“(Reuters) – U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows. …
“Multinational investment bank Goldman Sachs has escaped a US government lawsuit for suspected fraudulent trades made during the financial crisis. A senate probe revealed evidence the bank deliberately deceived investors during the economic downturn.
“The Department of Justice and investigative agencies say “the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time,” despite evidence revealed by the probe that Goldman Sachs deliberately misled its customers. They added that should more information come to light then the verdict could potentially change.
“The Justice Department said that it had conducted an “exhaustive investigation” into allegations of fraud during the crisis from 2008 to 2009. The probe reportedly uncovered email conversations between employees of Goldman Sachs branding mortgage securities sold to investors as “junk” and “crap”.
“Moreover, the probe writes that the bank “used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs [collateralized debt obligations] in ways that created conflicts of interest with the firm’s clients and at times led to the bank’s profiting from the same products that caused substantial losses for its clients.” …
“Totally Busted: The Truth About Goldman’s Bailout by the Fed
“Recent disclosures from the Federal Reserve reveal that honesty was one of the earliest casualties of the 2008 financial crisis. These disclosures contain a number of juicy tidbits, like the fact that Goldman Sachs received tens of billions of dollars in direct and indirect succor from the Fed.
“Thanks to these spectacularly large taxpayer-funded bailouts, Goldman was able to continue “doing God’s Work” – as CEO Lloyd Blankfein infamously remarked – like the work of producing billion-dollar trading profits without ever suffering a single day of losses.
“Thanks to the Fed’s massive, undisclosed assistance, Goldman Sachs managed to project an image of financial well-being, even while accessing tens of billions of dollars of direct assistance from the Federal Reserve.
“By repaying its TARP loan, for example, Goldman wriggled out from under the nettlesome compensation limits imposed by TARP, while also conveying an image of financial strength. But this “strength” was illusory. Goldman repaid the TARP loans with funds it procured days earlier from the Federal Reserve. Then, over the ensuing months, Goldman recapitalized its balance sheet by selling tens of billions of dollars of mortgage-backed securities to the Fed. …”
How did GS know to bet against the subprime housing market using the CIA cutout AIG? Among other things, they were in a position to know about GWBush’s being an accessory to the systemic fraud going on in mortgage lending (see “bush helped engineer subprime collapse” in the reference section). They would have known the ratings agencies like S&P and Moodys were issuing fraudulent endorsements of this worthless paper. They obviously knew greenspan had (against strenuous objections from economists from all over the political spectrum) blown up a huge bubble. They knew clinton had set the stage for wholesale fraud in the housing market by allowing freddie mac and fannie mae to purchase these fraudulent instruments and underwrite them with taxpayer money. And they knew the bank for international settlements (the central bankers central bank) had fundamentally changed the rules for mortgage backed securities and banking in general, at the worst possible time:
“Basel II requires banks to adjust the value of their marketable securities to the “market price” of the security, a rule called “mark to market.”9 The rule has theoretical merit, but the problem is timing: it was imposed ex post facto, after the banks already had the hard-to-market assets on their books. Lenders that had been considered sufficiently well capitalized to make new loans suddenly found they were insolvent. At least, they would have been insolvent if they had tried to sell their assets, an assumption required by the new rule. Financial analyst John Berlau complained:
“The crisis is often called a ‘market failure,’ and the term ‘mark-to-market’ seems to reinforce that. But the mark-to-market rules are profoundly anti-market and hinder the free-market function of price discovery. . . . In this case, the accounting rules fail to allow the market players to hold on to an asset if they don’t like what the market is currently fetching, an important market action that affects price discovery in areas from agriculture to antiques.”10
“Imposing the mark-to-market rule on U.S. banks caused an instant credit freeze, which proceeded to take down the economies not only of the U.S. but of countries worldwide. In early April 2009, the mark-to-market rule was finally softened by the U.S. Financial Accounting Standards Board (FASB); but critics said the modification did not go far enough, and it was done in response to pressure from politicians and bankers, not out of any fundamental change of heart or policies by the BIS.
“And that is where the conspiracy theorists come in. Why did the BIS not retract or at least modify Basel II after seeing the devastation it had caused? Why did it sit idly by as the global economy came crashing down? Was the goal to create so much economic havoc that the world would rush with relief into the waiting arms of the BIS with its privately-created global currency? The plot thickens . . . . “
This would be nothing but speculation except for the fact that people who are paid to study and understand economics, regulation and fraud, such as Catherine Austin Fitts, saw this coming 10 years ago. How did it escape the attention of the insiders? Clearly, it didn’t.
When GS’s Blankfein stated that they were “doing god’s work” he was talking about darwin’s idea of god: killing off the weak for the greater glory of the strong. In other words, this is not a gentleman’s game they’re playing. They are creating an empire of corruption. If you’re an insider, you have it made. Otherwise, you have decisions to make.