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Date Posted: 01:38:49 12/10/08 Wed
Author: Bob O. Link
Subject:

THE GOLDMAN SACHS CHRONICLES

The Catbird Chronicles...
GOLDMAN SACHS

http://www.kycbs.net/Goldman-Sachs-Chronicles.htm

�Those who cannot remember the past are condemned to repeat it.�

- George Santayana (1863-1952)

-----------------------------------------------------------

A Sighting from The Catbird Seat

~ o ~

1929 - Goldman Sachs is named by a U.S. government-appointed investigation as one of the banks which, by looting, market rigging and outrageous manipulation helped precipitate the Wall Street crash of 1929, which directly led to the Great Depression of the 1930s.

1933 - Franklin Roosevelt is sworn in as U.S. President. The Fletcher-Pecora hearings are set up to ferret out the causes of the stock-market crash and the Great Depression. These hearings disclose elements of the Goldman Sachs misadventures and shed light on the danger of a single institution mingling the activities of commercial banks with those of an investment/brokerage company and that of the insurance industry.

1933 - The Banking Act of 1933, more popularly known as the Glass-Steagall Act, is introduced. The Act stipulated that no single institution or bank holding company could engage in both commercial banking and brokerage/investment banking. No commercial banks could own an investment/brokerage company or engage in insurance.

1979 - Goldman Sachs is found guilty of fraud in the Penn Central Railroad failure.

1985 - Sumitomo acquires the Tokyo-based Heiwa Sogo Bank, leading to their ascent to the number one position in Japan�s banking industry � assisted by the then-Finance Minister Takeshita Noboru and the Yamaguchi Gumi, Japan�s most powerful Yakuza syndicate.

1985 - Ichiwa-kai � a Yakuza faction � slaughters Yamaguchi Gumi leader, Masahisa Takenaka, creating a bloody gang war.

1986 - Robert Freeman makes his infamous �insider trading� deals relating to Beatrice Foods � trading for Goldman Sachs as well as his own personal accounts, leaving both in deep do-do.

1986 - Sumitomo acquires 12.5% of Goldman Sachs for $500 million.

1986 - The notorious Arkansas Development Finance Authority (ADFA) borrows $5 million from the Chicago branch of Japan�s Sanwa Bank as a part of a $60 million deal to purchase stock in Coral Reinsurance, a Barbados subsidiary of American International Group (AIG). The deal is brokered by Goldman Sachs, whose head at the time was Robert Rubin. An AIG affiliate had also managed over $1 billion worth of ADFA bonds.

1989 - Robert Freeman pleads guilty to one count of insider trading and is later sentenced to one year in prison (with 8 months suspended), and fined $1.1 million.

1990 - Steve Friedman and Robert Rubin are named senior partners and co-chairmen of the management committee of Goldman Sachs.

1992 - Bishop Estate trustees invest $250 million of the trust�s money in Goldman Sachs.

1993 - Robert Rubin, worth an estimated $100 million at the time, resigns Goldman Sachs to join the Clinton administration. Rubin makes a phone call to Bishop Estate and the estate �insures� Rubin�s stake in Goldman Sachs for $100,000 a year � a �sweetheart deal� for Rubin according to some sources. Kenneth Brody, a Goldman Sachs general partner until 1991, is appointed by Clinton to be chairman of the Export-Import Bank.

1994 - Bishop Estate invests another $250 million of the trust�s money in Goldman Sachs.

1994 - The peso crisis in Mexico comes to a head. Robert Rubin had spearheaded Goldman�s move into Mexico, and the firm had steered billions of dollars to that emerging market. Rubin�s one-year recusal from dealing in matters affecting Goldman Sachs had ended. By helping Mexico make good on its commitment to bondholders, the $20 billion portion of the bailout was viewed by some as a publicly-financed insurance policy for Rubin and Goldman Sachs, along with other large investment houses and banks that were highly exposed in Mexico.

1996 - One time king of copper trading, Yasuo Hamanaka, is arrested on charges of forgery relating to the loss of $2.6 billion by Sumitomo Corp. in a decade of fraudulent copper trading.

