Thursday, October 29, 2009

Goldman Sachs - liar, liar pants on fire!

With great power comes great lies

Not only are Goldman Sachs a bunch of criminals as I've stated before, but they're also a bunch of liars!

Oh sure. You're not surprised and think that this is a trivial point. But in my book, the worst sort of person is a liar. Why? Because you can't trust them. Even criminals can be truthful. But there's one sort of criminal that you can never trust to tell the truth - the psychopath. That's the sort of people were dealing with at Goldman Sachs.

So meet the head psychopath over at Goldman Sachs. His name is David Viniar and he is the CFO (Chief Financial Officer) and the chief spokesperson for the lying bunch of scum over at 85 Broad Street in Lower Manhattan. Here's a map in case you want to pay them a visit like Michael Moore did in his film "Capitalism: A Love Story".

View Larger Map

While your there, could you make a citizen's arrest of the Board of Directors of Goldman Sachs like Moore unsuccessfully attempted to do in his movie? Thanks. You'd be doing us all a big favor.

Janet Tavakoli calls 'em like she sees 'em

I'm a big fan of Janet Tavakoli - the author of "Dear Mr. Buffet". In a commentary which she released on her website on October 27, she pulls no punches. And she goes for a knockout when she calls David A. Viniar, Goldman’s CFO, a liar.
In my opinion, David Viniar’s (CFO of Goldman Sachs) comments in the fall of 2008 were a lie (see endnote), and for that matter, Lloyd Blankfein’s (CEO of Goldman Sachs) later comments to the Wall Street Journal were disingenuous. In the context of what was happening near the time of AIG’s implosion, the key question was “What is going on between Goldman and AIG?” Their rhetoric surrounding this issue is a deft dodge. They may claim they didn’t “technically” lie, but Goldman’s business exposure to AIG posed both credit risk and reputation risk. They seem to overlook elements of the former and put insufficient value on the latter.
JT Note: It is a strong statement to say that a CFO lied to the public, and in my opinion, David Viniar, Goldman’s CFO, lied about Goldman’s exposure to AIG while the AIG bailout was in progress in September 2008. Viniar spoke about risk management, but that is a separate issue from whether or not Goldman Sachs would have money at risk due to its direct business with AIG. Goldman Sachs would have been out billions of dollars in collateral had a bankruptcy‐like settlement been negotiated with AIG, and that is material (see also the commentary above).

This is what David Viniar said during his Sept 16, 2008 earnings call:

David Viniar ‐ The Goldman Sachs Group, Inc. ‐ EVP, CFO Sure. Without giving exact numbers, let me just tell you how we think about this. AIG and Lehman, big important financial institution counterparties to Goldman Sachs. We did and we do a lot of business with both of them, as we do with all other major financial institutions. The way we do business with financial institutions is by having appropriate daily margin terms. That is how we are able to do the volume of business with each other that we do. And that goes for AIG, Lehman, and also Morgan Stanley, and JPMorgan, and Citi, and UBS, and Credit Suisse. That is how we manage our risk. In addition to the margin terms, we augment our risk management with appropriate hedging strategies. You heard at the beginning of my remarks that we believe one of the biggest challenges we have is to avoid large concentrated exposures; and we took that very much into account in managing our credit exposures to Lehman and to AIG, as well as we do with any other financial institution. Given that, what I would tell you is given the outcome at Lehman and whatever the outcome at AIG, I would expect the direct impact of our credit exposure to both of them to be immaterial to our results. [This last emphasis was added by Ms. Tavakoli.]
She's not the first to notice CFO Viniar's flirtations with the truth.

Gretchen Morgenson of the New York Times, who deserves a 2nd Pulitzer Prize, pointed out the same misstatement by Viniar in her iconic piece on AIG's demise written on September 27, 2008. That's right - 2008. That groundbreaking article titled "Behind Insurer’s Crisis, Blind Eye to a Web of Risk" revealed the GS-AIG symbiotic relationship in amazing detail given that the bailout was just taking shape at the time.

Here's a quote from her article which you'll find familiar.
"Few knew of Goldman’s exposure to A.I.G. When the insurer’s flameout became public, David A. Viniar, Goldman’s chief financial officer, assured analysts on Sept. 16 that his firm’s exposure was “immaterial,” a view that the company reiterated in an interview."
She's referring here to the same Sept 16 earnings call that Tavakoli refers to. And Morgenson also highlights the use of the term "immaterial".

It so happens that I wrote an article in my blog in March 2009 titled "Welcome to the Wall St. jungle" where I analyzed Morgenson's article in light of the revelations that had come out at that time about the Fed bailout of AIG. I highlighted the passage from Morgenson above and added a comment of my own.
"Is the NYT calling GS's CFO a liar?"
It's nice to see someone with the credibility of Janet Tavakoli backing up my sentiments. My guess is that Viniar is so used to lying and getting away with it that it is just second nature to him. After all he has powerful people like Robert Rubin and Hank "the Hammer" Paulson ready to defend him.

Hank the Hammer

No not this Hank the Hammer!

He's a character in the way popular video game, World of Warcraft (WOW). But he's got nothing on the real life Hank the Hammer who was described as "the most powerful man in America" in his heyday at the height of the economic "crisis".
The most powerful man in America today is not President Bush. Nor is it the two men fighting to replace him, Barack Obama and John McCain. It is Hank 'the Hammer' Paulson.

For make no mistake, it is the U.S. Treasury Secretary who is calling all the shots on the credit crunch crisis. At the word of this former banker, the American taxpayer has committed hundreds of billions of dollars to save some firms (such as insurance giant AIG) and let others (such as Lehman's) go to the wall.

So who is Hank Paulson, and what gives him the right to play God with the world's banking system? Paulson, 62, was brought up in suburban Illinois, where he won a reputation as a tough, sporting child.

He was an American Football hero at high school and university, and it was on the football field that this 6ft 2in bear of a man won the Hammer nickname. He still works out every day and one former colleague says: 'Hank comes across as a big, tough, redneck.'
What I really think that former colleague meant to say is that Paulson comes across as a hired thug or a Mafia enforcer.

Lock 'em up and throw away the key

I hope that this story gets some follow up. It's truly frustrating to see all these revelations come to light and then nothing is done to go after the "too big to jail" criminals like Paulson and Geithner.

You might also enjoy another article I wrote about Goldman Sachs back in September 2008 titled "Goldman Sachs: Wall St. Gangstas". It's become popular enough that if you do a Google search for "goldman sachs criminals", it is one of the top results. :)

Related posts

No comments: