Goldman Sachs Corporation is facing a new wave of charges of not looking out for the interests of its clients this week, as one corporate vice president published a resignation March 14Â letter in the New York Times and the company agreed March 13 to pay a $7 million fine to the Commodity Futures Trading Commission. Goldman Sachs stock took a hit on the two-pronged attack March 14, losing $2.2 billion in stock value with a three-percent plunge, though the stock recovered significantly the next day.
Goldman Sachs is Wall Street's investment banking giant, with 33,000 employees, $28.8 billion in annual revenue and $4.4 billion in profit in 2011.
Former Goldman Sachs Vice President Greg Smith wrote in the March 14 New York Times that “I can honestly say that the environment now is as toxic and destructive as I have ever seen it.†Smith complained that the client's interests had been “sidelined†to the corporate interests and that “When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.†Smith resigned as executive director of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, a middle level position with the firm. “Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them,†Smith charged of the Goldman Sachs corporate culture.
Story continues with much information.
How interesting, it appears Americans (a) are just getting ripped off all over the place.
our jobs
the economy
food prices
health care
dental care
gas prices
internet
free speech
the right to be a farmer
growing your own garden soon....
Hmmmm
And here is a guy who actually has a conscious and feels bad and knows right from wrong, and has a heart, cares about others although he was part of it too. Would he have kept going if circumstances were different?
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Comments: 30
Why is that so hard to understand? Why is that not obvious to everyone?
Money brings power. Those who want power must control money.
If you have $10 billion you have power. GS has control of billions. GS has and uses power. If one has lots of money one has lots of power. One may choose not to use that power but the power is possessed, it's available.
Without money, one has very little power. Please consider Gandhi who had as little money as one can imagine yet was an Icon for millions as an opponent of government oppression. So one could say that Gandhi had power but his influence was propagated by political parties who did use money. It was spread by newspapers (money again). It was only because Gandhi had the support of people with big money that he succeeded to the extent that he did.
It is strange, but it was really "too big to fail", however it failed. It was a few years before the idea of "too big to fail"... In a way it started the trend.
So, what's is different about these guys who are doing the same sort of things Anderson people did? Actually Anderson crowds were preparing the figures for Goldman Sacks and company to screw their customers.
I read a few comments on Goldman Sacks. The theme of all the articles were that some people were making money. Which I don't dispute.
This idea is still nagging me though. There were some people who made money with Madoff for twenty years... A couple of days ago, the trustee taking care of the investors defrauded by Madoff, dropped a lawsuit against the Mets' owners who were making money from a few years from Birnie's dealings...
Was Goldman Sacks another ponzi scheme? Is it that they are too big to fail, so that we forget their wrongdoings?
But in this case, is it fair to chase poor Bernie with such a vengeance?
I did not work with them, but I did work on them for a little while. I was very fascinated by the developments and I followed their move. I had a few acquaintances working in different positions for the company and I was familiar with the gossip.
As far as Arthur Anderson (this was the original name which was changed to Anderson Consulting) ceased to exist in 2002 by surrendering their accounting license. They were in business since 1913 as tax accountants... They later got into the computer business. Actually, for a long time they were grooming (sixties, seventies and eighties) CEO's for the big companies. Any super accounting major had a job at Arthur Andersen and in three to five years they used to end up at the helm of big corporations...
Accenture is the consulting arm that is still in existence, but this is after the main company went out of business.
The Enron scandal started around October of 2001 and right at the very beginning there was the scandal with the shredded documents. Practically by January of 2002 they were finished... The only reason that no one found out about spectacular trials was that they surrendered their license, and their people vanished in thin air...
OK, it was not a matter of a couple of weeks, probably a matter of a few months...
My memory may play tricks on me, but I am sure that you may Google the company and you will find more details...
