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Sanders to launch new plan to break up Wall Street giants, including Goldman Sachs and JP Morgan

Sanders to launch new plan to break up Wall Street giants, including Goldman Sachs and JP Morgan

WAPO-

Sen. Bernie Sanders (I-Vt.) on Wednesday unveiled legislation that would place a hard cap on the size of financial institutions, a proposal that would splinter Wall Street’s biggest firms in an effort to ward off future taxpayer bailouts.

The measure is dead on arrival with a Republican Congress and President Trump in office. And even if the current Democratic Party were to take control of government, it would face a difficult path to passage, as many of the party’s moderates have opted for answers to the banking crisis that did less to alter the financial system.

Sanders’s bill would bar financial institutions from holding assets, derivatives and other forms of borrowing worth more than 3 percent of the entire U.S. economy. That would cap their size at $584 billion in today’s dollars.

[WAPO]

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Report: Goldman Sachs CEO plans his exit

Report: Goldman Sachs CEO plans his exit

Axios-

“Lloyd Blankfein is preparing to step down as Goldman Sachs Group Inc.’s chief executive as soon as the end of the year, capping a more than 12-year run that has made him one of the longest-serving bosses on Wall Street,” the Wall Street Journal reports.

Why he matters: “The departure would conclude a 36-year Goldman career for Mr. Blankfein, the son of a Brooklyn postal worker who rose to the pinnacle of Wall Street. In 1982, he quit his job as a tax lawyer and joined Goldman’s commodities arm as a gold salesman. He rose through the ranks of the firm’s trading business and was named CEO in 2006 when Hank Paulson became Treasury secretary.”

[AXIOS]

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JPMorgan and Goldman Sachs bosses receive $314m windfall, boosted by Donald Trump

JPMorgan and Goldman Sachs bosses receive $314m windfall, boosted by Donald Trump

The Independent-

The bosses of two of Wall Street’s biggest banks received a $314m (£241m) windfall last year as the value of their shares soared after Donald Trump’s victory in the US presidential election.

Jamie Dimon, who is chairman, president and chief executive of JP Morgan, and Lloyd Blankfein, the chief executive of Goldman Sachs, each saw their stock and options rise by more than $150m, new figures compiled by consultancy Equilar for the Financial Times show.

US bank shares jumped in the aftermath of Mr Trump’s win on 9 November, as investors predicted Wall Street-friendly policies and increased spending from the new administration.

[THE INDEPENDENT]

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New Lloyd, Same Goldman

New Lloyd, Same Goldman

Bloomberg-

With those 102 characters, Lloyd Blankfein introduced himself to Twitter, taking a swipe at President Donald Trump for pulling out of the Paris climate accord.

The Goldman Sachs Group Inc. chief executive officer’s June 1 debut on the social media platform was unusual. No other leader of a big U.S. bank has an official Twitter account. Most avoid taking stands on political issues in any venue for fear of igniting a backlash or damaging their brand. And Blankfein, who has been the target of public scorn for his bank’s role in the 2008 financial crisis, was opening himself up to more abuse.

“I felt there was some inevitability to it,” Blankfein said in a June 27 interview, six Twitter posts and 40,000 followers later. “In this world, part of my job is to make us understood because the consequences of not being understood were made quite vivid to me.”

Blankfein’s embrace of a new technology and his willingness to speak out on controversial issues go hand in hand with a strategic retooling as he begins his 12th year as the bank’s leader. Call it Lloyd 3.0. If the first act of Blankfein’s career ended with the crisis, and the second covered its aftermath, the third began a year and a half ago with his recovery from lymphoma and his decision to stick around.

[BLOOMBERG]

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What’s really going on between Goldman Sachs and the federal government?

What’s really going on between Goldman Sachs and the federal government?

NY Post-

Just for laughs, let’s start out with this idea — that Goldman Sachs acts as an agent of the federal government. Let’s see if I can persuade you.

For starters, it wasn’t too long ago that then-President-elect Donald Trump vowed to drain the swamp — before he went ahead and hired six Goldman executives to clog up the drains.

