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January 28, 2016 By Richard Bowen

Goldman Sachs aka The Great Vampire Squid Rides Again!

"Goldman Sachs New World Headquarters". Licensed under Public Domain via Wikimedia Commons
“Goldman Sachs New World Headquarters”. Licensed under Public Domain via Wikimedia Commons

As my friend William D. Cohan said in a recent New York Times post, “nearly eight years after the onset of the financial crisis; its unintended consequences continue to startle and amaze.” 

The latest in a long saga of TBTF bank settlements, Goldman Sachs, one of the more recent  banks to resolve settlements charges for the mortgage backed securities packaging that led to the financial maelstrom of 2008, has announced a $5.1 billion settlement with the Department of Justice and others. 

Goldman Sachs said the settlement comprises a $2.385 billion civil penalty, an $875 million cash payment and $1.8 billion in relief for homeowners whose mortgages exceed the value of their property as well as distressed borrowers.

The Great Vampire Squid…Not a Jules Verne Sci Fi Movie!

Goldman Sachs, who  was accused of cobbling together home mortgage securities it knew would implode — and selling them to  investors who were naively trusting in their good name — was called by Matt Taibbi of the Rolling Stone Magazine, “the Great Vampire Squid of Wall Street.” Ironic, when others in banking did the same.

To date, the government has won multibillion dollar settlements from J.P. Morgan Chase, Bank of America and Citigroup, to mention a few. As you know, the probes dealt with banks deceiving investors by misrepresenting the quality of the loans being packaged.

I find several things rather ironic in all this. For some time, both Cohan and I have been writing about the Department of Justice’s indictments of the major Wall Street banks. I was actually heartened by  the strong stance taken by Attorney General Loretta Lynch some time back, when she said the corruption “is rampant, systemic, and deep-rooted both abroad and here in the United States.” I recall applauding, yet still being somewhat cynical when she said, “this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice.”

[tweetthis]The corruption “is rampant, systemic, and deep-rooted…” ~ @LorettaLynch #AG #DOJ #tbtf #wallstreet[/tweetthis]

Her intentions and former Attorney General Eric Holder’s seemed fairly forthright, yet as Cohan and I have repeatedly pointed out, the Department of Justice has lost sight of the larger issue: the fraudulent behavior of the Wall Street bankers and traders that resulted in the 2008 financial crisis. They keep dishing out fines yet, have only managed to indict and jail one banker in eight years!

In the 1980’s financial crisis over 1,000 bankers were jailed, not just let off with just a fine.  To date, the 2008 crisis has resulted in nearly $190 billion in fines and settlements from 49 separate financial institutions (Keefe, Bruyette & Woods analysis). Sure, that’s a pretty impressive number; however, those fines and settlements were paid by the bank’s shareholders, not the bankers themselves. And, they were paid out as corporate expenses. In other words, the payments were treated as the cost of doing business and in some cases these expenses were tax deductible. Unbelievable, but true!

Frankly, I believe these settlements are merely payments of extortion to the Department of Justice to ensure that the evidence of these frauds is sealed … locked up… so the American public will never know how widespread this fraud actually was that was perpetrated on the public and helped cause the financial crisis. These settlements are not, on the part of the banks involved, admissions of guilt. In fact, I stated in a Bloomberg TV interview that “the lack of prosecutions does not indicate a lack of evidence.”

Goldman Sachs may complain that the settlement in question may “dent its fourth –quarter profits by about $1.5 billion after taxes,” but with that said, even after all those fines and settlements have been paid out the banks are entering what Cohan describes as another “golden age of Wall Street,” with profits at an all-time high. So the banks get off pretty much scot free and, get this, are making record profits.

The 2008 fiasco has assured them of less competition and they’ve learned they can get away with one heck of a lot, the legal/regulatory side will let them off, and it’s just another cost of doing business!

The message is clear. In the aftermath of the ‘80’s financial crisis over 1,000 bankers went to jail, a crisis less than one third as severe as 2008. Regardless of what our past and present Attorneys General claim — that the lack of prosecutions are not a result of their lack of effort, to date, the D.O.J. has not displayed any desire to seek punishment for bankers’ misconduct.

Instead we reward their behavior. Well, you always get more of what you reward so the near future should be most interesting.

[tweetthis]”The #DOJ has not sought punishment for bankers’ misconduct.” ~ @RichardMBowen #tbtf[/tweetthis]

Bank Whistleblowers United… Restoring the Rule of Law to Banking
We Need To Speak Up, Loud and Clear!

Tagged With: Goldman Sachs, Too Big to Fail, Wall Street

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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What People Are Saying About Richard M. Bowen

William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
https://richardmbowen.com/testimonials/2556/

Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
2015-02-13T19:51:19-06:00
"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
https://richardmbowen.com/testimonials/711/

Ben Stein"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator
2015-02-13T19:50:26-06:00
"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator
https://richardmbowen.com/testimonials/712/

Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
https://richardmbowen.com/testimonials/532/

Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
https://richardmbowen.com/testimonials/531/

fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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