Matt Taibbi: Convinced that Goldman Sachs can be hurt if enough people keep the pressure on

[seafan]

Goldman Sachs is reeling under public pressure

Jul. 2 2009



FILE - In this Feb. 11, 2009 file photo, Goldman Sachs & Co. Chief Executive Officer and Chairman Lloyd C. Blankfein, left, and JPMorgan Chase & Co. Chief Executive Officer James Dimon, testify on Capitol Hill in Washington, before the House Financial Services Committee. AP



Taibbi writes:

You acknowledge that we may monitor your use of the Services for our own purposes (and not for your benefit). We may use the resulting information for internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory body and in compliance with applicable law and regulation.via Is Goldman Legally Frontrunning Its Clients? | zero hedge.

After watching its thoroughly maladroit handling of several p.r. problems this week, I’m absolutely convinced that Goldman Sachs can be hurt if enough people keep piling on with the pressure. The latest evidence of this is its abject collapse in the face of questions from Zero Hedge about the possibility that it is using the data its takes from users of its website to front-run those same people.

Front-running takes place when a bank or broker-dealer– say, Goldman, Sachs — executes a trade for its own account before filling its customer’s order. Since a large enough trade (executed by institutional investors, for instance) can actually move the price of the security in question, front-running can be a very profitable activity. It’s sort of like fast-food insider trading. It is common knowledge that front-running on Wall Street is rampant, and I interviewed more than one person for my recent Rolling Stone story who accused Goldman of front-running its big clients in all sorts of arenas, from the internet IPO years to the commodities markets.

What caught Zero Hedge’s attention was a curious disclaimer uncovered on Goldman’s website, which includes a trading platform that visitors can use to execute trades. At one point the disclaimer read:

Monitoring by GS: Your use of the products and services on this Web site may be monitored by GS, and that the resultant information may be used by GS for its internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory organization.

Subsequently readers uncovered an even more sinister disclaimer that appears on other Goldman documents (see the quote at the top of this post with the key line “and not for your benefit”). So Tyler Durden over at Zero Hedge wrote to Goldman to ask if this meant what it quite obviously seems to mean, and got this response from the bank’s Senior Vice Scoundrel, Ed Canaday. Note the way he seems to be addressing Dick Durbin, which looks like a case of wish-fulfillment to me:

Dear Mr Durbin:
This is in response to your recent blog about our web site disclaimer. It is quite usual for websites to have disclaimers that refer to the monitoring of site usage. Most web sites, including yours we noticed, track usage by their visitors. This is primarily used for marketing and to help inform decision about enhancing content.
Your suggestion that we monitor our web site to facilitate front-running is untrue and offensive.
Sincerely
Ed Canaday
Vice President
Goldman, Sachs & Co.

In exactly the same manner that Goldman demonstrated with regard to my story, Canaday avoided any of the factual concerns that Zero Hedge presented about the curious disclaimer; in fact his letter, if anything, is such a classic non-denial denial that it really just confirms everyone’s worst suspicions. Most notably, he doesn’t specify what “internal business purposes” the company is talking about, and while he insists it is not front-running, it’s a very thin, curiously worded denial.

That a company as rich and powerful as Goldman would stoop to peering through the web version of a locker-room peephole to make a few extra pennies either front-running random trades or somehow using visitor data “not for their benefit” shows how completely and utterly morally absent this company is. There is not an ill-gotten dollar they will not chase, no matter how small or insignificant the sums might be.

Word should be spread about this and anyone who used the Goldman 360 portral for trading should seriously investigate this situation, as it is entirely possible you’ve been ripped off — legally, perhaps, although how much “legality” a disclaimer like that can confer is a serious question in my mind.

More to the point, the fact that Goldman is getting enough public pressure that it feels it has to respond to these queries shows that the company is reeling. And the fact that their public statements have been so hilariously transparent and clumsy shows that they’re rattled and don’t know how to handle this kind of heat, which they’re not used to getting. Kudos to Zero Hedge for applying the pressure; readers who want to see Tyler’s very funny response to Canaday should read here.

Matt Taibbi takes it to Goldman Sachs, and they are squealing.



Bust it up, Mr. President. And while you're at it, the Federal Reserve should be next in line.

[Voltaire]

1. There are no political solutions to the cancer that is Goldman Sachs

At least there are no political solutions that any politicians that WE know are willing to offer. Not even Obama.

It begs the questions, what ARE we to do about Goldman Sachs, seeing as every branch of the Federal Government appears to be a wholly owned subsidiary OF Goldman Sachs. Why don't we just use our proper corporate name, instead of the United States of America we can be the Duped Vassals of Goldman Sachs. Isn't that closer to reality?

Realities like these make me long for Paris in 1789 and the guillotine. For that is the ONLY way to exorcise this particular cancer.

Or the Loki scene in the movie Dogma, where he shoots up the whole fucking office of suits. Either way works for me.

[notesdev]

7. The solution is vigilantism

Individuals with nothing to lose taking sniper shots at GS execs is pretty much the only way this ends (other than the total debt slavery of the entire human race).

The proper solution, of course, is to have the government actually enforce the law, but I think we can pretty clearly see that there isn't a prayer of that happening with so many government people coming directly from GS, and so many others bought off.

[Voltaire]

12. I think you are correct

nt

[KittyWampus]

11. I hope your ass goes to the guillotine first. Anyone who would invoke that madness has

either no understanding of what actually went on or serious problems.