Last week, The Post’s Kevin Dugan broke the fascinating story that the Justice Department’s investigation into possible rigging of US Treasury Department securities offerings was focusing on Goldman — which, sources told Dugan, had won an astonishing percentage of government bond auctions from 2007 to 2011.

[NY POST]

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Goldman Sachs win streak is focus of Treasury-rigging probe

Goldman Sachs win streak is focus of Treasury-rigging probe

NY POST-

The Justice Department’s investigation into Wall Street’s rigging of the $14 trillion Treasury market is zeroing in on Goldman Sachs — just as the bank’s former employees have taken over the agency that’s at the center of the probe, The Post has learned.

Goldman Sachs won almost all auctions for US Treasury bonds from 2007 to about 2011, a remarkable winning streak that came despite safeguards established by the Treasury to keep bidding competitive, sources familiar with the investigation said.

At the center of the case are chats and emails believed to show Goldman traders sharing sensitive price information with traders at other banks — a sign of possible price fixing and collusion, according to sources familiar with the investigation.

[NY POST]

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Goldman Sachs Goes on Buying Binge for Delinquent Mortgages

Goldman Sachs Goes on Buying Binge for Delinquent Mortgages

WSJ-

In a strange reverberation of the housing crisis, Goldman Sachs Group Inc. has become a voracious buyer of soured mortgages, trying to make money even as it looks to fulfill terms of a government settlement that calls for it to help struggling homeowners.

Over the past year-and-a-half, the Wall Street giant has become the largest buyer of severely delinquent home loans from mortgage giant Fannie Mae. The firm has acquired nearly two-thirds of $9.6 billion in loans the agency has auctioned, representing unpaid loan balances of $5.7 billion, a Wall Street Journal review of government records shows.

Goldman’s buying spree has been sparked by a $5.1 billion settlement the firm entered into last year with federal and state governments over its role in packaging and selling mortgage-backed securities in the housing meltdown. As part of this, the firm agreed to provide $1.8 billion in homeowner relief.

[WALL STREET JOURNAL]

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Trump adds even more Goldman Sachs executives to his administration

Trump adds even more Goldman Sachs executives to his administration

NY DAILY NEWS-

Donald Trump’s administration is taking on a distinctively Goldman hue.

Trump is adding even more Goldman Sachs executives to his nascent administration. Trump’s top donor and close advisor, hedge fund manager and Goldman Sachs alumna Anthony Scaramucci, will serve as a senior White House advisor, according to The Washington Post, and Trump’s transition team officially announced that Dina Habib Powell will be a “senior counselor for economic initiatives.”

Scaramucci, who runs SkyBridge Capital, is a vocal defender of big banks — at one point he accused President Obama to his face of “whacking Wall Street like a piñata.”

[NY DAILY NEWS]

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Goldman Sachs to settle U.S. rate-rigging lawsuit for $56.5 mln

Goldman Sachs to settle U.S. rate-rigging lawsuit for $56.5 mln

Reuters-

Goldman Sachs Group Inc has agreed to pay $56.5 million to resolve a U.S. class action lawsuit accusing it and other banks of rigging an interest rate benchmark used in the $553 trillion derivatives market.

The proposed settlement was disclosed in papers filed in federal court in Manhattan on Friday. It came after seven other banks agreed in May to pay a combined $324 million to resolve the litigation.

As part of the deal, Goldman has also agreed to provide lawyers for the plaintiffs evidence including transaction data, documents and witness interviews, which could be used in litigations against the remaining banks, the court papers said.

[REUTERS]

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Former Goldman Sachs Trader Settles Fraud Charges

Former Goldman Sachs Trader Settles Fraud Charges

FOR IMMEDIATE RELEASE
2016-163

Washington D.C., Aug. 16, 2016 —The Securities and Exchange Commission today announced that the former head trader in residential mortgage-backed securities (RMBS) at Goldman Sachs has agreed to be barred from the securities industry and pay $400,000 to settle charges that he repeatedly misled customers and caused them to pay higher prices.

