Mayor Mike Bloomberg visits the firm’s HQ to tell bankers that they’re wonderful people and everyone loves them
By Alex Pareene
New York City Mayor Michael Bloomberg (Credit: Kevin Lamarque / Reuters)
On Wednesday, accomplished table tennis player Greg Smith announced in a New York Times op-ed that he was quitting his job at investment firm Goldman Sachs, because the firm’s “culture” has become, at some point in the last 12 years, “toxic.” Goldman Sachs responded with a spirited PR campaign in which they claimed that Smith was not actually a very important person to the firm, and a leaked memo from Lloyd Blankfein in which he argued that Goldman could not possibly be evil because a recent internal survey proved that Goldman employees enjoy working at Goldman.
Despite that very good spin, Goldman Sachs lost $2 billion worth of market value as its shares fell 3.4 in trading over the course of the day (“oh man, some guy says Goldman Sachs is evil? I HAD NO IDEA” — the market). Thankfully, one hero stands ready to defend Goldman Sachs from public scorn: New York City Mayor Michael Bloomberg.
Bloomberg actually visited Goldman Sachs headquarters today to personally cheer up very sad bankers. Bloomberg met with Goldman head Blankfein and various other members of the 1%, in order to reassure them that they are good people who do good work, even though that is a ridiculous delusion that only fellow members of that class still believe.
“The mayor stopped by to make clear that the company is a vital part of the city’s economy, and the kind of unfair attacks that we’re seeing can eventually hurt all New Yorkers,” Bloomberg’s spokesman said. Bloomberg is a billionaire mogul who owns a financial information company, so Goldman Sachs and other major financial institutions are a vital part of his economy.
After his visit, Bloomberg continued his “stop piling on Goldman Sachs” tour on the radio:
“I don’t know whoever said what,” Bloomberg said on WOR Radio’s John Gambling Show.
“But even if it was said, it’s a few people and, you know, Goldman Sachs is a firm that’s been around for well over a hundred years and it’s a great firm.”
“It’s my job to stand up and support companies that are here in the city that bring us a tax base that employ our people and I’m going to do that.”
He called news coverage of the letter “ridiculous” and “not something we should do.”
We mustn’t cover bad things about Goldman Sachs, because if we do they might get mad and leave us, and then we will have no more Goldman Sachs! They are so important to our tax base that New York City gave them hundreds of millions of dollars worth of tax concessions and grants and benefits after they unconvincingly threatened to move to the suburbs.
“Bloomberg View,” the opinion arm of Mr. Bloomberg’s media company that operates out of the offices of his charity, also defended Goldman in an unsigned editorial mocking Smith for failing to realize that Goldman exists to make money by any means necessary, which is obviously a self-evident Good Thing for The Economy and The Country. “If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs,” The Editors write. Then: “Goldman and other investment banks do perform an important role in our economy, and Goldman bankers — most of them, at least — can hold their heads up high.” I am sure they are relieved to hear they have Bloomberg View’s vote of confidence. (Meanwhile, Bloomberg-owned Businessweek magazine offered this article documenting some recent “heads I win, tails you lose”-style Goldman malfeasance. When will these unfair attacks end?)
That’s the essentially contradictory message currently being offered by defenders of Wall Street: Only a naive fool thinks Goldman doesn’t rip off suckers, and also Goldman performs an important service. And as always the richest and most powerful people in finance turn out to be extraordinarily concerned about their public reputations, but basically unable to actually stop doing things that make people hate them.Continue Reading
Alex Pareene writes about politics for Salon. Email him at apareene@salon.com and follow him on Twitter @pareene More Alex Pareene
Reactions to an employee’s damning editorial speak to the firm’s power and the public rage over its moral lapses
Protesters march in support of the New York Occupy Wall Street protests outside City Hall in Los Angeles, California October 3, 2011 (Credit: Lucy Nicholson / Reuters)
This article originally appeared on AlterNet.
Goldman Sachs is having a bad PR moment. Very bad. And you can bet that the investment banking giant is right now tapping its vast resources to counter the tide. The frenzy centers on an entry and an exit.
