If you’ve been listening to our show and/or reading my posts, you know I try to bring crucial facts to your attention.

So let’s examine the sequence of events concerning Goldman Sachs.

For those who prefer audio, please click the play button below.

NEWS ALERT! Pirates Open Investment Banking Division

Goldman Sachs realizes that the housing market is heading south by mid-2007 and bets against it. They lose over a billion dollars, yet their balance sheet remains in the black in 2007 and 2008 because they hedged their bets.

Goldman donates four times as much to the Democratic Party as the Republican Party in 2008 – including a sweet $1 million directly to the Obama campaign. Goldman spent over $2.8 million in 2009 on Washington lobbyists. One can assume the numbers were roughly the same in 2007 and 2008.

Surprise! In late 2008 – less than a month before the election – Goldman receives $10 billion in TARP “emergency” funding – thanks to an emergency bill that few Members of Congress read before they sign it.

Americans were told that the sky will fall if the biggest banks aren’t saved (from themselves). Banks agreeing to receive preferred stock TARP investments from the Treasury included Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. (including Merrill Lynch), Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon and State Street Corp.

Six Goldman officers and advisers are then appointed to KEY positions in the Obama Administration. Within a year, Goldman profits and bonuses are soaring. Break out the champagne. Does anyone seriously believe ANY of this was a coincidence? Goldman didn’t game the American system. The system is Goldman’s partner.

It’s the American people who were gamed. Maybe it makes sense after-all.

Was Goldman in serious financial trouble from the housing crisis? Was Goldman in danger of going bankrupt? Could Goldman have failed without bailout support? NO! Goldman Sachs CEO Lloyd Blankfein said so himself with the entire world watching. He stated that Goldman exposure to the housing crisis was limited in 2007 and thereafter contained when they hedged  their bets by betting against mortgage backed securities. Yet, there was no follow-up, nary a word, from Senate Committee members on this revelation.

I spoke with a Washington insider, an attorney who works closely with the SEC. I asked his opinion on the SEC action against Goldman,and here’s what he said: “What they did may not prove to be inherently illegal, but it is morally reprehensible. If you believe the SEC did, Goldman went too far.  It’s not your typical fraud case, where x number of people profited. Paulson made a great deal of money. But Paulson wasn’t named, because he didn’t misrepresent anybody in particular.”

I asked, “With so many former Goldman officials in the Obama administration, didn’t it take guts to go after Goldman?”

He responded, “Frankly, nearly everyone who matters has worked at Goldman, Merrill and Bear Sterns. You want senior economic officials to know what they’re talking about. But the head of SEC enforcement, Robert Khuzami, is a tough guy. What took courage is going after the one company that people thought was doing the right thing, but in fact, were just about as evil as they come. They make the rich richer and the poor poorer. They’re all out to line their own pockets.”

Robert Khuzami is a…no-nonsense, thorough, award winning Prosecutor: This guy is the real deal — he busted terrorist rings, broke up the mob, took down security frauds. He is now the director of SEC enforcement. He is fearless, and was awarded the Attorney General’s Exceptional Service Award (1996), for “extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation.” When you prosecute mass murderers who use guns and bombs and threaten your life…you ain’t afraid of a group of billionaire bankers and their spreadsheets. My advice to anyone on Wall Street in his crosshairs: If you are indicted in a case by Khuzami, do yourself a big favor: Settle. ~ Barry Ritholtz, Ritholz.com

Goldman Chairman Lloyd Blankfein said that “The worst day of his life is losing other people’s money.” Do we really believe that? Or that he understands what worst days can be for people who lose their homes, life savings and hope? Zachary Roth of tpmuckraker.com assembled some interesting numbers:

- Goldman received $10 billion in TARP funds through a Treasury Department purchase of preferred stock. Goldman got a much sweeter deal on those loans from Treasury than it did when it raised capital from Warren Buffet a month earlier. The more generous terms are worth an additional $500 million a year to Goldman.

