The following is a guest post by Joseph Hall.
Democrat Super Bank Takes a PR Tumble When Truth Slips Out
This week’s truth-letting by former Goldman Sachs VP, Gregg Smith, is a vindication of economist Frank Sauer’s expose of a decade of alleged malfeasance at Sachs. Sauer documents how Sachs achieved super-bank status from a series of seemingly unethical dealings between the Clinton White House, and an unscrupulous former Secretary of the Treasury, Robert Ruben. By 2008, Sachs had skillfully maneuvered itself into a bastion of insider deals that allowed the investment firm to suffer substantial losses and hide its losses by acquiring a line of credit through the New York branch of the Federal Reserve Bank at a substantial penalty to US tax payers.
See prior LC article: Slick Willy Revisited
The current Goldman Sachs problem started on Sunday night with the revelations of former VP, Greg Smith, submitting his resignation via the New York Times Op-ed, appearing online initially. Later, the print edition also carried the piece that included statements of how Smith had witnessed a decline of professionalism and the advent of a “toxic” client relationship in which Sachs employees made denigrating remarks about investors by calling them Muppets. Additionally, Sauer has reported numerous situations in which Sachs has either gambled away substantial client investment capital or traded with self-preservation as the goal. So Smith’s story seems to be corroborated quite well by Sauer’s definitive investigation.
See NYT Op-Ed, “Why I Am Leaving Goldman Sachs,” Greg Smith
“When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”
Smith tells of his personal observations at the investment bank that caused him to resign after twelve years at Sachs. Despite many Wall Street objections to the Smith story, there was a prior SEC investigation that ended with a Sachs fine when evidence was uncovered that Sachs had violated the SEC investing rules in 2010.
See: “Goldman Sachs loses market value after searing Greg Smith essay,” (The Washington Post with Bloomberg News)
“Executives at Goldman Sachs haven’t changed their behavior even after the firm paid $550 million to settle a fraud lawsuit with the Securities and Exchange Commission and was accused by the U.S. Senate’s Permanent Subcommittee on Investigations of misleading clients, Smith wrote. The company published a report in January 2011 with 39 recommendations on how to improve its business practices and client focus.”
The aura of Goldman Sachs’ image as a premier investment bank did suffer a slight adjustment by mid-week, but with the announcement that top management had launched an investigation into the charges levied by Smith, the current down trend may be short lived. However, economist Sauer has related that this sub-culture has permeated the bank’s philosophy for years, benefiting from cozy arrangements permitted by apparent sympathetic Democrat connections throughout the past fifteen years (Sauer).
While critics may accuse Smith of deeper personal motives, he does not appear to be making a business move to further exploit his observations at Sachs, according to a recent article, “Goldman Critic Dodges Agents Eager for Tell-All Book” (Bloomberg Businessweek, Christine Harper and Charles Mead).
“Greg Smith, the former Goldman Sachs Group Inc. (GS) derivatives salesman whose critique of the Wall Street firm earned him $150 from the New York Times, has eluded book agents and publishers who say his story could make him a lot more.
“The sky’s the limit,” said Esther Newberg of International Creative Management in New York who’s been a literary agent for 35 years. She said two of her colleagues have reached out to Smith. “Agents and publishers are trying to talk to him. The feedback we get is that he’s hiding for a while.”
Watch Fox News video: “Goldman Sachs resignation in NY Times sparks controversy”
The real question remains, is Goldman Sachs a legitimate investment bank or a tax payer rip-off capable of obtaining preferred, taxpayer backed, loans from the Federal Reserve Bank?
Read the book that provides the detailed research:
“A Simple Guide: How Liberalism, a Euphemism for Socialism, Destroys People and Nations,”
Fred Sauer, American Cultural Studies.
Submitted by: Joseph Hall