It's my remembrance, though the exact time frame might be off, that Arthur Anderson changed to Anderson Consulting because of the scandal. Arthur Andersen was no more, and I believe my last dealing with them was in late 1999 or early 2000. There was this "dormant" time period when they were Anderson Consulting, but no longer of the Big Five, before Accenture took over. So I was always of the impression that their accountants had something to do with the later Enron scandal, but not that they fell at near times. Now that you say that we just didn't hear about the Enron scandal until later, that may be why I didn't connect the times of their demise more closely. I do want to look it up now, though.
It wasn’t the beginning of 2000 that my last dealing was with AA, but the beginning of 1999. The Colonial scandal for which the litigation had gone on for several years, was settled in spring of 1999, and that was the end of Arthur Andersen as part of the Big Five. Although you will see that on the Internet, articles cite Andersen as folding in 2002, that’s not really so. That was Andersen Consulting that folded in 2002, the name under which they reorganized and continued to function on a limited basis until they lost their accounting license in 2002. However, they were defunct as Arthur Andersen right after that Colonial lawsuit was settled in April of 1999. That’s why I remembered that there were a couple of years difference in the time of the fall of Enron and of Arthur Andersen.
Andersen Consulting, which did not lose their license, but they surrendered it in a deal to kill the prosecution, was not doing too much computing consulting. Actually the computer bit was just a cover up for their accounting business...
The reason for which they were forced out of business was the accounting records they kept for Enron, which by the way were cooked and were covering up Enron's problems from the investors and government. Actually the real reason was the shredding of the records. The FBI and company spent long nights to piece together strips of shredded paper to show a few irregularities. Arthur Andersen did not fall for the most important crime they committed, cooking books. They fell for destroying evidence and for interfering in criminal investigation...
They have never been held accountable for the crime of falsifying documents, but it was much easier for everyone to end this way. The Justice Department scored an easy victory, the executives did not have to be accountable for the Enron fraud and the company could survive under a totally different face, history and reality...
The version that you are bringing up is as clean and as PR prone as they could get for the History books, but I lived it, and I witnessed it.
It was a real treat to follow the events in the press at the time, and to know one person whose career was very much connected to the company... If you want to have fun, get the Chicago Tribune issues from that period and you will have fun...
If you remember, Al Capone did not go to jail for the numerous crimes he committed, directly or indirectly. He went to jail for... tax evasion. It was the only thing the prosecutors were able to come up with...
Lucky Luciano did not go to jail for the number of people killed and lives destroyed in New York, he went to jail for prostitution a business he hated it, never wanted to be involved with. He did not feel right about taking advantage of prostitutes. He was declaring that he used prostitutes as a customer, but he did not feel right to take material advantage of them... He was writing in his memories that he always paid the asked price, gave a little tip, but that was as far is he went. It was like buying a service from a manicurist. Ethics come in different forms...
Yet, the famous Dewey, blackmailed prostitutes in New York to offer false testimony to get Lucky Luciano.
So it is a common practice...
Anderson Consulting, the "legally laundered" version of Arthur Anderson did not vanish because of cooking the Enron books, but because they destroyed the books which were subpoenaed by the Fed ... Which by the way existed on computer records. It was much easier to get them on technicalities rather than on actual data...
Besides it was much cheaper. Prosecuting Enron was a fiasco. The money that its owner stole, finally ended up in the family anyway, because he died before sentencing...
You know, the official recorded history is always boring and uneventful, but the real history, the sequence of events that actually took place and are never in the books are always fascinating...
You'll see even in that article that it says that Andersen Consulting lost its accounging license in 2002 when they ceased to exist, but Arthur Anderson had already ceased to exist in 1999. That Colonial Bank scandal was their demise.
Whateve involvement you know Anderson Consulting had with Enron is nothing I am privy to. That may be so, but it doesn't change anything I said above. I only speculated that they had something to do with Enron because I knew that Enron was one of Arthur Andersen's clients before they reorganized to Andersen Consulting, but I didn't know that Enron stayed with them after the Big 5 Firm fell. This is news to me, and maybe it's so. My only interest at the time was personal because I knew I was going to lose a good account and I always liked to be proactive and add new accounts to make up for loss of any.