- But Goldman was also a major counter-party to AIG’s disastrous credit default swaps. As a result, Goldman was the biggest American beneficiary of the various government bailouts of the collapsed insurance giant (which itself is almost 80 percent owned by the federal government):

- Goldman received $4.8 billion from AIG’s securities lending unit.

- It received $5.6 billion, almost twice as much as any other American bank, from Maiden Lane III, the Fed’s “special purpose vehicle” created to unwind AIG’s credit default swaps;

- And AIG posted $2.5 billion in collateral to Goldman last fall, which came directly from its government bailout, according to AIG’s own list of what it did with its bailout money.

- Goldman is getting an additional several hundred million dollars per year in interest savings, according to Gross, thanks to an FDIC program that guarantees bonds issued by banks. Under the program, which is designed to make it easier for banks to raise capital, Goldman has sold $21 billion in bonds since November.

A commenter on Roth’s article asks: How is it that Goldman, the largest beneficiary of the AIG collapse and bailout, was able to negotiate a $10B bailout of their own – while denying that they had a direct stake in what happens to AIG? And when they were never in danger of collapse?

According to Wikipedia, numerous TARP recipients failed to use the money for the reasons it was injected.

Others told investors their money was invested in the federal TARP financial bailout program and other securities which didn’t in fact exist. Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), told lawmakers, “Inadequate oversight and insufficient information about what companies are doing with the money leaves the program open to fraud, including conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering.” An overwhelming majority of banks saw the program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.

Something is terribly wrong with this picture. If Goldman saw major problems int the housing industry by mid-2007, didn’t other major banks anticipate it as well? Is it possible that the TARP party was planned well in advance of the so-called crisis of October, 2008? That the players had already lined up to get their unfair share of our future. Will we ever know the truth?

The one thing that we do know is that the SEC action against Goldman is a fault line. An earthquake of revelations could soon erupt that will put the entire system to shame.

Could the Goldman fraud be the first in a series of  post-TARP scandals? We welcome your opinion.

To the truth,

Dr. Joyce Starr

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Contradiction! We’re nearly 13 trillion in debt but the economy is recovering. The stock market has outstripped Vegas as the playground of choice for bankers, brokers and the super-rich (again), while American workers depend on a roll of the dice. Dr. Joyce Starr & Joe Stallard discuss an obvious contradiction…

Goldman Sachs Bailout Winner Dominates Banking Landscape
Under the policy enacted by former U.S. Treasury Secretary Henry Paulson, Goldman’s chief executive until 2006, key competitors have failed or been diminished. Goldman is now poised to dominate the investment banking landscape. The following article by David Weidner appeared on MarketWatch.com on April 7, 2009 in Weidner’s “Writing on…

Goldman Sachs: Betting Against American Taxpayers – Betting on TARP Bailout originally appeared on Rights Radio™ with Dr. Joyce Starr on May 1, 2010.

A Massachusetts law school dean that lost money invested with swindler Bernard Madoff contends the Securities and Exchange Commission (SEC) was “willfully, horribly negligent” in failing to monitor his operation.

Now the federal judge overseeing the criminal case against Bernard Madoff has ordered the seizure of Madoff’s assets, making it impossible for victims to take action against those assets.

WHERE? The show was carried live on this page. Listen to the replay at the end of this page.

Lawrence Velvel, dean of the Massachusetts School of Law at Andover, said, “The SEC’s incredible willful negligence” to not seriously investigate Madoff’s operations despite repeated red flags and written warnings of his criminality probably makes the agency liable to legal action by aggrieved investors. The SEC, he said, “has no discretion—none—to fail to follow up, with serious investigations, when presented with knowledgeable, detailed, obviously highly competent, and in many respects easily ‘checkable’ allegations of…a huge fraud that is fooling thousands of people, stealing billions of dollars, and causing horrible injustice.”

