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Goldman urges clients to stay, CEO at Obama speech
1 of 2. Pedestrian pass the offices of Goldman Sachs in London April 20, 2010.
Credit: Reuters/Toby Melville
NEW YORK/FRANKFURT |
NEW YORK/FRANKFURT (Reuters) - Goldman Sachs Group Inc intensified its public relations counteroffensive over fraud charges on Thursday as the company's chief executive watched President Barack Obama urge Wall Street to back regulatory reforms.
Goldman Sachs CEO Lloyd Blankfein, who will testify before a Senate subcommittee next week, looked on as Obama scolded Wall Street for "furious efforts" to block reforms.
Goldman is trying to contain the fallout from charges by the U.S. Securities and Exchange Commission over the way it structured and marketed a product tied to subprime mortgages.
Current and former Goldman officials will appear before the Senate Permanent Subcommittee on Investigations next Tuesday to testify about the role of investment banks in the subprime mortgage disaster.
Fabrice Tourre, the Goldman employee who was charged by the SEC, is also scheduled to testify, along with Goldman Chief Financial Officer David Viniar and Managing Director Michael Swenson.
In his speech, Obama urged Congress to press ahead with an overhaul of Wall Street regulations and warned of the risks of another financial crisis should safeguards not be in place.
Blankfein's appearance at the event, accompanied by Gary Cohn, Goldman's president and chief operating officer, came as Goldman urged clients to stay after German bank BayernLB cut its ties to the New York bank.
One high-profile client, Blackstone Group LP CEO Stephen Schwarzman, said the private equity firm would stick with Goldman.
Goldman shares were up 0.57 percent at $159.83 in afternoon trading after falling earlier in the day.
'PRESUMPTION OF INNOCENCE'
Goldman has denied the SEC charges, and is calling clients and sending emails rejecting the accusations.
Goldman says it "would never condone one of its employees misleading anyone, certainly not investors, counterparties or clients," according to a person who saw one of the emails.
"Were there ever to emerge credible evidence that such behavior indeed occurred here, we would be the first to condemn it and to take all appropriate actions," the bank said.
BayernLB said the severity of the accusations against Goldman prompted it to sever ties with the bank, according to a letter sent by the German landesbank's chief executive and seen by Reuters.
BayernLB had hired Goldman as an adviser to bolster its capital position as part of restructuring efforts following a bailout.
"Even if (SEC) proceedings are still underway, in which the presumption of innocence must prevail, the accusations leveled against your institution are so severe that the Bavarian landesbank, which is itself under close scrutiny and needs to adhere to the highest ethical standards, feels compelled to take this step," the letter said.
BayernLB did not account for a substantial amount of Goldman's business in Germany.
Germany accounted for 6 percent, or $995 million, of $16.3 billion in investment banking fees generated by Goldman between 2005 and 2009, according to Thomson Reuters data.
Mn Services, an asset manager owned by employees and unions, which manages 62 billion euros ($83.3 billion) for Dutch pension funds, said on Thursday it was "not happy" about Goldman, and would not rule out consequences for its relations with the bank.
(Reporting by Christian Kraemer in Munich, Alexander Huebner in Frankfurt, Steve Eder in New York and Steve Slater in London; Writing by Edward Taylor and Robert MacMillan; Editing by David Cowell, Gerald E. McCormick and Ted Kerr)
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The media’s hype is a smoke and mirrors ploy to pass the Bill.
This Bill will give to the Federal Reserve, a puppet of the huge monopoly banks,including Goldman, control over their remaining banking competition, what their media calls the “shadow banking system”. This competition is composed of financial institutions, such as, Fidelity, Vanguard, Charles Schwab, American Century, etc… which act like banks with checking accounts, savings, mutual funds, lending and brokerage services.
Contrary to the media hype of a “new” financial order, the recent financial crisis created by the Federal Reserve has eliminated banking competition and kept the “old” financial order in power that has governed since the reign of Abraham Lincoln (1861-1865).
In three years these monopoly banks have bankrupt, bought, or gained control of much of their banking competition, from Lehman Brothers to CIT.
It should be no surprise that the largest monopoly banks left in power are Goldman Sachs, Citibank, J.P. Morgan Chase, Wells Fargo, Bank of America, Mellon Bank of New York and Morgan Stanley.
All, except Bank of America, are part of the “old” financial order that mushroomed into power about 150 years ago during and after Lincoln’s Tax War. Remember, Lincoln declared in his First Inaugural Speech (paragraphs 4, 21 and 32) that he started his war solely to collect his new 40% import tax from Southerners under the Morrill Tariff Act of 1861.
With the passage of his National Bank Act of 1863, Abraham Lincoln, a puppet of Northern banks and industries, re-established Alexander Hamilton’s centralist banking system in the United States, which set the foundation for the present day Federal Reserve System.
Under his First Legal Tender Act of 1862, Lincoln printed worthless paper money displaying images of Alexander Hamilton and Lincoln’s Treasury Secretary Salmon P. Chase (as in Chase Bank), which ultimately destroyed State banking.
Consumers and small businesses will have to lick the boots of the few elitist banks of the “old” financial order to obtain a loan. Investors and savers will have few options in their choices for high yields and returns on their investments.
Right now these monopoly banks are borrowing from the Federal Reserve at 1% and lending to consumers, via credit cards, at up to 30%. Price gouging is always the result of establishing monopolies.
http://wjmc.blogspot.com/2010/04/banking-and-financial-services-are-in.html
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