Wednesday, June 1, 2011

Who is Out to Destroy Lloyd Blankfein/Goldman Sachs?

Forget Wikileaks, pay attention to Goldileaks. On the same day, the two most powerful news organizations in the world have major negative stories about Goldman Sachs. This doesn't happen everyday. In fact, it has never happened before.

WSJ reports that Libya's sovereign wealth fund gave $1.3 billion to GS to sink into a currency bet and other complicated trades. The investments lost 98% of their value. GS then tried to do a make-up trade that would give Libya an investment of some sort that would get Libya it's money back over a number of years and also get Libya an investment in GS.

Got that? GS blew up 98% of a Libyan  $1.3 billion investment and GS was willing to sell part of its own firm to make up to Libya.

But that is not all. NYT 's Gretchen Morgenson/Louise Story are out with another story that is sure to be more of a problem for GS than even the WSJ story. Tyler Durden provides a summary of the Morgenson/Story report and notes some curiosities about the story:
This evening's latest NYT Story-Morgenson Joint Venture story about Goldman beats a well-beaten drum: the question, which has been discussed extensively on Zero Hedge and elsewhere before, of just how ridiculous and ludicrous is the notion, used by Goldman in both Congress and before the SEC, that Fabrice Tourre, then a midlevel 28 year old whose story has been told millions of times, worked completely and entirely alone when perpetrating the Abacus CDO "transgression" (for which Goldman neither admitted nor denied guilt). Obviously this is such BS that nobody but an entity as entitled (and for the implications of perceived infinite self-entitlement look no further than DSK or David Sokol) as Goldman (and hence the SEC which needs Goldman for future employment prospects) could possibly believe it. There is however, a link in the story that is so weak, that it raises extensive questions about either the credibility of the entire narrative, or the complete worthlessness of Goldman's IT security and VPN firewall, two possibilities that demand further inquiry.

Here is the relevant extract from the NYT article:

In their Oct. 10 response to the S.E.C., Mr. Tourre’s lawyers, including Pamela Chepiga of Allen & Overy, made an argument that they have not emphasized publicly. They contended that “singling Mr. Tourre out for criticism regarding the content of this clearly collaborative effort is unreasonable.”
So far so good. But here is where it gets downright ridiculous:

These legal replies, which are not public, were provided to The New York Times by Nancy Cohen, an artist and filmmaker in New York also known as Nancy Koan, who says she found the materials in a laptop she had been given by a friend in 2006.

The friend told her he had happened upon the laptop discarded in a garbage area in a downtown apartment building. E-mail messages for Mr. Tourre continued streaming into the device, but Ms. Cohen said she had ignored them until she heard Mr. Tourre’s name in news reports about the S.E.C. case. She then provided the material to The Times. Mr. Tourre’s lawyer did not respond to an inquiry for comment.
So let's get this straight: someone, i.e., Ms. Cohen's friend, found one (supposedly corporate) notebook belonging to Tourre, back in 2006, "discarded in a garbage area in a downtown apartment building." Not only was this notebook in perfect working order, but somehow, and anyone who has ever worked in investment banking can attest to this, had a permanent VPN connection, something that all who have enjoyed inputting Securicard ID codes at each and every login attempt, know is impossible, to Goldman's primary email server. In addition, it held in its buffer's Tourre's email password for not one, not two, but at least three years, something that is contrary to FINRA regulations which at last check require banks to force employees to change their email password at least once a year. Lastly, Ms. Cohen somehow had parallel access to Tourre's emails even as he had access on at least one other offsite terminal: an event that would have set off every possible red flag in even the simplest VPN network (and trust us, Goldman has a is also very, very well encrypted).

In summary - we call total bullshit on this story.

Which begs the question: what is really going on here? Well, since the premise of the NYT story is to present the now firewalled publication as having access to non-public emails that expose other Goldman employees in Tourre-gate ("In addition to Mr. Egol, they included David Gerst, a securities lawyer in the Abacus group and Darren Littlejohn, another lawyer at Goldman who worked on the deal; Cactus Raazi and Gail Kreitman, sales representatives; Shin Yukawa, a credit ratings specialist; and others" - there is Ms. Kreitman again... the same Ms. Kreitman (and her husband) whom we wrote about a year ago, and who was mysteriously fired long before the Tourre affair) we can only surmise that this is nothing short of the smoking gun that somehow is supposed to hold in it the secrets that could put the Goldman civil (and criminal case) back front and center (We also ignore the fact that attorney-client privilege, which is the key source of information in the NYT article, tends to be the most sacred Non-Disclosure source of information which even reporters are leery of breaking).

We therefore wonder: is the NYT now being used as a conduit through which to build the criminal case against Goldman (which, make no mistake, is about to hit the news any minute) using purposefully leaked smoking guns. On the other hand, the alternative is just as disturbing. Assuming there is no ulterior motive, one wonders: just how secure is Goldman's firewall from the external world. If a random woman can find a jettisoned laptop and use it to access confidential emails for several years, we would venture to guess: not very. In which case the question becomes: just how many (hundreds, thousands?) of people have parallel knowledge of all the latest happenings at the 200 West headquartered firm?
Two stories like this do not come out with this kind of firepower, unless there are some very powerful people behind the stories.

I'm thinking that right now, Lloyd Blankfein wished he had flown to Washington D.C. the night before, like JPMorgan's Jamie Dimon did, for  the sit-down they had scheduled in December of 2009 with the  passive-aggressive never-forget, vindictive President of the United States Barack Obama, instead of calling a fog audible and dissing the President  by saying he would participate in the meeting by conference call.

These leaks are either government leaks or leaks by a testosterone filled Brutus at GS, who is sick and tired of Blankfein public foibles. No one else could assemble the types of information contained in these leaks. It's either a high level Brutus, with across the board access at GS or it's the government with its super spook tools. Either way, this is the end for Blankfein. It says here, Blankfein doesn't make it until the end of the year. What happens to Goldman, depends upon who on is planting these leaks. If it is a GS inside job then it should stop with Blankfein. If it is the government (most likely), then GS is in serious trouble and will have to pull every insider favor it can.

It should also be noted that good old aw shucks Warren Buffett is out of Goldman, paid in full--just before all this happens. He was, of course, kicking and screaming that he didn't want to get paid so soon. Funny how, in the end, that all works out for Warren.


  1. Goldman is "Too Big" to face prosecution:

  2. Goldileaks....

    Wenzel, I am going to borrow that one..
    (with hat-tip to you, of course).

  3. I believe it's the government, although there may well be an insider too.

    I told you before Goldman would be taken down over this.

    It's served its purpose.

  4. With his status like that his VPN must be really encrypted.

  5. I am becoming more and more convinced that the world will be a much better place without Goldman Sachs in it since they are responsible for far too many economic bubbles and crisis. Time and again they create schemes that would get an ordinary criminal jailed for decades and yet they run off scott free because they are "Too big to fail".

    Who is after Goldman Sachs? The light of truth and no amount of scurrying for the cover of darkness will protect them anymore.

  6. I am devastated for Goldman Sachs. I wish all banking institutions in the world follow them straight to hell. We could then possibly live normal life.