An SEC investigation found that Edwin Chin generated extra revenue for Goldman by concealing the prices at which the firm had bought various RMBS, then re-selling them at higher prices to the buying customer with Goldman keeping the difference.  On other occasions, Chin misled purchasers by suggesting he was actively negotiating a transaction between customers when he was merely selling RMBS out of Goldman’s inventory.

“With no public exchange showing the price for each RMBS trade as it occurs, investors purchasing these securities rely on dealers to be honest about the purchase price they paid,” said Michael J. Osnato, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit.  “Chin repeatedly abused his fundamental duty to serve as an honest transmitter of market information so he could increase Goldman’s trading profits and, indirectly, his own compensation.”

The SEC’s order finds that Chin’s misconduct began in 2010 and continued until he left Goldman in 2012.  Without admitting or denying the findings, Chin agreed to the entry of the order finding that he violated Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5.  He agreed to pay $200,000 in disgorgement, $50,000 in prejudgment interest, and a $150,000 penalty.

The SEC’s continuing investigation has been conducted by Andrew Feller, David London, and Heidi Mitza, and the case has been supervised by Celia Moore and Michael Osnato.  The SEC appreciates the assistance of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

###

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Federal Reserve Board orders Goldman Sachs Group to pay $36.3 million civil money penalty and announces it is instituting enforcement proceedings against former Goldman Sachs managing director

Federal Reserve Board orders Goldman Sachs Group to pay $36.3 million civil money penalty and announces it is instituting enforcement proceedings against former Goldman Sachs managing director

The Federal Reserve Board on Wednesday ordered Goldman Sachs Group to pay a $36.3 million civil money penalty for its unauthorized use and disclosure of confidential supervisory information and to implement an enhanced program to ensure the proper use of confidential supervisory information. Additionally, the Board announced that it is instituting enforcement proceedings against Joseph Jiampietro, a former managing director at Goldman Sachs, seeking to impose a fine and permanently bar him from the banking industry stemming from his and his subordinates’ unauthorized use and disclosure of confidential supervisory information.

Confidential supervisory information includes reports of bank examinations and other confidential reports prepared by banking regulators.  It is illegal to use or disclose confidential supervisory information without prior approval of the appropriate banking regulator.

In levying the fine on Goldman Sachs, the Board found that the firm’s personnel improperly used confidential supervisory information of the Board in presentations to its clients and prospective clients in an effort to solicit business for the firm. Further, the Board found that from at least 2012, the firm did not have sufficient policies, procedures, or adequate employee training in place to ensure compliance with current laws prohibiting the unauthorized use or disclosure of confidential supervisory information. The Board’s order requires Goldman Sachs to put in place an enhanced program to ensure compliance with Board regulations concerning the receipt, use, and dissemination of confidential supervisory information.

The Board expects all firms, including Goldman Sachs, to comply with all U.S. laws, rules, and regulations. The board of directors of Goldman Sachs must ensure that its senior management implements an effective compliance risk management framework and that potential compliance risk failures are appropriately brought to the attention of senior managers and addressed immediately. The Board will actively monitor Goldman Sachs’ effectiveness in doing so.

The order prohibits Goldman Sachs from re-employing individuals involved in the improper disclosure of confidential supervisory information or retaining them as consultants or contractors. In November 2015, the Board permanently barred a former Goldman Sachs employee from the banking industry following his guilty plea for the theft of confidential supervisory information.

For media inquiries, call 202-452-2955

Board Votes

Attachment (32 KB PDF)

Attachment 2 (84 KB PDF)

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Why the Goldman Sachs Settlement Is a $5 Billion Sham

Why the Goldman Sachs Settlement Is a $5 Billion Sham

The penalty might sound pretty stiff. But get a load of the real math.

New Republic-

“Recently Goldman Sachs reached a settlement with the federal government for $5 billion because they were selling worthless packages of subprime mortgages,” Bernie Sanders shouted (as he does) in the last Democratic presidential debate. “If you are a kid caught with marijuana in Michigan, you get a police record. If you are an executive on Wall Street that destroys the American economy, you pay a $5 billion fine, no police record.”