Before we do, please Google Enron, Arthur Andersen shredded documents. Here is one of the things that popped up.
If you do not remember anything about these events, you either did not watch any tv news during those few months, nor did you read any paper, or maybe you had been in vacation in the islands all that time!
By the way, I usually get the message in only one notification now that Gather works, why are you sending the same message twice?
Next case: If you thought the sub-thread was useless, you shouldn't have replied within the useless thread, and then you needn't have concerned yourself with the poor, distracted readers because I wouldn't have had anything to reply to. However, I can deduce that you just don't want me to reply so you can say I didn't read the papers and have the last word on that, or that you want the readers to think that you care more about them than I do, or both. The only reason I even responded to your initial comment here is because I cared about the readers having erroneous information and felt I could help clear up the false statements you made. It's getting more and more difficult with each succeeding comment you make to keep up with all of them, however.
Case 3: I saw the Wiki article. The 5 pages of news highlights about Arthur Andersen from the Hartford Courant are much more accurate than that Wiki article. The Wiki article is assuming Arthur Anderson (AA) was still a Big 5 accounting firm at the time of the Enron scandal which it was absolutely not. What it does not reveal in either article is that AA was not only one of the Big 5, but the biggest of them. That Colonial Bank scandal and the settlement in 1999 was AA's demise. Read my linked article. They lost the case and the damages were $90 million. After this, they lost several clients, were bankrupted and reorganized to call themselves Andersen Consulting. (AC) They were still a very large consulting firm, but if they took on any new clients after that, they weren't significant because no one trusted them. They also lost a lot of clients. The little jokes around the office at that time went like, "Guess we'll have to call them the Big 4 now." They were a very snooty firm, and they only hired candidates presented from the other 4 of the Big 5 when they were still AA. When they changed their name after reorganization to AC, they did no new hiring, at least not from headhunters, both because they could not afford to,and also because as the Colonial investigation revealed more and more dirt, it became exceedingly difficult to attract good candidates from the other 4 firms.
Case 4: I didn't follow Arthur Andersen's specific role in the Enron scandal. The Wiki article states that AC voluntarily gave up their license, but they're still referring to them as if they were AA and a Big Five firm. They're wrong on the latter, and misleading on the former. If you look at page 2 of the article to which I linked, it was from great pressure by Richard Blumenthal, the then Attorney General of CT, in 2002, because AC was involved in the Enron scandal, to revoke their license. So maybe they volutarily relinquished their license, but if they hadn't done it voluntarily, it was going to happen anyway.
In the case of Arhur Andersen above, most people not in involved in the accounting industry hadn't heard much of Arthur Andersen before Enron, yet this company was involved in so many "cooking book" scandals and lawsuits prior to Enron, that it was only those of us who knew about some of them that didn't pay much attention when they were first implicated in the Enron scandal because by then, we had already established the notoriety of the company and the general attitude was "What's new?" Some people I knew followed the Enron story, but I wasn't interested by then. It was much too matter of fact to me to be news by then. Those stories didn't make headlines in the national news, but were mostly news only in the states in which the client firms resided unless you're an avid reader of WSJ. Even then, they don't always report all the details accurately. (I saw an example of that in an article I was reading recently by an insider who explained an error.) I'm sure that if we knew the history behind this Goldman Sachs story, this wouldn't be news either, and we can't even believe what the various players are now saying because it's all to CYA. (cover your butt) The same thing is true of Bernie Madoff and his ponzi scheme. It was so huge, it couldn't be covered, however, in the first place, hedge fund managers all work with insider infomation and, in the second place, Bernie Madoff was exposed because he had done it for so long and it affected so many people. There are hundreds of others even now who should be in prison with him. Of course, you can read stories that will tell you that what Bernie Madoff did had nothing to do with hedge funds. And really, it doesn't make a huge difference how he scammed so many unwitting and trusting people, but just to further show you how disparate stories about these finanacial scams are.
