." President Obama, December 14, 2009.

Was the President signaling that it was time for progressives to form a visible protest movement against "fat cat bankers"? Did he all but invite us to march on the recent White House/bankers meeting?

Well, whether he invited us or not, where were we?

All the big boys showed up except for the chairmen of Goldman Sachs, Citigroup and Morgan Stanley who feared airport delays - they know their time is much more valuable than the President's.

What a perfect opportunity to show our displeasure with those who have so callously wrecked our economy, who have reaped the benefits of welfare for the rich, and who now are boasting record profits while unemployment reaches record highs.

In the Sixties this kind of protest was a snap. At the very least, you could count on a swarm of hippies arriving with plans to levitate the White House - something they actually tried to do to the Pentagon in 1968.

But we don't do that stuff anymore. Why is that?

Many who responded to my recent posts have come up with a number of answers. Here are a few:

The Internet distracts us, especially on-line porn and sports.

We're just too stupid, more like serfs who submit to their feudal masters.

The super-rich own our politicians, so why bother to lobby them.

We let off steam by blogging and then pretend that means something, (mea culpa.)

The Right controls the media and misinforms the masses.

We still have it too good, so please pass me another beer.

Bruce Levine provides a more chilling explanation. ("Are Americans Too Broken for the Truth to Set Us Free?") He believes we may be suffering from "abuse syndrome." He writes:

"U.S. citizens do not actively protest obvious injustices for the same reasons that people cannot leave their abusive spouses. They feel helpless to effect change. The more we don't act, the weaker we get. And ultimately to deal with the painful humiliation over inaction in the face of an oppressor, we move to shutdown and escape strategies such as depression, substance abuse, and other diversions, which further keep us from acting. This is the vicious cycle of all abuse syndromes."

I don't buy it. We've been abused many times before, yet, we've managed to recover the collective will to fight back. From 1930 to 1933, many Americans were worse than abused -- they were broken. During the Great Depression, millions of people were ashamed because they couldn't support their families. They felt humiliated to be standing on bread lines. They had little understanding of the economic system that was failing them, so they blamed themselves.

It's hard to imagine that the depressed and the downtrodden could rise up to change America. But they did. In a few short years the country was in motion, alive with sit-down strikes, union organizing, and protests of all kinds.

The point is not to glorify unions, or praise the profound New Deal changes they helped to usher in. Rather, we need to acknowledge that the "abused" quite suddenly became activated on a very large scale. Could it happen again?

We have two possibilities. The first is that the modern world has so changed us that passivity and apathy have become embedded within our very nature. Perhaps our will has been curbed, channeled and controlled by consumerism, visual stimuli and ideological education. This might make the activism of yesteryear totally irrelevant to our current predicament.

The other possibility is that human nature has not changed. Rather, certain kinds of organizations and organizers have faded from our political landscape- the kind who dedicated their lives to massive social change. History is not a cookbook. But the record clearly shows that massive social change doesn't happen by accident. I choose to be in this camp.

Throughout the Depression, even during its darkest times, dedicated organizers believed that the system as a whole needed dramatic change. They were very different than our current crop of community organizers who focus primarily on "winnable" issues, (Obama included when he was organizing in South Chicago). Modern community organizers feel uncomfortable with big picture issues that require solutions that seem beyond reach. They feel that striving towards such lofty goals will disempower their community participants who need concrete changes in the here and now. Better to fix the local potholes than howl about banker bonuses.

But Depression-era organizers enjoyed the howling. They had big ideas: They wanted to challenge the financial elites and put an end to the rule of bankers and plutocrats. They had a dream of a fairer world where unemployment no longer destroyed lives. They thought everyone who wanted to work should be able to find a decent job. If the private sector couldn't deliver, then it was the duty of government to create jobs. They were espousing big picture New Deal-like programs long before Roosevelt came to office.

For years before and during the Depression thousands of radical organizers (some who were Communists and many others who were not) worked towards big picture social change for a long, long time. At some point, for reasons we don't fully understand, something clicked. And once it did, it couldn't be stopped.

Hard times alone didn't create the upsurge in activism. We were four years into the Depression before large scale actions started to spread. The CIO, labor's new mass organizing vehicle, didn't form until Roosevelt's second term. So neither hard times, nor Roosevelt's election can explain entirely the renewal of mass activism.