This lack of accountability for Wall Street and the perception of a two-tiered justice system gnaws away at Americans’ trust. But now that the Goldman Sachs settlement Sanders referred to has been finalized, I’m sorry to say that he was wrong. If you are an executive on Wall Street who destroys the American economy, you don’t pay a $5 billion fine. You pay much, much less. In fact, you can make a credible case that Goldman won’t pay a fine at all. They will merely send a cut of profits from long-ago fraudulent activity to a shakedown artist, also known as U.S. law enforcement.

The Justice Department announcement in the Goldman case states that between 2005 and 2007, the investment bank marketed and sold mortgage-backed securities to investors that were of lower quality than promised. As a result, Goldman will pay a $2.385 billion civil penalty to the Justice Department, $875 million resolving claims from other state and federal agencies, and $1.8 billion in so-called “consumer relief” measures, like forgiving principal on loans and providing financing for affordable housing. That’s where the much-touted $5 billion figure comes from.

[NEW REPUBLIC]

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A.G. Schneiderman-Led State & Federal Working Group Announces $5 Billion Settlement With Goldman Sachs

A.G. Schneiderman-Led State & Federal Working Group Announces $5 Billion Settlement With Goldman Sachs

Settlement Includes $670 Million For New Yorkers, Including $190 Million In Cash And $480 Million In Consumer Relief Committed To Mortgage Assistance, Principal Forgiveness, And Affordable Housing Programs

New York Has Now Received $5.3 Billion In Cash And Consumer Relief From National Mortgage Settlement And Residential Mortgage-Backed Securities Working Group Settlements Combined Since 2012

Schneiderman: Since 2012, My Number One Priority Has Been Getting New York Families The Resources They Need To Help Rebuild

NEW YORK – Attorney General Eric T. Schneiderman today joined members of the state and federal working group he co-chairs to announce a $5 billion settlement with Goldman Sachs over the bank’s deceptive practices leading up to the financial crisis.  The settlement includes $670 million – $480 million worth of creditable consumer relief and $190 million in cash – that will be allocated to New York State. The resolution requires Goldman Sachs to provide significant community-level relief to New Yorkers, including resources that will facilitate a significant expansion of the New York State Mortgage Assistance Program enabling distressed homeowners to restructure their debt, as well as first-lien principal forgiveness, and funds to spur the construction of more affordable housing.  Additional resources will be dedicated to helping communities transform their code enforcement systems, and invest in land banks and land trusts.

The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal working group formed in 2012 to share resources and continue investigating wrongdoing in the mortgage-backed securities market prior to the financial crisis.

New York has now received $5.33 billion in cash and consumer relief from the National Mortgage Settlement (NMS) and all five Residential Mortgage-Backed Securities Working Group settlements (RMBS). The combined $3.2 billion in cash and consumer relief from RMBS settlements is more than any other state.

“Since 2012, my number one priority has been getting New Yorkers the resources they need to rebuild,” Attorney General Schneiderman said. “These dollars will immediately go to work funding proven programs and services to help New Yorkers keep their homes and rebuild their communities. We’ve witnessed the incredible impact these programs and services can have in helping communities recover from the financial crisis. This settlement, like those before it, ensures that these critical programs—such as mortgage assistance, principal forgiveness, and code enforcement—will continue to get funded well into the future, and will be paid for by the institutions responsible for the financial crisis.”

The settlement includes an agreed-upon statement of facts that describes how Goldman Sachs made multiple representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors, its process for screening out questionable loans, and its process for qualifying loan originators.  Contrary to those representations, Goldman Sachs securitized and sold RMBS backed by large numbers of loans from originators whose mortgage loans contained material defects.

In the statement of facts, Goldman Sachs acknowledges that it securitized thousands of Alt-A, and subprime mortgage loans and sold the resulting residential mortgage-backed securities (“RMBS”) to investors for tens of billions of dollars.  During the course of its due diligence process, Goldman Sachs received pertinent information indicating that significant percentages of the loans reviewed did not conform to the representations it made to investors.  Goldman also received and failed to disclose negative information that it obtained regarding the originators’ business practices.  Indeed, Goldman’s due diligence vendors provided Goldman with reports reflecting that the vendors had graded significant numbers and percentages of sampled loans as EV3s, i.e., not in compliance with originator underwriting guidelines.  In certain circumstances, Goldman reevaluated loan grades and directed that such loans be waived into the pools to be purchased or securitized.