Equally bad, says Velvel, the SEC was responsible for a lot of people being sucked into Madoff in the first place, because in 1992 it publicly announced that there was no fraud.

Referring to the preponderant majority of Madoff’s victims, Velvel said, “These are not the billionaires, or the huge institutions, that could hire expensive experts in due diligence…These are the plain people who worked hard and saved all their lives, as capitalism says they should, and who…depended on their government to protect them…but were failed by it because of one of the most willfully negligent, incompetent, and perhaps even complicitous courses of action any agency has ever engaged in.”

Lawrence R. Velvel is an honors graduate of the University of Michigan Law School. He has been a government lawyer, a lawyer in private practice, and a law professor. He is the author of a book on the Viet Nam War and civil disobedience, and of many law review and newspaper articles, including humor pieces written under a pseudonym. He recently wrote a quartet called Thine Alabaster Cities Gleam, comprised of: Misfits In America; Trail of Tears; The Hopes and Fears of Future Years: Loss and Creation; and The Hopes and Fears of Future Years: Defeat and Victory. Velvel blogs at velvelonnationalaffairs.com. His blog postings have been published in Blogs From the Liberal Standpoint: 2004-2005 and An Enemy of the People.

In 1988 he was one of the founders, and from inception has been the Dean, of the Massachusetts School of Law (MSL), a school which has introduced extensive reforms into legal education and which especially focuses on providing legal education to the working class, mid-life people, minorities and immigrants. He is the editor-in-chief of, and writes the introductions for, a journal of serious thought called The Long Term View, which is published by MSL. He is also the host of an hour-long television book review show, called Books Our Time, which is produced by MSL and seen throughout New England and the Mid-Atlantic states.

Concerned about your homeowners association rights? Learn how to protect your condo rights and HOA rights.

Madoff Victim Law School Dean on SEC Negligence – Failure to Investigate originally appeared on Rights Radio™ with Dr. Joyce Starr on April 21, 2009.

Pro Publica, the online investigative reporting site counts 533 institutions that took $333.3 billion in TARP money. Moreover, the current CEO of Goldman Sachs, Loyd C. Blankfein, also earned over 70 million dollars in 2007.

[In a prior MarketWatch article - "Is the rush to exit TARP a trap?" (April 2, 2009) - Weidner states: "Since the middle of March, at least five banks have said they will either not accept TARP funds or they will return the funds received with interest due to Uncle Sam. Four banks that took a combined $338 million actually returned the cash Tuesday. Officials at Bank of America Corp, which took a combined $105 billion from the program, have hinted they want to repay the funds as soon as they can, possibly this year. ... Geithner's care-free attitude about banks repaying the government early defies a truth about the program: many banks were forced to take bailout cash to cover for troubled banks that truly needed it. The government, which never gave detailed criteria about what institutions would qualify for TARP cash, intentionally tried to create confusion around the program. Pro Publica, the online investigative reporting site counts 533 institutions that took $333.3 billion in TARP money."]

Government Sachs is in control
Commentary: Investment bank has strengthened its position through bailout
By David Weidner, MarketWatch
Last update: 12:01 a.m. EDT April 7, 2009

NEW YORK (MarketWatch) — Lloyd Blankfein must be the luckiest guy on Wall Street.

Goldman hasn’t had to forfeit an ownership stake in its firm, and its shareholders — many of them management and employees — have benefited. Goldman shares trade above $100. That’s less than half of where Goldman shares traded at their peak, but far better than the $1 and $3 that AIG and Citigroup shares trade for, respectively.

Since the fall of Bear Stearns Cos. a little more than a year ago, Goldman has taken more than $20 billion in taxpayer cash through loans, payments and backstops. Goldman’s latest bailout coup was a $12.5 billion paid out of AIG’s $180 billion government cash infusion.
Until it was fully extricated, Goldman always characterized its exposure to AIG as “immaterial,” and that its $20 billion notional exposure to AIG was hedged. Turns out that it was — through government bailouts that didn’t exist when Goldman entered the contracts.
Even former New York Luv Guv Eliot Spitzer told journalist Fareed Zakaria on Sunday that he thinks something smells.