If we look at any of our major movements, from abolition to populism to civil rights, we will find long periods when apathy and disheartening quietude were pervasive. Yet the hard-core organizers somehow endured.

The point is this: The debilitating apathy can turn into vibrant activism even when the odds are impossibly long. But that kind of change doesn't fall from the sky. It takes hard work, usually fueled by new generations of young people who believe that our nation can do better, much better. They provide the spark that raises expectations.

Institutions also are critically important, especially now. If just a handful of progressive unions organized demonstrations at banks and bankers' meetings, it might unleash the pent-up anger and frustration felt by tens of millions of Americans. Just three unions, the Service Employees International Union, the California Nurses Association and the United Steelworkers could easily put together large demonstrations just about anywhere, anytime. If they collectively committed to at least five large mobilizations against Wall Street in 2010, the abuse syndrome might begin to unravel. (See Bob Borosage's convincing call for demonstrations.)

Our mission is clear: We must find ways to tap into the human spirit which stands ready to transform unbridled personal greed into a massive quest for the common good.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.

Jim Wallis: The Parable of the Unmerciful Bankers

2009-12-17T15:52:37Z

This week, I joined a press conference with People Improving Communities through Organizing and the Center for Responsible Lending on the steps of the United States Treasury. The first three speakers were not the usual Washington talking heads. Instead, they were American homeowners who were losing their homes to foreclosure--a terrible thing that now happens to another American family every 13 seconds (6,600 per day). And a rapidly increasing number of them are now due, not to subprime mortgages, but to the loss of employment. That's what had happened to those who told their stories on Monday in Washington D.C. across from the White House and just down the street from the huge Bank of America and PNC Bank buildings.

Mercy Martinez began to cry as she spoke. She had saved for years and put $100,000 down to buy her first condo. Choking back tears, she recalled her meeting with the Countrywide Financial mortgage broker. "I had enough money for a traditional, 30-year fixed rate loan; but the loan servicer unethically tricked me into an adjustable rate loan that could put me in foreclosure at any moment." Now she waits for the "time bomb" of her loan to explode, and when it does she will join the millions of Americans facing foreclosure. Mercy is not alone: in 2006, 61 percent of subprime borrowers were forced into mortgages more expensive and riskier than what they qualified for.

Meanwhile, inside the White House, the heads of the nation's biggest banks and financial institutions were meeting with the president. They were told that since the American people had bailed them out, they now needed to do something for the American people by beginning to lend again and to agree to loan modification plans enabling homeowners not to lose everything. But so far, those admonitions are falling on deaf ears. Indeed, I learned this week that the bonuses and extra compensation paid to the executives at the big banks are on track to exceed the 2007 level of $162 billion (even after some banks, like Goldman Sachs, have switched compensation packages away from cash and into stock bonuses). At the same time, the Center for Responsible Lending estimates that the bonus pool of just one of these big banks would have been enough money to prevent or significantly delay foreclosure for all 2.3 million people who lost their homes last year. And what about loan modifications to help homeowners stay in their homes? To date, Bank of America has agreed to fewer than 100 permanent home loan modifications. Amazing.

At the press conference, I pointed out the fundamental moral contradiction of this situation: Those whose behavior is most responsible for causing this economic crisis are being saved from failure and suffering by the American taxpayers, while those least responsible for causing this recession are now losing both jobs and homes--with no bailouts for them on the horizon. My friend Rev. Derrick Harkins made a point about "grace." He suggested that in order to try to save the economy from a feared massive meltdown, some real grace was extended to the big banks; but they now seem unwilling to extend grace to anyone else. Does this sound like a gospel parable to you?

What it sounds like to me is a very bad morality play--one that I write about much more extensively in my new book Rediscovering Values: On Wall Street, Main Street, and Your Street--A Moral Compass for the New Economy. The book says we need a new national conversation about all this, a return to some basic values, and a moral recovery to accompany an economic recovery. We cannot go back to normal this time; we need a new normal. It's time to change the script of this play. That is the only way all this suffering and pain can be redeemed.

+Click here for a free download of the first chapter of Jim's new book, "Sunday School with Jon Stewart."

Jim Wallis is the author of The Great Awakening, Editor-in-Chief of Sojourners and blogs at www.godspolitics.com.