Even when the percentage of problematic loans in pools sampled by it vendors indicated that the unsampled portions of the pools likely contained additional such loans, Goldman typically did not increase the size of the sample or review the unsampled portions of the pools to identify and eliminate any additional such loans.   In many cases, 80 percent or more of the loans in the loan pools Goldman purchased and securitized were not sampled for credit and compliance due diligence.  Nevertheless, Goldman approved various offerings for securitization without requiring further due diligence to determine whether the remaining loans in the deal contained defects.  A Goldman employee overseeing due diligence for a particular loan pool noted that the pool included loans originated with “[e]xtremely aggressive underwriting” and “large program exceptions made without compensating factors.”  Despite this observation, Goldman did not review the remaining portion of the pool, and subsequently securitized thousands of loans from the pool.

Goldman made statements to investors in offering documents and in certain other marketing materials regarding its process for reviewing and approving originators, yet it failed to disclose  to investors negative information it obtained about mortgage loan originators and its practice of securitizing loans from suspended originators.

Beginning in mid-2006, Goldman recognized that Fremont, a “key originator, was experiencing an increasing level of early payment defaults (“EPDs”) (i.e., loans for which the borrowers had failed to make one or more of their first payments).  Goldman was aware that EPDs were a sign of originators’ bad credit decisions and could be indicators of potential borrower fraud.  However, Goldman did not put Fremont on its “no bid” list and continued to purchase loan pools from Fremont during the period Fremont’s EPD claims remained unpaid.  Moreover, Goldman “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.”    Likewise, Goldman identified issues with Countrywide’s origination practices.  Goldman’s head of due diligence, when presented with a “very bullish” equity report on Countrywide, another large originator, exclaimed “[i]f they only knew  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”

Attorney General Schneiderman was elected in 2010 and took office in 2011, when the five largest mortgage servicing banks, 49 state attorneys general, and the federal government were on the verge of agreeing to a settlement that would have released the banks – including Bank of America – from liability for virtually all misconduct related to the financial crisis. Attorney General Schneiderman refused to agree to such sweeping immunity for the banks. As a result, Attorney General Schneiderman secured a settlement that preserved a wide range of claims for further investigation and prosecution. In his 2012 State of the Union address, President Obama announced the formation of the RMBS Working Group. The collaboration brought together the Department of Justice (DOJ), other federal entities, and several state law enforcement officials – co-chaired by Attorney General Schneiderman – to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.

Under today’s settlement, Goldman Sachs will be required to provide a minimum of $480 million in creditable consumer relief directly to struggling families and communities across the state. The settlement includes a menu of options for consumer relief to be provided, and different categories of relief are credited at different rates toward the bank’s $480 million obligation, including at least:

·         $220 million for debt restructuring

·         $30 million for land banks and land trusts

·         $30 million for code enforcement

·         $150 million for first-lien principal reduction

·         $50 million for the creation and preservation of affordable rental housing

In addition to the settlement with Goldman Sachs, the RMBS working group has reached settlements with four other major financial institutions since 2012:

·         J.P. Morgan Chase: $13 Billion

·         Bank of America: $16.6 Billion

·         Citibank: $7 Billion

·         Morgan Stanley: $3.2 Billion

The National Mortgage Settlement (NMS), reached with the five largest national mortgage servicers, has provided $51 billion in consumer relief and cash nationwide. The combined amount of cash and consumer relief that has been returned to New York as a result of all the RMBS and NMS deals is $1.481 billion in cash and $3.857 in consumer relief, for a total of $5.338 billion. This matter was led by Senior Enforcement Counsel for Economic Justice Steven Glassman and Assistant Attorneys General Desiree Cummings and Kenneth Haim, both of the Investor Protection Bureau.

source: http://www.ag.ny.gov/

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CEO of Goldman Sachs Lambasted Sanders as Grave Threat, but Not Clinton. Why?