Entering: Jeffrey Verschleiser, former Bear Stearns executive and emblem of Wall Street excess and corruption, who will join Goldman as global head of mortgage trading.
Exiting: Greg Smith, executive director of Goldman Sachs’ U.S. equity derivatives business in Europe, the Middle East and Africa, who has resigned in protest of the company’s culture of toxic greed and published his reasons in a New York Times op-ed.
This tale of coming and going, and the public reaction, speaks volumes of the power of Goldman Sachs and the public rage over its ethical lapses.
Which will speak louder? The answer will serve as a barometer to how far America has come in challenging a destructive financial system.
The Devil’s Work
Back in 2009, Rolling Stone’s Matt Taibbi launched the key media indictment of the mega bank’s excesses, famously dubbing the firm a “blood-sucking vampire squid.” Taibbi unsparingly detailed the vast economic and political power of Goldman and its history of destructive market manipulation that helped devastate the world economy in the 2008 financial crisis.
Taibbi’s story involved some of the most influential men in recent U.S. history, including Hank Paulson, Robert Rubin, and other members of a privileged fraternity of Goldman-affiliated players whom he called out as political puppeteers working on behalf of a corrupt financial industry. It was a tale of greed triumphing over democracy. Goldman Sachs was the predator, and we the people, our money sucked away in a “giant pump-and-dump scam,” were the broke and bewildered prey.
Taibbi was vilified by many members of the press for his audacity, and it wasn’t just the conservative press that pounced. Tim Fernholtz accused Taibbi of lying and called the piece a “conspiracy theorist’s dream” in the liberal American Prospect.
A few voices came to Taibbi’s defense, including economist Rob Johnson, who published his reaction on a blog I edited at that time. Johnson pointed out that Taibbi’s article would “surely be discounted by some as hysterical or exaggerated, particularly by those whose senses are deadened by the business press or CNBC-style babble.” But Johnson felt that Taibbi’s outrage was more than justified:
“He is screaming in a way that a healthy press would do in a hysterical time. Goldman Sachs’ uncontested success blurring the boundaries between market and state is symbolic of a tremendous malfunction in finance, politics and civil society.”
The Goldman apologists might dismiss Taibbi as hysterical. But it was a little harder to wave away the condemnation that appeared in the New York Times this week from a man who had worked at the firm for 12 years before quitting because he could no longer tolerate what he described as a culture as “toxic and destructive as I have ever seen it.”
Rip-off, Inc.
Greg Smith came to Goldman as a college intern and over the years has helped recruit students to join the firm. But after 12 years, he found himself working for a company that had become so blinded with greed that its clients were no longer there to be served, but to be duped, profited from, and disparaged. Smith wrote:
“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes in internal e-mails.”
Regardless of the legality of Goldman’s activities, Smith found the absence of integrity and the single-minded focus on pushing potentially harmful investments on clients to be destructive and repellent: “I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”
This announcement came on the heels of a report from none other than Matt Taibbi that Goldman Sachs had just hired a man as global head of mortgage trading whose background is as shady as it is outrageous. Jeffrey Verschleiser, a former Bear Stearns executive, was already making the news back in January, when he bought out a popular Aspen hotel and shelled out $500k to $1 million for his daughter’s bat mitzvah party. The community was disgusted, particularly as this same man had been named in a lawsuit against Bear Stearns that claims the company took millions of dollars from clients in the name of profits and bonuses. Teri Buhl, who broke the story for the Atlantic, named Verschleiser as a key figure in a scheme among Bear traders to sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. “The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds.” In other words, Verschleiser and his pals were getting paid twice on the same deal, what’s known as “double-dipping.” The Bear traders cynically referred to these crappy bond mortgages as “sack-of-shit” bonds.
Verschleiser was hired by Goldman Sachs. Two days later, Smith released his op-ed in the Times, which pointed to a “toxic leadership culture” as one of the key problems at the bank.
Release the Kraken!