Click here to get e-mail updates from Jim Wallis

Raymond J. Learsy: Wall Street Tells the President of the United States to Bugger Off

2009-12-17T09:21:59Z

Acela Express Departs NYC Arrives DC
" 6 00 AM 8 52 AM
" 7 00 AM 9 44 AM
" 8 00 AM 10 49 AM
" 9 00 AM 11 25 AM
etc.

These were the Amtrak trains available to the three grandees of Wall Street; Lloyd Blankfein, CEO of Goldman Sachs; John Mack, Chairman of Morgan Stanley; and Richard Parsons, Chairman of Citigroup, leaders of perhaps the most important Wall Street firms. Yet not one of them was willing to change their flight schedules in spite of approaching weather, causing them to miss being in attendance with twelve other senior bank executives at at an urgent conclave summoned to the White House by the President of the United States. The meeting was called in order to discuss pressing issues; bank lending, executive compensation and legislation seeking reform of the financial services industry. According to White House sources they ascribed their absence from the meeting as due to "inclement weather."

The three must have felt sufficiently entitled that they could travel to Washington at the last minute and if the weather didn't oblige, so be it. With the nation up in arms about the perversity of pouring billions into the coffers of the banks (not only TARP, but counter party billions, federal guarantees of toxic holdings, green lighting conversion to becoming bank holding companies, access to myriad Fed programs etc., etc.) the symbolism of their tone deaf failure to be present at the President's meeting is beyond understanding. As one White House staff member was quoted, "It was pretty nervy."

And these grandees are the heads of organizations whose trading desks cash in on every nuance of change in the weather. They are ever alert to the gathering of a hurricane in every corner of the globe, knowing it may significantly impact the trading price of crude oil, and even more significantly paying for the services of professional weather prognosticators giving their grain trading desks early alerts on weather impacting growing conditions for wheat, soybean and corn crops so that their futures contracts can be traded with greater profitability. And with all this firepower at hand these three poobahs didn't have the interest nor considered it their obligation, given the billions of help their organizations received, to get a heads up on the weather front moving in. They stubbornly kept to their last minute flight schedules even with the approaching weather that would play havoc with their flight plans. Had their trading desks been equally oblivious and not had a fall back plan on major positions they had undertaken, it would have cost the career of the lead desk trader. Even then they had the option of a last minute reprieve, as an early train would have delivered them to Washington on time, but that would have meant traveling with the hoi polloi, the great unwashed, you know those little people whose tax dollars spared them the need from having to take the subway, ever. Hardly worth keeping an appointment with the President of the United States.

Their clumsy absence bespeaks of an arrogance that is frightening. Perhaps not the three individuals per se, but certainly the hubris of the Wall Street crowd. Here is a services industry vital to the well-being of the nation that appears to have its head in the sand, playing ostrich to the burning anger vested against them throughout the land. They are powerful, rich, with a Congress largely under their thumb. In turn we have a President who speaks for so many of his fellow citizens, and the leaders of the Wall Street crowd feel he can be figuratively and symbolically dismissed together with the anger of so many of their fellow citizens. It is a bonfire waiting to be lit. Beware!

Goldman Sachs Driving YRC Trucking Into Bankruptcy, Hoffa Says

2009-12-17T08:07:47Z

Dec. 17 (Bloomberg) -- International Brotherhood of Teamsters President James Hoffa said Goldman Sachs Group Inc. is creating derivatives trades that would benefit from the bankruptcy of YRC Worldwide Inc., the trucking company trying to avert failure with a debt exchange.

The most profitable securities firm in Wall Street history "is actively soliciting bond trades for clients and underwriting credit-default swaps to benefit from a failed exchange and resulting bankruptcy," Hoffa, the union leader, wrote in a letter dated yesterday to Goldman Sachs Chief Executive Officer Lloyd Blankfein.

Tom Gregory: Corrected: TIME 's Person of the Year

2009-12-17T04:02:33Z

Marcella Mroczkowski: Goldman Sachs: Let Me Count the Ways You Offend Us

2009-12-16T17:54:29Z

Even so, many Goldman employees are stunned by the public resentment directed at the bank in general and Mr. Blankfein in particular, who, after first steadfastly defending Goldman's profits and pay, recently offered a vague apology for "mistakes" that led to the financial crisis.