When it comes to securites, you can't even be what is considered successful unless you're a crook. I don't pay a whole lot of attention to any of it anymore because it just isn't a surprise, and what we get is only a fraction of the real story.
I also knew a very honest accountant who was thrilled to be hired by AA, and about 3 years after joining he suddenly left and just said he didn't think they were as good a company as they were supposed to be. I bet anything, he saw the writing on the wall and did not want to be involved! He loves IBM, an honest company.
"Bernie Madoff was exposed because he had done it for so long and it affected so many people"
I thought that being exposed implies that one keeps doing something, usually wrong, for a long time, taking advantage of others trust, until one day the person is discovered and the truth being brought to life, thus exposing it...
Bernie Madoff went to his office one day, and told everyone that everything was a fraud, he was out of money and he can't service his obligations.
So, where is the exposing coming into picture?
The main problem here, and I am sure that a lot of voices in the crowd will get up on their arms screaming and yelling, was the direct effect of the deregulation policies so much pushed by the NeoConservatives of the eighties.
There is nothing wrong with the idea of stock market. The idea is old and it has always worked. But the stock market is a gamble and like any gamble implies risk. Any real gambler knows that one wins big, but one also loses big. Over all though, hopefully the wins are more than the losses.
By eliminating the rules governing the industry, possibilities of cheating were created, and the only thing common with the original intent of the stock market was the name. Because the main players made sure that the risk factor was eliminated.
The most diabolical action has been eliminating the checks and balances from the system. The old wisdom tells you that you don't put a fox in charge of the chicken coup, or you don't let a wolf in charge of the sheep heard. Why diabolical? Because it was a very well thought and planned action which has been carried over thirty years, supported mainly by ideology. The truth of the matter was that the ideology was very clever. Who can argue that government is useless and we don't need them? They don't produce, they only take our money and waste it.
It is always very difficult to assess value to intangible actions. No one can touch what the government is producing, unless we run into debacle like these and we get stung!
And if you think that our troubles are over, you got a thing or two coming your way.
As long as politicians are running for office, spend a few years in Washington to make contacts and then they retire going into private consulting (lobbying), we would never get rid of the status quo...
Bernie Madoff was the head man at SEC. He should have never been allowed to do what he did when he finished his tenure. Once a person holds such a position the common sense suggest to keep him out of the business. That particular person knows the in and outs, has connections, is involved in policies setting for years to come...
Long time ago, the stock market was for small investors. These days the stock market is propelled by institutional investors, the small people are just symbolic and they don't really play any role in the way things are going.
The functions that Arthur Andersen and the rest of the Big Five performed were necessary. In the way the accounting is performed in this country, there is a need for some form of organization to audit companies for tax purposes and for general control in keeping them honest. In other countries there are government agencies performing these control. In America, luckily this time, we don't have the government doing the control.
But when the controller is crooked, the system is failing. And the controller does not have any incentive to keep honest, when no one is keeping an eye on him.
A vicious circle. I have to give credit to the master minds of the movement. They succeeded!!!
The regulations, which at times were a real pain in the neck, implemented right after the big Depression, were not a bad idea.
The easiest way out of this would be to get a new deal. To set the players to the basic, set the rules, forget the past and start anew.
But we are afraid to do it. I am not sure that we can do it!!! We forgot to work hard and to enjoy our work. We like to be winners but we don't like to work to win, so we cheat!!!
Crin Forbes Mar 22, 2012, 9:39am EDT
"I have family in your neck of the woods, in Niece and Narbonne (this one sort of)"
Crin Forbes Mar 22, 2012, 9:08am EDT
"What changed is the fact that women today some time [sic] live more then [sic] their reproductive period and sex is not considered as a reproductive instinct any longer..."
Crin Forbes Mar 22, 2012, 12:45am EDT
"That guy saw the shah going down, he saw the Soviet Union going down, he saw the Eastern Bloc going down." (Have you ever heard of a semi-colon?)