The vampire squid froze for a moment in horror. And then a tsunami of attacks on Smith and defenses of Goldman covered the media. Within 24 hours, the following stories appeared:
Greg Smith Isn’t A Whistleblower, He’s Just A Goldman Sachs Executive Having A Midlife Crisis (Nathan Vardi, Forbes)
“Smith is not the first person who wants to tell his former bosses to shove it. He is also not a whistleblower. He remained happily employed at Goldman after it took a massive taxpayer bailout.”
Read: Traitor!
Greg Smith Doesn’t Like Goldman Sachs, But MBAs Still Do (Kurt Badenhausen, Forbes)
“Smith might think that Goldman is undergoing a ‘decline in the firm’s moral fiber,’ but MBA students are still clamoring to get in the door of the investment bank.”
Read: Who cares about morality when you can make $$?
Yes, Mr. Smith, Goldman Sachs Is All About Making Money (The Editors, Bloomberg)
“If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs. That’s not its function, and it never will be. Go to work for Goldman Sachs if you wish to work hard and get paid more than you deserve even so.”
Read: Goldman Sachs doesn’t have to serve society. How cool is that?
The ballad of Greg Smith (Felix Salmon, Reuters)
“It’s much easier to see the disgruntled ex-employee here, quitting in a huff, than it is to see someone genuinely trying to do his part to reconstitute the Goldman Sachs of Gus Levy and John Whitehead … The most remunerative skill, at Goldman, is the ability to flatter someone into believing that they’re incredibly important and clever and sophisticated, even as you’re getting that person to do exactly what’s in your own best interest.”
Read: Fiduciary duty is for suckers. Not for blood-sucking vampire squids.
Goldman on Trial
One of the most memorable spectacles of the Occupy movement was a mock trial held in Zuccotti Park in which philosopher Cornel West and journalist Chris Hedges teamed up with people directly impacted by Goldman Sachs’ destructive policies to publicly accuse the firm of crimes against society. “The People v. Goldman Sachs” concluded with a verdict that found the bank guilty of felony fraud and a demand, among other things, of the return of billions looted from the U.S. Treasury.
Now, perhaps, is the moment for a broader public trial.
Paul Volcker has praised the Smith op-ed and denounced the conflicts of interest rampant in the industry. The blogosphere is ablaze with commentary testifying to widespread anger at the firm and all it represents, including Mike Lux’s piece in the Huffington Post, which includes a petition demanding that Mitt Romney lead the charge for Lloyd Blankfein’s resignation. Web satirists are having a field day — a parody popped up on the Daily Mash website in which Darth Vader resigns from the Empire, unable to swallow its unethical behavior.
Most upsetting for Blankfein, I’ll wager, is that money talks. The company’s shares have already taken a steep dive, evaporating $2.15 billion of its market value.
Hard to say where this will all end. The vampire squid has lost a tentacle, but it knows how to grow three more in its place. Unless, of course, it finds that unmitigated greed and corruption don’t pay quite as well as they used to. At water coolers, dinner tables, classrooms and newsrooms across the country, the people will be asking, how have we allowed this predator to exist in our midst? And some very wealthy clients will be asking, why the hell are we giving this thing our money?Continue Reading
Lynn Parramore is an AlterNet contributing editor. She is co-founder of Recessionwire, founding editor of New Deal 2.0, and author of «Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.» Follow her on Twitter @LynnParramore. More Lynn Parramore
Radical protesters are reborn as policy analysts; they tell the SEC to curb Wall Street speculators
By John Knefel
Occupy the SEC’s radical message
As the Occupy the SEC march made its way past the Goldman Sachs building in New York City on Monday night I looked up from the near-constant tweeting I do at these events just in time to see a man in a top-shelf suit rush past us holding a bottle of champagne. I imagined him looking at the 100-plus crowd of activists disrupting the walk to his luxury mid-size, pouting indignantly, “You’re gonna do this to a guy in a $4,000 suit? Come on!”
Occupy the SEC held the march to celebrate the release of its 325-page comment letter to the SEC calling for it to strengthen – and then, more important, enforce – the Volcker Rule, which will go into effect on July 21, 2012. According to Aaron Bornstein, who helped organize the march, Occupy the SEC’s comment is about twice the size of the next longest letter, drafted by the Securities Industry and Financial Markets Association, a financial interest lobbying group.