CEO of Goldman Sachs Lambasted Sanders as Grave Threat, but Not Clinton. Why?

Truth-Out-

According to an article in The Hill a few weeks back, Lloyd Blankfein – head of Goldman Sachs and symbol of Wall Street’s lack of accountability – warned that Bernie Sanders is “dangerous.” Blankfein told CNBC that Sanders is too set in his ways, adding, “It’s a liability [in this anti-Wall Street environment] to say, ‘I’m willing to compromise’… It’s just incredible. It’s a moment in history. Eventually people, the electorate, will notice nothing is getting done.”

At no time did Blankfein, who personally supported Hillary Clinton against Barack Obama in 2008, find fault with Clinton; his alarm is solely focused on the senator from Vermont. He contrasted Sanders with more flexible candidates who are willing to work with Wall Street when he emphasized that a candidate must be “willing to compromise.”

The Sanders campaign – supported by public records – charges that Wall Street donations make up a considerable portion of the Clinton war chest. She is supported by at least one huge Wall Street PAC, and, of course, has made millions of dollars in speaking fees from Wall Street financial firms.

[TRUTH-OUT]

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Goldman Sachs to pay $5 billion in mortgage settlement

Goldman Sachs to pay $5 billion in mortgage settlement

AP-

Goldman Sachs said Thursday it had reached a roughly $5 billion settlement as part of a federal and state probe into its role in the sale of mortgages in the years leading up into the housing bubble and subsequent financial crisis.

It is by far the largest settlement the investment bank has reached related to its role in the crisis, but the payment dwarfs the payments made by some of its Wall Street counterparts.

Goldman will pay $2.39 billion in civil monetary penalties, $875 million in cash payments and provide $1.8 billion in consumer relief in the form of mortgage forgiveness and refinancing as part of the agreement. The U.S. Department of Justice, the attorneys general of Illinois and New York and other regulators who are part of the settlement have not officially signed off on the deal, which could take some time.

[AP]

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Clinton Super PAC Donor Is Former Goldman Exec and Foreclosure Crisis Profiteer

Clinton Super PAC Donor Is Former Goldman Exec and Foreclosure Crisis Profiteer

The Intercept_

When Bernie Sanders brought up Hillary Clinton’s prodigious fundraising from Wall Street at the Nov. 14 Democratic presidential debate, Clinton called it an attack on her “integrity.” And in an interview this week, she said that “anybody who thinks they can influence me on that ground doesn’t know me very well.”

But the fact remains that the Clinton campaign is fundraising heavily from Wall Street. Contributions from the securities and investment industries comprise her fourth-largest pile of campaign money, totaling $2,044,471. Commercial banks have given $443,519 directly to her campaign.

One major donor to her Super PAC, Priorities USA, is Donald Mullen Jr., a man who was singularly able to profit from the financial crisis both before and after the crash of the housing bubble.

[THE INTERCEPT]

image: Flickr.com

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Ex-Federal Reserve worker admits to leaking secrets to Goldman Sachs

Ex-Federal Reserve worker admits to leaking secrets to Goldman Sachs

NY POST-

An ex-employee of the Federal Reserve Bank of New York pleaded guilty in Manhattan federal court on Wednesday to passing off secret government documents to Goldman Sachs.

Jason Gross, 37, admitted to a misdemeanor charge of theft of government property for passing along regulatory documents from the New York Fed to his friend and ex-colleague, according to a plea deal with the Justice Department.

That former colleague, Rohit Bansal, worked at Goldman at the time, according to people familiar with the case.

[NEW YORK POST]

image: Jason Gross Reuters

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ACA Fin. Guar. Corp. v Goldman, Sachs & Co. | NY App. 1st Dept. – plaintiff has sufficiently pleaded justifiable reliance for the causes of action for fraud in the inducement and fraudulent concealment

ACA Fin. Guar. Corp. v Goldman, Sachs & Co. | NY App. 1st Dept. – plaintiff has sufficiently pleaded justifiable reliance for the causes of action for fraud in the inducement and fraudulent concealment

Friedman, J.P., Renwick, Manzanet-Daniels, Clark, JJ.