How do you offend us, Goldman Sachs? Let me count the ways:

You get nearly interest-free loans from the Fed at taxpayer expense and then you welch on your end of the deal.

Instead of investing that money to grow the economy you foster predatory lending to our more vulnerable citizens, to feed your derivative gambling.

You pocket fortunes from your unregulated trading games and stick the taxpayers with the losses.

You pay lower tax rates on your 8, 9 and 10 figure incomes than the truck drivers, hairdressers and other middle class Americans who, in a supreme travesty of justice, are forced to subsidize you.

Your lobbyists gut our political rights, cost us and our grandchildren trillions in taxes and debt to subsidize you and, perhaps worst of all, make a mockery of the sacrifices our loved ones and ancestors made to keep us strong and free.

Your PR campaigns and media minions lie to us and foster hate against scapegoats for your iniquities.

To top it all off, many of you subscribe to disgusting ideologies, such as Objectivism and Christianism, that richly deserve to be and, mark my words, will be thrown on the ashheap of history - ideologies that hold you entitled to exploit, cheat, lie to and otherwise abuse the rest of humanity.

The next time you dispatch your armies of lobbyists to Congress, you might as well tell them to take a short detour to Arlington National Cemetary and piss on the graves there.

Trust me, it won't make your offenses any worse than they already are.

Dan Collins: Wall Street Makes Merry With Other People's Money

2009-12-16T16:11:42Z

There's a good deal of jolliness on Wall Street this holiday season, thanks to the billions of dollars in bonuses that will be stuffed into the stockings of your favorite bankers.

It's safe to assume that the final tally will be big, very big. After all, in 2008, a year of disaster for the financial sector, Wall Street still managed to dole out an estimated $18 billion in cash bonuses to New York's least needy. This turned out to be the sixth best bonus year in Wall Street history -- a much better performance than the rest of the seething country might have anticipated.

"Executive pay is like sugar. If you consume too much of it, you get a rush. And then you crave it. It becomes an addiction," said Vineeta Anand, Chief Research Analyst for the AFL-CIO Office of Investment.

This year, with a much healthier stock market, the rush is on. Bankers will likely be stampeding to the tree on Christmas morning. Johnson Associates, a respected New York compensation consulting firm, expects a 40 percent increase in "year-end incentives" at investment and commercial banks. (Johnson forecasts lower bonuses for other financial types, including the much-beloved hedge fund managers.)

And not everybody will be getting exactly what they want. Instead of piles of cash, Goldman Sachs is rewarding its top executives with millions and millions of dollars in stock. While the country hasn't exactly collapsed in awe and gratitude, this was certainly a more successful PR gambit than CEO Lloyd Blankfein's recent assertion that the firm was "doing God's work."

A recent lawsuit filed against the Wall Street Goliath by a pension fund maintains that the Almighty had nothing with the year-end stock bonanza. Instead, the suit credits a "trillion-dollar investment made by the American taxpayers that was meant to stabilize the financial industry" and not the "hard work of the executives."

Goldman speedily paid off the cash it borrowed from the government's Troubled Asset Relief Program. Real and threatened federal restrictions on executive pay have proved to be a stupendous incentive in getting the banks to pay back their government loans. Citigroup and Wells Fargo are the latest financial firms to raise cash to pay off the loans that place them under the jurisdiction of U.S. pay czar Ken Feinberg.

"We've gotten $90 billion back for the taxpayer in an accelerated fashion. I'd also like to think we've developed some guiding principles for compensation that will be followed voluntarily by Wall Street," Feinberg told HuffPost.

Whether Wall Street has learned a lesson is highly debatable. Even basket case AIG -- the insurance giant that remains under Feinberg's jurisdiction -- seems intent on maintaining the tradition of irrational exuberance when it comes to executive pay.

AIG's justification is always that it needs to make big payouts to keep critical talent. John Cassano, the head of AIG Financial Products, resigned after sending his firm down an $85 billion rat hole of red ink. But he was allowed to keep $34 million in bonuses, and put on a million-dollar-a-month retainer. The firm's then-CEO said AIG "wanted to retain the 20-year knowledge that Mr. Cassano had."

Cassano is finally gone but AIG is paying still more bonuses to members of his old unit, under the theory that they're the only ones who know how to unravel the complicated messes that their boss left behind.