“The web between AIG and Goldman Sachs is something that should be pursued,” Spitzer said. “Why did [those payments] happen, what questions were asked, why did we need to pay 100 cents on the dollar for those transactions if we had to pay anything, what would have happened to the financial system had it not been paid?”

But the AIG-Goldman affair is just the beginning, under the policy enacted by former U.S. Treasury Secretary Henry Paulson, Goldman’s chief executive until 2006. Major competitors have failed or been diminished. Goldman already seems, if not just poised, to be dominating what’s left of the investment banking landscape.

We last visited Goldman in the early days of the Troubled Asset Relief Program, or TARP, in October. Then, it appeared Goldman would come out ahead by virtue of avoiding a major investment by a commercial bank. Merrill Lynch had just been sold to Bank of America Corp.
Five months later, Goldman’s position in the marketplace looks even stronger — its future even more brilliant.
“Goldman Sachs has the most powerful investment banking franchise and the most successful trading operation on Wall Street,” Brad Hintz of Bernstein Research wrote Friday, adding that he’s been told “new leverage limits are not expected to impact Goldman’s trading performance.”

“New leverage limits are not expected to impact Goldman’s trading performance.”

— — Brad Hintz, Bernstein Research

Hintz said Goldman is touting how it plans to avoid tighter leverage limits. For one, its trading desk can take advantage of widening bid-offer spreads. Fewer players in the marketplace mean there’s a bigger gap to exploit. Without Lehman and with a diminished Morgan Stanley, Goldman has more ability to corner a market.

Goldman’s commodities oil-trading desk has been linked to the failure of Semgroup Holdings, an oil-trading company in Tulsa, Okla., that declared bankruptcy in July 2008. Semgroup investors say Goldman had access to the company’s trading books and could have used that information against the company, according to Forbes.

That’s just the trading business. Goldman also will have less competition when it comes to underwriting stocks and bonds, advising corporate clients and providing prime brokerage services — including trading leverage — to hedge funds. Goldman ranked No. 1 among advisers with $316 million in revenue during the first quarter, according to Dealogic.
Goldman won’t rake in the exponentially growing profits that it did during the middle part of the decade — it reported $9.54 billion and then $11.6 billion in 2006 and 2007, respectively — but it will improve mightily on the $2.04 billion in returns it earned last year.

As glittering as Goldman’s recent history has been and as bright as its future looks, there is a dark cloud on the horizon. Paulson’s successor at Treasury, Timothy Geithner, is proposing a market-risk regulator that would put the regulatory squeeze on any institution deemed so big that its failure would take down the system with it.

Geithner wants to encourage break-ups and the creation of smaller institutions, said John Garvey, a risk management and banking consultant with PriceWaterhouseCoopers. Goldman, which could easily divide itself into a hedge fund, trading business, private equity shop and advisory firm, would be in the crosshairs of such a plan.

Even separated, though, why would Goldman’s roll stop? In the last year, Goldman has benefited from Paulson’s selective bailouts, a fortuitously timed ban on short selling, a liberal interpretation of bank holding company rules and soon, an easily gamed auction of distressed securities run by the government.

A conspiracy theorist might think this run of fortune has something to do with the former Goldman executives having influential roles in the Treasury Department.
Market-risk regulator? Smaller companies? Goldman will find a way around it. It just seems to have that kind of luck.

Goldman Sachs Bailout Winner Dominates Banking Landscape originally appeared on Rights Radio™ with Dr. Joyce Starr on April 8, 2009.

Topic: What are your shareholders rights when a stock you own drops like a rock, the company goes broke or shareholders are victims of massive stock market fraud/stock broker fraud?

How can shareholders reclaim invested funds and how much can can they expect to get back?