The working group’s detailed policy position gives lie to the common claim that the Occupy Wall Street movement is “well intentioned but misinformed.” It shows there’s room in the movement both for policy wonks and those chanting “anti-capitalista.”
The group was aimed to bolster one of the key reforms to emerge since the 2008 crash. The Volcker Rule (named after former Federal Reserve Board Chairman Paul Volcker) is a subsection of the Dodd-Frank act, passed in 2010. Its purpose is to curb risky speculative trading by Wall Street investment firms. The regulations are set to be finalized in mid-July. Until then well-paid lobbyists will do everything they can to create new loopholes that will enable the banks to engage in high-risk, high-reward speculation. Occupy the SEC seeks to block them.
“The main takeaway is the bank lobby is not the only player when it comes to influencing the regulators. There’s another side, and we’re trying to take that side,” said Akshat Tewary, an attorney, who helped draft the letter.
The SEC is now bound to some combination of its initial draft and the comments it receives, explained Alexis Goldstein, who quit her Wall Street job last year. “They can’t add new stuff out of thin air; it has to come from comments. We’ve basically said the opposite of what the banks have said, from what I can tell so far.”
The action marks an unusual development for both the Occupy Wall Street movement and the SEC. Unlike the Environmental Protection Agency, which gets comments from both industry and environmentalists, the SEC usually only hears from industry. The movement is bolstering the regulators, not bad-mouthing them. While the Occupy movement is often characterized by its disruptive street protests, it also includes a faction willing to dedicate untold hours of detailed policy analysis urging the SEC to do its job. That’s a more full understanding of what the movement calls “diversity of tactics.”
It’s hard to argue with Occupy the SEC’s recommendations. The Volcker Rule currently has an exemption for “repos,” which, Akshat tells me, is “basically a way to get funding at a very high leverage and very quickly.” Alexis describes repos like a pawn shop transaction. You sell your watch to the pawn shop for cash, but you plan on buying it back.
“So it’s technically a sale, but it’s treated as a way to finance things. Banks do this all the time, to finance things. And that would be fine if they were using Treasuries [i.e., U.S. Treasury bonds, the definition of a safe bet], but they’re using these crappy assets. So they sell them, then they buy them back, and it’s all really short-term trading that happens with them. When people start to think the assets are bad they demand more collateral, and then other people hear that they’re in trouble so they start to demand more collateral and it becomes this death spiral.”
Repos are one of the reasons Lehman Brothers fell as swiftly as it did in 2008, and Occupy the SEC thinks that exempting them from the Volcker rule is a “terrible” idea.
They also want illiquid, over-the-counter financial products – like mortgage-backed securities – to be forbidden. As Alexis Goldstein puts it, “There’s a clause that says any high-risk asset shouldn’t be allowed by the rule, and we think over-the-counter illiquid assets are high risk.” The millions of Americans still suffering the effects of the Great Recession that began with the 2008 Wall Street crash are likely to agree.
In addition to its attempt to directly influence the SEC, the group hopes to wage a broad educational campaign to teach the public about the financial industry. Occupy Wall Street has already successfully jammed early-stage class consciousness into the American zeitgeist. Occupy the SEC is hoping to build on that.
As one SEC occupier told me before the march, “One of the most exciting, surreal things about Occupy Wall Street so far is I have this sign that says, ‘Bring Back the Glass-Steagall Act,’ and if I just hold that on the subway, or on Broadway, you see people walking up to me every day, every single day I do it, someone walks up to me and says, ‘Yeah man, the Glass-Steagall Act.’ That would have been unthinkable four or five months ago.”Continue Reading
John Knefel, a comedian, is co-host of Radio Dispatch. Follow him @johnknefel. More John Knefel
After a brief hibernation, a refocused movement takes aim at corporate America
By Gary Kamiya
Warren Langley: from stock exchange chief to occupier
SAN FRANCISCO–Act II of the Occupy Wall Street movement, San Francisco version, kicked off on a rainy, blustery Friday in the heart of the city’s financial district. Targeting specific corporations like Wells Fargo and Bank of America and emphasizing real, tangible issues like home foreclosures, affordable health care and education as well as broader ones like the Supreme Court’s Citizens United decision, several hundred protesters – the exact number was impossible to estimate – fanned out across the city, snarling traffic, getting arrested, holding sidewalk teach-ins, and generally serving notice that after its brief winter hibernation, the Occupy movement was back and kicking.
