SEC Fines Goldman Sachs $550 Million: A slap on the Wrist For Being Naughty Boys

Stealing off workers is one thing. But there has to be some honor among thieves.

As a shop steward in my workplace for many years I was used to hearing the boss tell me that the co-worker I was representing “Needed to be taught a lesson in order to change behavior”.  The lesson might be a week or two off work. To lose 50% of their monthly earnings when the cost of the roof over their head might consume up to 75% of their income is quite a severe reprimand.

By comparison, the US Securities and Exchange Commission (SEC) levied the highest fine in history on Goldman Sachs the financial speculation outfit this week. Goldman was fined $550 million for giving what the firm admitted was “Incomplete information” to its clients; its clients being investors.

What Goldman Sachs actually did was rip off investors to the tune of $1 billion.  As the Guardian put it: Goldman packaged and sold dubious home loans, “without telling investors that one of its biggest hedge-fund clients had hand-picked the loans that went into the package, and had bet that they would fall in value.” (1) John Paulson (No relation to former treasury secretary, Hank Paulson, another Goldman alumni), the Hedge Fund manager in question, bet these deals would sour and made a small fortune, as did Goldman Sachs as a company.  No wonder Goldman could pay $16 billion in bonuses to its traders last year.  Wall Street as a whole paid out $32 billion in bonuses in 2008, slightly less than 2007.

Goldman also persuaded rating agencies to upgrade many subprime mortgages, which were then packaged and sold as prime, and we know what happened there. The subprime collapse that gave way to the present global crisis is estimated by some to be the largest loss of wealth by African Americans in history.  David Harvey estimates that from 1998 to 2006, African Americans lost between $71 and $93 billion in asset values due to the subprime collapse.  By the end of 2007, two million people families had lost their homes. (2)

Goldman’s fine has to be seen in perspective as $550 million is as much as the bank takes in trading revenue in just one week. And quite naturally, Goldman neither admitted nor denied any wrongdoing.
The real issue here is that the firm ripped off its own.  The global havoc misery and death that bankers like those that run Goldman Sachs caused working people and the poor is not what the fine is about.  Its one thing to rip off workers, another when they blatantly steal off each other.

Because corporations are treated as people, the culprits pretty much get off scot-free.  Maybe an individual here and there will be hung out to dry in order to placate the seething masses, but overall, they keep their plunder.

As wages, jobs and public services, all fall under the executioner’s ax, and the media and Union officials all tell us that this is necessary as we are in “hard times”, that we all have to “share the pain”, we need to keep the likes of  Goldman Sachs and the individuals that run it in mind.  We all know that the government is not our government, it is the government of capital and defends the interests of capital, but with Goldman, the link between the firm and the state goes deep.

Hank Paulson
Paulson the former US Treasury Secretary is also a former Goldman Sachs CEO.  He crafted the deal that ended up giving more than $700 billion of taxpayer’s money to the bankers to help them get out of the mess they created, much of this money ended up in Goldman’s coffers. Hank loves wildlife and wants to save the planet.  He always wanted to be a park ranger he says.  Hanks wife “leads bird walks” in Central Park and “Teaches a course to Harlem schoolchildren called For the Birds”.  Says a 2004 Fortune magazine bio (3) The Paulson’s just love black folk.  What hypocrisy: destroy the wealth of the families who raise the children and make millions doing it, then spend a few condescending hours taking their kids on walks.  It’s all about feeling good themselves.

Paulson’s net worth at about $400 million in 2004 is said to be over $700 million by the end of 2009. Not bad for 5 years, he must have worked a lot of overtime.

Robert Rubin
Rubin is another former Goldman Sachs employee, serving as a co-chairman.  He too was US Treasury Secretary under the two Clinton terms. He is one of the main culprits in the disaster that followed the subprime collapse.

Rubin was worth about $50 million in 1991 and after his government job joined Citigroup and resigned after criticism of his performance there.  He received more than $126 million in cash and stock for his 8 years at Citi.  The collapse of city left the taxpayer with a $350 billion bill. Robert Rubin's son Jamie was one of Obama's main Wall Street fund-raisers.

Stephen Friedman
Stephen Friedman was a Goldman Board member and Chairman of the New York Federal Reserve Board. This is what the Wall Street Journal said about Friedman:
“During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.

The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They've since risen $1.7 million in value.” (4)

Almost a $2 million wage income increase in two and a half months---not bad and even more overtime worked than Paulson.

Lloyd Blankfein
Lloyd is a young buck, present CEO of Goldman.  He earned $53 million in 2006 and got in trouble for telling the world in a Financial Times interview that Goldman was “Doing God’s Work”.  Like Hank Paulson’s wife he feels guilty about what he does, stealing all that money and destroying the lives workers and the poor, so he serves on the board of the Robin Hood Foundation, described as a charitable organization dedicated to eliminating poverty in New York. Like the others though, he can’t stop stealing and perpetuating poverty in New York; he can’t stop the addiction to money without working. No doubt Lloyd will eventually move in to public service through the Democratic Party like many of his predecessors. Goldman employees and their relatives contributed almost a million dollars to Barak Obama's presidential campaign


Timothy Geitner
Timmy is the present US Treasury Secretary (this post is one of their favorites) and has been closely associated in one way or another with Goldman Sachs, Robert Rubin, Sanford Weill and others. (He is also the guy who, when employed at the IMF, forgot to pay his taxes.) (5) Geitner is just learning the ropes when it comes to the plundering business; his estimated net worth is only around $2 million. He got a nice boost when he left his Federal Reserve post though.  He received more than $400,000 in severance payment and between $50,000 and $100,000 for unused vacation and comp time. He once worked for Kissinger and Associates, Kissinger, some young people may not be aware, is a terrorist residing in the US.  He was one of those responsible for the mass murder of more than three million Vietnamese people and 70,000 US workers.

I was intending to include a few more people in this commentary but, to be honest, the subject of my own writing is making me sick as well as angry.

The last thing I will add is that when you hear or read in their media that we have to tighten our belts, or that we all have to “share the pain”. And when your Union officials (for the declining number of workers who are in Unions) repeat these arguments.  Think of the folks above and how much they stole from us.

In the words of Joe Hill: Don’t Mourn, Organize.

(1)  Guardian UK 7-17-10
(2)  David Harvey: The Enigma of Capital
(3)  Hank Paulson's Secret Life: Fortune Magazine 1-12-04
(4)  New York Fed Chairman's Ties to Goldman Raise Questions: WSJ 5-4-2009
(5)  Read: http://www.mcclatchydc.com/2009/01/14/59703/were-geithners-unpaid-taxes-errors.html