[Voltaire]

13. I have a very clear understanding of what is going on

And I stand foursquare behind my assertions and solution. Not to worry though, it won't happen here. This country is in love with the lies it tells to itself, so it will never believe until its way to late the danger that its in. There will be no changes in how we live unless you find a way to get through to the suits on Wall Street. And it is clear that talking to them is NOT that way. Got any other ideas? The madness is that of the CAPITALISTS not me. If my wish comes true, it will be because the bankers would not listen when they had the chance.

[Voltaire]

14. Actually now that I think of it, I do have a problem

with liars, cheats, thieves, robber barons, Wall-Street executives, bankers, corporatists, and all the filthy fucking politicians who service them, to the detriment of all of us. How's that for really redundant??!! That's my problem. Should be your problem too.

[chill_wind]

2. Follow the GS money to Dems.

President Obama is their million dollar baby. Don't look to Dems to bust up this octopus.

Goldman Sachs




Goldman Sachs, one of Wall Street’s most prestigious investment banks, was also among the many banks in 2008 and 2009 to receive billions of dollars in taxpayer money to help it stay afloat. Like others in the securities industry, Goldman Sachs advises and invests in nearly every industry affected by federal legislation. The firm closely monitors issues including economic policy, trade and nearly all legislation that governs the financial sector. It has been a major proponent of privatizing Social Security as well as legislation that would essentially deregulate the investment banking/securities industry. The firm tends to give most of its money to Democrats. A number of high-ranking government officials in recent years have spent part of their careers at Goldman Sachs.


Cycle Total Dem Republicans % to Dems % to Repubs

2008 $5,842,471 $4,392,720 $1,439,411 75% 25%
2006 $3,502,866 $2,170,911 $1,294,005 62% 37%
2004 $6,428,438 $3,963,753 $2,446,185 62% 38%
2002 $3,513,035 $2,292,040 $1,219,995 65% 35%
2000 $4,432,977 $2,764,185 $1,662,292 62% 38%
1998 $1,938,166 $1,225,252 $683,914 63% 35%
1996 $1,816,563 $997,747 $816,316 55% 45%
1994 $1,026,235 $562,760 $462,675 55% 45%
1992 $1,660,310 $908,295 $751,515 55% 45%
1990 $717,621 $473,716 $243,905 66% 34%
TOTAL $30,878,682 $19,751,379 $11,020,213 64% 36%


The numbers on this page are based on contributions of $200 or more from PACs and individuals to federal candidates and from PAC, individual and soft money donors to political parties, as reported to the Federal Election Commission. While election cycles are shown in charts as 1996, 1998, 2000 etc. they actually represent two-year periods. For example, the 2002 election cycle runs from January 1, 2001 to December 31, 2002. NOTE: Soft money contributions were not publicly disclosed until the 1991-92 election cycle and were banned after the 2002 cycle.

Data for the current election cycle was released by the Federal Election Commission on March 02, 2009.

http://www.opensecrets.org/orgs/summary.php?id=D000000085

Top Recipients

Senate Obama, Barack $983,245
Senate Clinton, Hillary $410,350
Presidential Romney, Mitt $234,275
Senate McCain, John $230,095
House Himes, Jim $150,498
Senate Dodd, Chris $110,000
Presidential Giuliani, Rudolph W $109,450
Presidential Edwards, John $68,750
Senate Specter, Arlen $47,600
House Emanuel, Rahm $37,750

http://www.opensecrets.org/orgs/toprecips.php?id=D000000085




Barack Obama (D)

Top Contributors 2008



University of California $1,385,675
Goldman Sachs $980,945
Microsoft Corp $806,299
Harvard University $793,460
Google Inc $790,564
Citigroup Inc $657,268
JPMorgan Chase & Co $650,758
Stanford University $580,904
Sidley Austin LLP $574,938
Time Warner $547,951
National Amusements Inc $541,251
WilmerHale $524,292
UBS AG $522,019
IBM Corp $518,557
Skadden, Arps et al $510,274
Columbia University $503,566
Morgan Stanley $490,873
US Government $479,956
General Electric $479,454
Latham & Watkins $467,311



Top Industries of Obama Bundlers

http://www.opensecrets.org/pres08/bundlers.php?id=N00009638

Lawyers/Law Firms $12,600,000 97
Securities & Investment $8,250,000 61
TV/Movies/Music $3,200,000 20
Business Services $2,400,000 19
Real Estate $2,050,000 20

http://www.opensecrets.org/pres08/bundlers...


Feel free to distribute or cite this material, but please credit the Center for Responsive Politics. For permission to reprint for commercial uses, such as textbooks, contact the Center

[Hannah Bell]

9. goldman, citi, morgan. the big three derivatives traders.

[chill_wind]

3. Radical campaign finance reform is what is needed

before we will ever see govt even begin to tackle this, the banks, the insurance lobbies and all the other greatest lobby predators that have seized our "representative" system of government.

[bvar22]

4. But how do you convince the people benefiting from bribery...

...to bite off the hand that feeds them?

The "Pay to Play" system works great for the winners.

[Voltaire]

5. Never happen

Unless their ability to access huge sums of capital is destroyed. Doesn't leave many options does it?

[lordsummerisle]

6. I get really frustrated

when I read threads like this...I just don't see Wall Street influence declining short of a complete economic collapse.

[troubledamerican]

8. Rolling Stone Magazine deserves a special kudos from YOU

If you want to reward True Media Bravery -- a nearly extinct species --

then you may want to drop a 15-second thanks to Rolling Stone:

[email protected]

Thanks.

[KittyWampus]

10. The Federal Reserve? Obama's Administration (via Geithner) proposes the Fed be in charge

even more than it is now.