9037 650027/11

[*1]ACA Financial Guaranty Corp.,Plaintiff-Respondent,

Goldman, Sachs & Co., Defendant-Appellant.

 

Sullivan & Cromwell LLP, New York (Theodore Edelman of counsel), for appellant.

Kasowitz Benson Torres & Friedman LLP, New York (Marc E. Kasowitz of counsel), for respondent.

 

Upon remittitur from the Court of Appeals for consideration of issues raised but not determined on appeal to this Court (25 NY3d 1043 [2015]), order, Supreme Court, New York County (Barbara R. Kapnick, J.), entered April 24, 2012, which, to the extent appealed from, denied defendant’s motion to dismiss the causes of action for fraudulent inducement and fraudulent concealment, unanimously affirmed, without costs.

Plaintiff, ACA Financial Guaranty Corp., alleges that defendant, Goldman, Sachs & Co. fraudulently induced plaintiff to issue a financial guaranty for a synthetic collateralized debt obligation while concealing the fact that its hedge fund client Paulson & Co., which selected most of the portfolio investment securities, planned to take a “short” position. Plaintiff alleges that had it known this information, it would not have agreed to the guaranty as it exposed plaintiff to substantial liability.

On a prior appeal, we reversed, granted defendant’s motion to dismiss the causes of action for fraudulent inducement and fraudulent concealment finding that plaintiff’s amended complaint failed to establish justifiable reliance as a matter of law (106 AD3d 494 [2013]). The Court of Appeals reversed our order, finding that plaintiff has sufficiently pleaded justifiable reliance for the causes of action for fraud in the inducement and fraudulent concealment, and remitted the case to this Court “for consideration of issues raised but not determined” (25 NY3d 1043 [2015]).

We find that plaintiff adequately pleaded all of the requisite elements comprising a fraud claim. “To make a prima facie claim of fraud, the complaint must allege misrepresentation or concealment of a material fact, falsity, scienter on the part of the wrongdoer, justifiable reliance and resulting injury” (Dembeck v 220 Cent. Park S., LLC, 33 AD3d 491, 492 [1st Dept 2006]). Defendant argued, inter alia, that the motion court erred in finding that the amended complaint adequately pled a material misrepresentation and scienter. However, the motion court properly determined that plaintiff pleaded a material misrepresentation. Plaintiff provided allegations that defendant misrepresented Paulson’s economic interest in ABACUS. Further, the complaint alleges that two other entities refused to assist Paulson upon learning of its true role in the transaction, and Paulson’s position was described as a “stark departure” from the basic assumption in the industry that sponsors of a deal want it to succeed. These allegations all supported plaintiff’s claim that the alleged misrepresentation/concealment of Paulson’s conflict of interest was material and it would not have provided the financial guaranty had it known the truth.

The motion court correctly found scienter sufficiently alleged. Ordinarily, intent to commit fraud is a question of fact which cannot be resolved on a motion to dismiss (Schisgal v Brown, 21 AD3d 845, 847 [1st Dept 2005]), and proof of intent is to be determined from surrounding circumstances (see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553 [2009]; Oster v Kirschner, 77 AD3d 51, 56 [1st Dept 2010]). Here, plaintiff’s complaint alleged [*2]that Goldman had a long-term and economically rational interest in pleasing a client with whom it had already done billions of dollars in transactions and in positioning itself as a leader in the burgeoning market for the type of investment product involved in this matter. As such, the complaint contains a rational basis for inferring that the alleged misrepresentations were made intentionally (see Seaview Mezzanine Fund, LP v Ramson, 77 AD3d 567, 568 [1st Dept 2010][rational inference standard]).

We have considered defendant’s remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: AUGUST 18, 2015

DEPUTY CLERK

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Goldman Sachs Pays $272M to Settle Suit Over Mortgage-Backed Securities

Goldman Sachs Pays $272M to Settle Suit Over Mortgage-Backed Securities

NBC-

Goldman Sachs Group Inc. will pay $272 million to settle a lawsuit that claimed the Wall Street bank defrauded investors about the safety of about $6 billion of residential mortgage-backed securities they bought in 2007 and 2008.