And AIG has extended the theory far beyond people with very specialized knowledge who are going to be employed for a short period of time. Robert Benmosche, who came out of retirement to be the post-disaster CEO, strongly believes that a man's worth can be measured very precisely by the amount he is paid. And he threatened to resign if Feinberg didn't back down in his attempts to drastically cap salaries and bonuses.

Feinberg did backtrack -- reportedly following lobbying from government officials who worried about that fabled brain drain. The people who run big Wall Street firms are convinced that the top financial jobs can only be done by a tiny handful of very special people, who must be wooed and re-wooed every year with obscene amounts of money.

Failure to do so will mean they'll take their services elsewhere. This has always been an article of faith on Wall Street, but not everybody agrees.

"I think that in many cases Wall Street would be better off without these executives," said Nell Minow, co-founder of the Corporate Library, an independent research firm that specializes in executive pay and corporate governance.

"Corporate America has really lost the battle if the best argument it can make is that if executives are not paid what they want, they'll take their bat and ball and go home," Minow added.

She said the retention incentives in executive compensation pay packages should be much more closely linked to performance: "Too many of these retention incentives are what we call 'pay for pulse.' It's stick-around money."

Minow noted that some companies are now calling bonuses "discretionary pay" (like, maybe we won't notice) while others juggle cash or stock payments to conceal bonuses. Last year, for example, Wells Fargo got around a big cash bonus for CEO John Stumpf by boosting his base salary from $900,000 to $5.6 million.

No matter how you slice it, it's still a bonus. And once the gifts under this year's Christmas tree have been carted away, the firms who made it through the last year on the backs of the taxpayers are going to have to explain exactly what it is that their executives do to make them worth so much more than the rest of humanity.

Stephen Gyllenhaal: To Gather Up One's Rage

2009-12-16T13:03:04Z

On Monday the important banking CEOs were to attend a Presidential meeting at which it was billed Obama (getting slammed in the polls for his entanglements with Wall Street) would dress them down for their unrepentant behavior since receiving hundreds of billions of taxpayer's cash.

But the biggest CEOs didn't show up because of "fog and rain".

Don't ask if they might not have taken a limo from NY to DC. Or (better yet) the Metro liner. Or (even better) gone the night before to prepare. Don't ask if they feel any need to help their Obama (at least a little) in the public relations department, even as he has helped them beyond measure (keeping them, for instance, from drowning at the bottom of their deep blue financial sea).

Don't ask who the hell they think they are? Don't ask who the hell Obama thinks he is, even as he was elected with the solid majority of millions of us, even as he was delivered a mandate that it now appears he has squandered to such an extent that there isn't even a peep from him or "his people" as he was snubbed like the butler it appears he is to these gargoyles of human excuse coiled up in their pinstripe suits and "grounded" Lear jets.

So how do I contain my rage at the absolute lack of separation of church and state that now exists in this country? Because, let's face it, our national religion isn't something cooked up in the deep Baptist south nor in ephemeral New Age San Francisco. No, it has been built stone by gothic stone down on Wall Street.

Our new Popes are the likes of Vikram Pandit, Robert Rubin, Lloyd Blankfein. Our new cathedrals the multinational sky scrapers that gleam with post-modern panache. Our altars of choice are the numbers rising to heaven on the stock market, which will only fall when the mysterious devil of whatever it is intrudes (not deregulation - God knows - not greed, not murder of ethics, etc).

So how do I contain my rage that unemployment soars; that millions more children have gone hungry in just these past three months; that the mass transportation systems throughout the nation are going the way of a corpse; that school systems slip into the red, chaos and bewilderment; that Health Care becomes another way to say "I love you" to the big boys...while all the while these giant financial tumors of Citicorp, AIG, Bank of America and Goldman (let them eat cake) Sachs -- now too big too fail, therefore backed by our government forever -- are able to "pay back" their TARP money by raising speculative billions from around the world because...

...well, who wouldn't invest their money in monsters backed forever by the US government? Who wouldn't invest in as sure a thing as the United States of America with it's Army, Navy, Air Force, Blackwater and taxpayers willing to pay for it all till there's nothing left? Who wouldn't give as much as they possibly could to institutions that claim to be doing the "work of God" (Lloyd Blankfein's proclamation last month, CEO of Goldman -let them eat cake- Sachs)?

