Public Intelligence

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

When Citigroup agreed last month to pay $285 million to settle civil charges that it had defrauded customers during the housing bubble, the Securities and Exchange Commission wrested a typical pledge from the company: Citigroup would never violate one of the main antifraud provisions of the nation’s securities laws. To an outsider, the vow may seem unusual. Citigroup, after all, was merely promising not to do something that the law already forbids. But that is the way the commission usually does business. It also was not the first time the firm was making that promise. Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed not to violate the very same antifraud statute in July 2010. And in May 2006. Also as far as back as March 2005 and April 2000.

The bad news just keeps on coming for Goldman Sachs. The Wall Street investment bank has received a subpoena from the office of the Manhattan district attorney, which is investigating Goldman’s role in the financial crisis, said one person familiar with the subpoena. It comes amid increased enforcement scrutiny of the company, which has faced blistering criticism that it shorted — or bet against — the mortgage market before it collapsed and that it knowingly sold bundles of bad mortgages to its clients. Goldman denies these accusations.

This Report is the product of a two-year bipartisan investigation by the U.S. Senate Permanent Subcommittee on Investigations into the origins of the 2008 financial crisis. The goals of this investigation were to construct a public record of the facts in order to deepen the understanding of what happened; identify some of the root causes of the crisis; and provide a factual foundation for the ongoing effort to fortify the country against the recurrence of a similar crisis in the future.

The Federal Reserve Bank of New York has begun an investigation into the mortgage-servicing arm of Goldman Sachs, looking at whether it systematically rejected borrowers’ efforts to lower their loan payments through government programs. The inquiry by the New York Fed arose from a letter sent by an anonymous employee, who accused the Goldman unit, Litton Loan, of denying loans without properly reviewing applications. The letter was brought to the Fed’s attention by The Financial Times after it received the tip. “We are in possession of the letter and are conducting an inquiry,” a spokesman for the New York Fed said in a statement.

Libyan Investment Authority Management Information Report documenting the Qaddaffi regime’s foreign investments as of June 2010.

Several Western financial institutions were holding Libyan state oil revenue last year, according to the nonprofit Global Witness, which cited a document it obtained. The document names Goldman Sachs, HSBC Holdings, Societe Generale and several other institutions holding some of the sovereign wealth fund’s assets, which totaled more than $53 billion at the end of the second quarter of 2010, Global Witness said. The Libyan sovereign wealth fund, as well as the national oil company, are now under international sanctions. Many of the national oil company’s subsidiaries are also under sanctions.

2007-2009 Tax Returns for American Friends of Bilderberg, Inc.

Goldman Sachs AIG/Maiden Lane III Documentation, 2008.

New York Attorney General Andrew Cuomo has subpoenaed eight banks in a probe into whether misrepresentations were made about some securities backed by mortgages in order to improve their credit ratings, a person familiar with the investigation said Thursday.

Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say. The investigation from the Manhattan U.S. Attorney’s Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission, these people say. The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges.

Goldman Sachs executives boasted about the money the bank was making while the US housing market was collapsing in 2007, released company e-mails show. The e-mails detail how the investment house profited from the mortgage crisis by betting that the market would fall.

Previously Confidential BlackRock Solutions Maiden Lane III Counterparty Brief from November 5, 2008.

Shares in European banks with big investment banking arms were under pressure Monday on fears they could face similar fraud accusations to the U.S. Securities and Exchange Commission’s Friday charge against Goldman Sachs Group Inc. (GS). At 0950 GMT, UBS AG (UBS) stock was down CHF0.63, or 3.5%, at CHF17.30, Deutsche Bank AG (DB)was down EUR0.80, or 1.4%, at EUR54.69 and HSBC Holdings PLC (HBC) fell 14 pence, or 1.9%, to 684 pence.

The Commission brings this securities fraud action against Goldman, Sachs & Co. (“GS&Co”) and a GS&C6 employee, Fabrice Tourre (“Tourre”), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (“CDO”) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007ACI, was tied to the performance of subprime residential mortgage-backed securities (“RMBS”) and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-ACI contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.

Maiden Lane LLC, Maiden Lane II LLC, Maiden Lane III LLC Balance Sheets from the Federal Reserve Bank of New York as of January 29, 2010.

The contentious role played by Goldman Sachs in Greece’s debt-saddled financial crisis is under scrutiny by financial regulators in the US, the chairman of the Federal Reserve, Ben Bernanke, revealed yesterday. Goldman has come under fire for helping the Greek government to structure complex derivatives deals early in the decade and “borrow” billions of dollars in exchange rate swaps, which did not officially count as debt under eurozone rules. Critics say such conduct contributed to unsustainable public finances which have destabilised the euro.

Addressing the influential Treasury Select Committee, Gerald Corrigan, a Goldman Sachs managing director, accepted that the investment bank had “enabled politicians to mask borrowings” through a complex currency transaction in 2001. The so-called “swap” allowed Greece to conceal some of its debts and meet eurozone limits on government borrowing. Goldman made an estimated £192m in fees on the deal. “With the benefit of hindsight, it seems very clear that standards of transparency could have been and should have been higher,” Mr Corrigan said

Goldman Sachs on Thursday reported earnings of $13.4 billion and a compensation pool of $16.2 billion for 2009. The results represent a remarkable recovery for Goldman Sachs, which emerged from the financial crisis ahead of rivals as it booked handsome profits from trading activities as markets recovered. The compensation pool — which includes salary and benefits but is largely for year-end bonuses — translates to an average payout of $498,000 per employee, although rainmaker traders and bankers will earn millions. The average pay amount is up 37 percent from 2008, although lower than the pre-crisis level in 2007.

Connections among board of directors and executive leadership of American International Group as of March 20, 2009.

The Chicago Climate Exchange is the world’s first environmental derivatives exchange. The exchange is owned by the London-based Climate Exchange PLC which also owns the European Climate Exchange, Montréal Climate Exchange, and the Tianjin Climate Exchange. Approximately 10% of CCX is owned by Goldman Sachs and another 10% is owned by Generation Investment Management LLP.

During the credit crisis in the summer of 2007, Goldman Sachs earned handsome profits when their competitors were being badly affected by tumultuous credit markets. According to MarketWatch, “Just before the market turned, Goldman traders got a hunch and began shorting and hedging the mortgage securities that were eating away at rivals’ revenue. Trading revenue soared 70% that quarter to $8.23 billion. It was Goldman’s last quarter in a series in which each new profit report exceeded expectations and prior results.” The New York Times described the earnings by saying that “Goldman’s good fortune cannot be explained by luck alone.”

Generation Investment Management LLP is a investment management firm with offices in London, Sydney, and Washington, D.C. The company was founded in April 2004 by the former CEO of Goldman Sachs Asset Management David Blood and former Vice-President Al Gore.

Home addresses for Vikram Pandit, CEO of Citigroup; James Dimon, CEO of J.P. Morgan Chase; John Stumpf, CEO of Wells Fargo; Ken Lewis, CEO of Bank of America; and Lloyd Blankfein, CEO of Goldman Sachs Group, Inc.

During that long summer between the collapse of Bear Stearns and the collapse of Lehman Brothers, Hank Paulson held a secret meeting with the board of Goldman Sachs in Moscow.