1996 - Bishop Estate lends $1 million to Charles M. Harmon, Jr., an investment banker and former general partner at Goldman Sachs. Together with Larry L. Landry, chief investment officer of the MacArthur Foundation, and Brad Heppner, a consultant at Bain & Co. and former director of private investments at the MacArthur Foundation, they form The Crossroads Group to purchase Bigler Investment Management, a Connecticut firm that manages fund-of-fund accounts. Bigler�s clients included: Connecticut State Treasury; Massachusetts� Pension Reserves Investment Management Board; Rhode Island Employees� Retirement System; City & Co. of San Francisco Retirement System; and the pension funds of E.I. duPont de Nemours & Co.

1997 - Goldman Sachs brings to market Lucent Technologies, the $3 billion spin-off from AT&T, the largest IPO to date.

1997 - August. Hawaii's Attorney General, Margery Bronster, begins investigation of allegations of fraud and corruption at Bishop Estate.

1998 - April. According to Spotlight, Sanford Weill, the chairman of Travellers Group, the largest US financial services conglomerate, phoned Treasury Secretary Robert Rubin to ask for an urgent meeting. �Why? Do you want to buy the government?� Rubin quipped. �No,� said Weill, �Just the law.� What Weill wanted was not a new law, but �reform� of an old one: Glass-Steagall.

1998 - Two of Japan's leading banks, Sumitomo Bank and Bank of Tokyo-Mitsubishi (BTM) are implicated in bribery scandals involving officials at Japan's powerful Ministry of Finance.

1999 - Goldman Sachs goes public. No mention is made in the IPO documents prepared by PricewaterhouseCoopers of the scandals that are plaguing Bishop Estate and Sumitomo Bank.

1999 - Rubin drafts �reform� legislation effectively cancelling Glass-Steagall and pushes it through the US Congress. This allows Travellers Group and Citibank to unite into the world�s largest financial services conglomerate

1999 - Rubin resigns as Treasury Secretary, and joins Citigroup a few months later.

1999 - Bishop Estate trustees Richard Wong and Henry Peters are indicted for fraud. Trustee Lokelani Lindsey is sued by fellow trustees Oswald Stender and Gerard Jervis, who demand her removal for mismanagement. Gerard Jervis is caught having sex with a female subordinate in the men's restroom of the Hawaii Prince Hotel. The female employee commits suicide the next day. Jervis attempts suicide the next week. The court removes Lindsey as trustee. All trustees are temporarily removed from office after the IRS gives an ultimatum that Bishop Estate will lose its tax-exempt status unless the trustees are removed. All five trustees permanently resign.

1999 - Ashanti Goldfields, a Goldman Sachs client, goes insolvent - allegedly due to fraudulent manipulations of the gold market.

2000 - Lawsuits continue against Bishop Estate, now renamed Kamehameha Schools. Former trustee, Oswald Stender, brings a lawsuit against the State of Hawaii for failure to act earlier to curtail corruption at the estate.

2000 - March. Goldman Sachs takes public World Online International NV, a Dutch Internet access provider. Goldman did not disclose that the internet firm's chairwoman had sold much of her stock before the IPO. The shares have fallen 65% from their sale price. Litigation is likely.

2000 - April. Goldman Sachs may be disqualified from arranging Nippon Telegraph & Telephone Corp.'s planned $13 billion share sale because of the soured IPO of World Online International NV. Japan's Ministry of Finance said it may bar Goldman, the No. 1 underwriter of Asian equities during the first quarter, from managing the sale of 1 million shares held by the Japanese government in NTT, in what is set to be one of the world's largest stock offerings.

2000 - December. The SEC announces that it is investigating possible wrongdoing involving Initial Public Offerings (IPO's). Goldman Sachs is named as one of the financial firms being investigated.

2001 - February. Goldman Sachs, and PricewaterhouseCoopers, come under fire again for the Robert Maxwell fraud scandals.

2001 - November. The American Stock Exchange announces a $1 million fine against Spear, Leeds & Kellogg LP, a unit of Goldman Sachs, for violating supervisory rules. It is the ASE�s largest fine ever.