So is it true that our President is now little more than their butler?

I am reminded of lines from T.S. Eliot's The Love Song of J. Alfred Prufrock:

And indeed there will be time/To wonder, 'Do I dare' and, 'Do I dare?/Do I dare/disturb the universe/...For decisions and revisions which a minute will reverse.

Yes, I believe Obama is their butler, albeit an intellectual one (so many of the great butlers were intellectuals, after all) with his "decisions and revisions" which can so easily be reversed - ever the Harvard grad. For hasn't Obama emerged with the same kind of twisted dialectic ala Alan Greenspan (with his Harvard's honorary degree) that bankers will ultimately do the right thing when pushed a bit? And yet how is it that even the least sober bum hanging out on Main Street; the sharecropper bumping along in the back of his nasty boss' truck; the private in any army on this planet; the guy (or more than likely in the coming months - the child) peeling carrots in a kitchen knows better. Again Eliot:

I grow old, I grow old/ I shall wear the bottoms of my trousers rolled.

For what is going to happen to our "thinking" President after all is said in done, sinking deeper into his little war in Afghanistan (graveyard of empires)? His war looks so good on paper, I suppose.

But what is going to happen with what has brought on all this rage in me (and in so many others)?

I am reminded of another quote from a fellow African American that Obama has so assiduously attached himself to: Martin Luther King, a monstrous crowd of humanity swirling around the marble steps he stood on at the time:

I have a dream...(that) we will be able to hew out of the mountain of despair a stone of hope. With this faith we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.

Rage was the order of the day then. I remember that brutal time. But Martin Luther King risked everything to gather up that rage to try to use it to hew that mountain.

J. Alfred Prufrock did not. Obama has not not. We have not. Will we? Can we?

After TARP Repayments, Banks Are Now 'Free To Fail Again': Steven Pearlstein

2009-12-16T08:58:51Z

As far as I can tell, top administration officials are fixated on voter rage over bank bailouts and the resulting hit to the president's poll ratings. So they're looking for any way to show that the economy is improving and that the government will not only get its bailout money back, but earn a profit besides.
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By rushing to cash in their chips, however, the administration not only gave up political leverage and additional profit, but took the risk that one or more of the banks may find that it can't make it on its own.

Goldman Sachs' Lost 'Ethos' Puts Traders -- And Profits -- Ahead Of Clients

2009-12-16T08:37:18Z

But as President Obama prods the financial industry to do more to help ordinary Americans -- he chided 'fat cat' bankers -- on Sunday for increasing their pay some current and former Goldman executives say Mr. Blankfein has built a money machine that, while it still values its customers, culture and reputation, puts profits above all.

Interviews with nearly 20 current and former Goldman partners paint a portrait of a bank driven by hard-charging traders like Mr. Blankfein, who wager vast sums in world markets in hopes of quick profits.

Obama And The Banks: No Real Consensus On Financial Reform

2009-12-16T07:57:57Z

WASHINGTON — After meeting with bank executives, President Barack Obama noted "a big gap" between the CEOs and their lobbyists on his campaign to rewrite the rules governing the financial industry. The CEOs "support reform," Obama said, but their lobbyists have been sending a different message.

Appearing separately after the meeting, the bankers seemed to agree. "We're going to do a better job ... to work with the lobbyists" to address that disconnect, US Bancorp CEO Richard Davis said.

Goldman Sachs Traders: Firm's Ethos Fading With Blankfein As CEO

2009-12-16T00:00:17Z

...Current and former Goldman executives say Mr. Blankfein has built a money machine that, while it still values its customers, culture and reputation, puts profits above all.

Interviews with nearly 20 current and former Goldman partners paint a portrait of a bank driven by hard-charging traders...

Obama Was Nice To Bankers Despite 'Fat Cat' Remark, Says NY Post

2009-12-15T21:17:54Z

In public, President Obama is on a tear against Wall Street. In private, not so much

Over the weekend, Obama attacked fat-cat investment bankers, telling "60 Minutes" he didn't become president to aid and abet Wall Street -- which, only a year after the financial meltdown and taxpayer bailout, is now scheduled to hand out tens of billions of dollars in bonuses to its bankers and traders.