Crin Forbes Mar 21, 2012, 10:43pm EDT
"The good part of the poppies is that if you look at them or if you smell them, they don't have a strong fragrance, you don't really get high..." [sic that whole thing, and another semi-colon missing] I'm sure glad that they don't have a strong fragrance if you only look at them, though.
Crin Forbes Mar 21, 2012, 10:10pm EDT
"You managed to expressed [sic]them so realistically and with so much passion!"
I'll have to continue to respond to the rest later.
You said, "I thought that being exposed implies that one keeps doing something, usually wrong, for a long time, taking advantage of others trust, until one day the person is discovered and the truth being brought to life, thus exposing it..."
Being exposed doesn't have any specific time frame for the action to have taken place to be exposed, and neither does it have anything to do with how many times someone repeats the same action. You can expose that someone picked his nose even if he did it only once if you catch the gooey glob on the end of his finger in time and point it out to someone who wasn't paying attention. And therein is also the exposure of your misunderstanding of what exposure means by thinking it must have to be something that necessarily involves trust.
In this case, it did involve a long period of time, repeated action and it did involve trust. The only reason Bernie exposed himself is because he knew the gig was up and he wanted to dispel the further anxiety of knowing he was going to be exposed very soon. Finally, the time was short, and he knew there was no way out. Don't you kid yourself that some colleagues didn't know what he was doing because they still are doing much the same, but not on such a grand scale. You can't expose someone of a wrong if you're guilty of the same, even if it's to a much lesser degree.
As far the rest of what you said, and that I don't think our troubles are over, even if that was a general statement, I don't think there's anyone who would think that. I don't think I indicated I thought anything but just the opposite from what I've already stated here. I would agree with a lot of what you said. There are some points I'd argue like saying there's nothing wrong with the stock market, but that's probably based on different philosophies we hold of how business should be conducted. That doesn't just have to do with the stock market per se.
However, that does not excuse the fact that you got into a field that you thought you know, but actually you don't.
I am going to go as far as I have to go, when people speak in public and don't know what they are saying.
OK, the way I write is not always correct, after all I am not a native English speaking person. However, no matter how twisted my English is, I don't get into subjects that I don't know too much about.
A person with your knowledge of the language, and I can see that you have a good mastering of it, can't have a slip of the tongue as the one with Madoff, unless the person did not know the matter well... M ore so to say that you were not aware of the facts I brought into discussion about Arthur Andersen is another little detail that does not really support your knowledge.
You want to make a point, you are welcome, but make it right!!!
Here is the sentence in a better delivery:
"To set the players back to the beginning of the game, to set new rules which have no connection to the past, to start anew".
Thank you for the editing above, and I will try to work on those passages.
Ma, ha, ha, Sue, on the matter at hand though, quit while you are ahead and have some fun today! This discussion was based mostly on what happened, not on what should happen, so everything I said is what I learned when it happened...
Well, you know, Crin, that's the usual type of authoritative declaration that "I'm right and you're wrong," no matter what has been stated with reference to show that you're the one who's wrong, and especially since the evidence of proof is there for anyone to read through to see that for themselves. It's always nice to bank on the greater chance that no one will bother to read the evidence of proof and only see your proclamation of veracity and knowledge, agreeing how much you "know" about it all. It's nothing I haven't seen before, and nothing I won't see again. As they say, "same old, same old."
I can't have fun right now; I'm working. (or as close a facsimile to it as I get these days)
"I also knew a very honest accountant who was thrilled to be hired by AA, and about 3 years after joining he suddenly left and just said he didn't think they were as good a company as they were supposed to be. I bet anything, he saw the writing on the wall and did not want to be involved!."
This was happening on a regular basis, and one of the reasons they were very strong users of headhunters. They were having retention problems as that Colonial lawsuit unfolded, and because the jobs required so much travel along with their particularity of only wishing to hire others part of the Big Five, it was difficult for them to find people in those last years of the 90s. As I said, although scandals like Colonial Bank and Waste Management were not known outside accounting circles, they were known in the industry. It was only a matter of time before the national exposure of an Enron would be the talk of the country by those without knowledge of the notorious history.