The settlement with investors led by the NECA-IBEW Health & Welfare Fund, an electrical workers’ pension fund in Decatur, Illinois, was disclosed in filings with the U.S. District Court in Manhattan on Thursday.

NECA-IBEW accused Goldman of misleading investors about the underwriting of home loans backing the securities, including the quality of appraisals and whether borrowers were capable of repaying their loans. The fund said the securities’ prices collapsed during and after the financial crisis, while their credit ratings fell to low, “triple-C” junk grades from “triple-A.”

[NBC]

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The Fed Had A Job Opening, So It Picked Another Goldman Sachs Executive

The Fed Had A Job Opening, So It Picked Another Goldman Sachs Executive

HuffPost-

The Federal Reserve can’t stop hiring Goldman Sachs executives. On Monday, the Dallas Fed named former Goldman Sachs Vice Chairman Robert Kaplan as its president — a post with significant regional regulatory responsibilities and influence over critical monetary policy decisions.

Kaplan will serve on the the powerful Federal Open Market Committee, which sets interest rates that have a massive impact on economic growth, unemployment and inflation. He’ll also be a major regulator. Kaplan has been critical of the regulatory response to the 2008 financial crisis, saying that the Wall Street reform law passed by Congress is hurting small businesses.

“My complaint about Dodd-Frank is that it should be slimmed down and focused on two or three top priorities,” Kaplan told The American Interest in 2012. During the same interview, Kaplan hinted that he’d be willing to end the Fed’s historic eight-year adherence to zero interest rate policy, saying that “what the Fed thinks it has been doing over the past three years [2009-2012] is what the ECB is now doing for Germany and Europe: buying them time, and hopefully putting on the pressure for [fiscal policy-makers] to get in gear because they can’t keep on indefinitely with hyper-aggressive monetary policy.”

[HUFFINGTON POST]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Goldman Sachs Group CEO Lloyd Blankfein Is NOW a Billionaire

Goldman Sachs Group CEO Lloyd Blankfein Is NOW a Billionaire

He has a special thanks to give to the Obama Administration.


Bloomberg-

Goldman Sachs Group Inc. made hundreds of partners rich when it went public in 1999. Its performance since then has turned Lloyd Blankfein into a billionaire.

The chief executive officer of the Wall Street bank for the past nine years, Blankfein has seen his net worth surge to about $1.1 billion as the firm’s shares quadrupled since the initial public offering, according to the Bloomberg Billionaires Index. As the largest individual owner of Goldman Sachs stock, he has a stake in the company worth almost $500 million. Real estate and an investment portfolio seeded by cash bonuses and distributions from the bank’s private-equity funds add more than $600 million.

For Blankfein, the son of a New York postal worker, the accumulation of wealth has been dramatic. He’s one of the few current leaders of a big global bank who reached a senior-executive rank before his firm went public. That won’t happen again anytime soon, as Goldman Sachs was the last major Wall Street firm to end its private partnership.

 [BLOOMBERG]

image: Reuters

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Goldman in talks to settle Justice Department probe into sales of mortgage securities before the financial crisis

Goldman in talks to settle Justice Department probe into sales of mortgage securities before the financial crisis

Crain’s-

Goldman Sachs Group Inc. reported second-quarter earnings that fell 49% from a year earlier on higher legal costs tied to a potential settlement of mortgage-related probes.

Net income dropped to $1.05 billion, or $1.98 a share, from $2.04 billion, or $4.10, a year earlier, the New York-based company said Thursday in a statement. Excluding the legal costs, earnings were $4.75 a share, beating the $3.96 average estimate of 24 analysts in a Bloomberg survey.

Goldman Sachs set aside $1.45 billion for litigation and regulatory proceedings this quarter, about five times more than a year earlier. The firm is in talks to be the latest major bank to settle a Justice Department probe into sales of mortgage securities before the financial crisis.

 [CRAIN’S]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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