2002 - March. Goldman Sachs has sold its 6.3 percent stake in the troubled ResCare, according to U.S. Securities and Exchange Commission filing. The date of the sale is not disclosed.

2002 - May. Goldman Sachs is sued by eToys for alleged misconduct in handling their IPO.

2002 - June. Japan accuses Goldman Sachs of evading taxes by illegally transferring funds to the Cayman Islands.

2003 - November. A former Goldman Sachs� economist, John Youngdahl, pleads guilty to insider bond trading that gave the firm an eight-minute edge on the market and nearly $4 million in tainted profits. The inside tip came Oct. 31, 2001, (20 days after 9-11), when the government announced it would end sales of its benchmark 30-year Treasury bond. The news triggered the largest single-day rally in the long-term bond since the stock crash of October 1987.

> > > FAST FORWARD > > >

2008 - October. From Politics in the Zeros:

Apparently it�s the Goldman Sachs Bailout Act

Bob Morris @ Oct 6th 2008 14:56

Category: Credit crisis Tags: bailout act, Neel Kashkari

Else how to explain that Neel Kashkari, a 35 year old protege of Paulson (former Goldman Sachs CEO), has been chosen to head the $700 billion bailout. Kashkari also used to work for Goldman, at a mere VP level and has a background in engineering. Wow, sounds like he�s just super-qualified for the job. I�m sure they looked long and hard before deciding, darn, no one in the entire country is better qualified than Kashkari.

Ethically, this stinks. The conflicts of interest are obvious. And the simple fact of the matter is that Paulson didn�t really spring into action until Goldman Sachs stock started plunging. Yes, there was and is a real crisis. But the sight of dear old Goldman cratering like all those plebian stocks was simply more than they could bear.

�Get ready to be disgusted by the coming investment bank / Goldman Sachs clusterfcuk,� I�m told�

2008 - November. From Marginalizing Morons:

In The Red, White, and GOLDman Sachs I wrote:

Remember that $85 $120 billion dollar government *bailout* that AIG got in September? Well the rumor mill had it that it was really a bailout of Goldman Sachs; that Goldman Sachs had $40 billion in AIG counterparty risk.

And then I went on to catalog all the Goldman cronies now shepherding the *bailout* funds.

Think my conspiracy theory is crazy?

There's more from the Washington Post last week:

Effectiveness of AIG's $143 Billion Rescue Questioned

A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing.

The deal that the Treasury and the Federal Reserve Bank of New York pressed upon AIG was intended to stop any domino effect of financial institutions falling because of their business ties to AIG. The rescue allowed AIG to provide cash to huge banks and other players who had invested in rapidly souring mortgages insured by the company.

Early this year, investors had begun privately demanding that AIG pay off its billion-dollar guarantees. But in mid-September, when the demands for cash reached a public crescendo, AIG had to admit that it didn't have enough cash on hand to meet the obligations.

In the first weeks of its federal rescue, AIG has used the loan money to post collateral demanded by these firms, sources close to those deals say.

The company may be forced to borrow additional federal funds for rising payouts to counterparties. Neither the government nor AIG is releasing information about the specific amounts paid to individual firms, but numerous credit experts say that the value of those mortgage assets is probably declining every week. That means AIG has to pay a higher price as part of its guarantees.

In February, internal notes show, board members discussed a growing dispute between AIG Financial Products and Goldman Sachs about the value of those assets when Goldman called for AIG to post collateral. AIG's chief financial officer warned of "Goldman's acknowledged desire to obtain as much cash as possible." But AIG's external accountants warned that it was they who alerted management to the dispute, not AIG Financial Products, and that the division was not properly considering the market in its pricing.

Rutledge warns that because there has been no public disclosure of AIG's payments to counterparties, it is impossible to know whether the pricing it is using now is proper....

Marginalizing Morons: More On The Secret Goldman Sachs Bailout

* * * * *

For more of the story, go to...

http://www.kycbs.net/GoldmanSachs.htm

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