How can a stock fraud attorney help? How do you find the right stock fraud lawyer? Why would a defrauded shareholder opt-out of a Class Action suit?

Guest: Shareholder rights litigation attorney Jason M. Leviton, Berman DeValerio.

This interview took place on the RIGHTS Radio Self-Help Show – a 30 minute segment featured and syndicated on BlogTalkRadio.com. The LIVE program date has passed. However, we offer a STREAMING REPLAY below. Click the PLAY ARROW BELOW to hear the entire show.

To your shareholder rights!

Don’t miss our special Shareholder Rights Course featuring Jason Leviton. Ask your burning question. Speak with Jason directly in a private call for class members.

Stock Fraud: How to Get A Portion of Your Money Back originally appeared on Rights Radio™ with Dr. Joyce Starr on December 24, 2008.

BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry and the husband gets no new electronic toys.

BROKER — What my broker has made me.

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.

CASH FLOW — The movement your money makes as it disappears down the toilet.

CEO –Chief Embezzlement Officer.

CFO — Corporate Fraud Officer.

FINANCIAL PLANNER — A guy whose phone has been disconnected.

INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.

MARKET CORRECTION — The day after you buy stocks.

P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.

PROFIT — An archaic word no longer in use. [Actually a code word for what only CFO's, CEO's and Brokers gain from YOUR investments, always have and always will.]

STANDARD & POOR — Your life in a nutshell.

STOCK ANALYST — Idiot who just downgraded your stock.

STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.

VALUE INVESTING — The art of buying low and selling lower.

WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share.

YAHOO — What you yell after selling it to some poor sucker for $240 per share.

To your economic survival!

Dr. Joyce Starr

PS: If you had purchased $1000 of shares in Delta Airlines one year ago, you will have $49.00 today.
If you had purchased $1000 of shares in AIG one year ago, you will have $33.00 today.
If you had purchased $1000 of shares in Lehman Brothers one year ago, you will have $0.00 today.
But—- if you had purchased $1000 worth of beer in a can, drank it all, then turned in the aluminum cans for a recycling refund, you will have $214.00.

Stock Market Terms for Trying Times originally appeared on Rights Radio™ with Dr. Joyce Starr on December 5, 2008.

The majority of Americans believe that the Securities & Exchange Commission (SEC) protects shareholder rights by prosecuting companies that violate those rights. While the SEC does launch civil litigation in defense of shareholder rights, its resources are extremely limited. The SEC therefore relies on private law firms to supplement such efforts.

What are the red flags? How does a leading law firm become involved in a particular case? My guest explains the process. He also reveals shocking details of the Xybernaut case in which he played a key role.

This shareholder scandal spanned three continents, included extramarital affairs, hookers and the purchase of expensive jewelry with corporate funds.

Our guest is Jason M. Leviton, ESQ.

Jason Leviton joinedBerman DeVelerio in April 2009. Formerly with Cohen, Milstein, Hausfeld & Toll. He joined Cohen Milstein in 2004 as a member of the Securities Fraud/Investor Protection practice group. Prior to joining Cohen Milstein, Mr. Leviton was a securities class-action attorney with another well-known securities class action firm. He has been involved in several major securities fraud cases at the Firm, including the class actions In re Verisign Securities Litigation (N.D. Cal.; settled for approximately $78 million); Bovee v. Coopers & Lybrand, et al. (S.D. Ohio; settled for $7.5 million); In re Xybernaut Securities Litigation (E.D. Va.; motions to dismiss denied); Ong v. Sears, Roebuck, and Co. (N.D. Ill; motions to dismiss denied and class certification pending); Welmon, et al. v. Chicago, Bridge & Iron N.A., et al. (motions to dismiss denied and class certification pending); and In re SOURCECORP Securities Litigation (N.D. Tex.; motion to dismiss denied against non-speaking defendant pursuant to SEC Rule 10b-5(a) and (c)).