Occupy’s first act, the Tent Phase, ended in early December, when city authorities raided its urban camp at Justin Herman Plaza near the Ferry Building. But even before the tents were removed, it had become clear that the movement needed both to develop new tactics and deepen its strategic vision.
“After the raid, when our attention was no longer focused on [the encampment], people turned back to their neighborhoods and their campuses,” said David Solnit, who is part of a direct action working group associated with Occupy SF. “We started Occupy Bernal Heights [a multi-ethnic, mixed-income neighborhood on the edge of the Mission District], and we had 65 people at the first meeting. We went door to door meeting folks facing foreclosures. We got meetings with mid-level people at Wells Fargo Bank.”
Solnit – who is the brother of San Francisco writer Rebecca Solnit – said that OccupySF Housing, a housing-related spinoff of the movement, had held marches in four neighborhoods and succeeded in saving four homes from foreclosure.
“We’re more diversified now, but more powerful than when all our eggs were in one basket,” Solnit said. “Gene Sharp came up with 198 different methods of nonviolent action. Camping out is one tactic. We still have 197 more tactics to go through, and another 500 to create.”
At 6:20 a.m., in pitch darkness, with a miserable rain pelting down in front of the enormous 52-story monolith of 555 California, it seemed like a good idea for Occupy to come up with a new tactic immediately. The schedule on the Occupy Wall St. West web site had announced that there would be a wacky 6 a.m. protest against Goldman Sachs, featuring a squid fry (“bring your own frying pan”) and protesters dressed as squids. (The squid theme derived from Rolling Stone writer Matt Taibbi’s famous description of Goldman Sachs as “a great vampire squid wrapped around the face of humanity.”) But no one seemed to be giving out fried calamari – not that anyone could have digested it at that ungodly hour — and there were only four protesters standing near the entrance. They were dwarfed by a phalanx of waiting police and TV journalists.
The last person you would expect to find standing in a bedraggled squid costume in front of a financial district skyscraper at six in the morning would be a 69-year-old retired psychology professor. But the Occupy movement is full of surprises. The human squid, Eleanor Levine, said, “I’m out here to bring attention to the irresponsible financial practices of Goldman Sachs. I also want to bring attention to the concept of corporate personhood [which was behind the Supreme Court ruling in Citizens United]. Corporations are not people. This company played a role in bringing not just the country but the world to financial ruin. People have to face up to what Goldman Sachs has done. Their CEO made $28 million.” Asked if the dreadful weather had prevented more people from joining the protest, Levine said calmly, “Yes, the rain put a damper on the turnout, but more will come.” Her pink tentacles waving, she walked cheerfully off.
I approached a mustachioed man in a yellow poncho inscribed with the words “Money 4 Housing and Education, not 4 Banks and Corporations.” Alex Carlson, 34, was a paramedic who said the biggest reason he came out was to protest America’s lack of educational opportunities. “I couldn’t get into school just to get an EMI license. I had to beg a teacher to let me into his class. Nursing was my real goal, but there’s no money for nursing schools. It’s crazy because there’s a nursing shortage and there’s going to be a crisis of care when the bay boomers die off.”
Carlson said he had come out at the crack of dawn in the rain because he felt he had to.
“Like everyone else I’m just trying to carve out a little life for myself, but my knife is getting shorter and shorter,” he said. “I’m not a crazy activist person. I have a wife and a young son. Camping out isn’t an option for me. But I was able to come out today, so I did. And I’m proud.”
I walked down a block to a building housing Wells Fargo, where people protesting the bank’s role in the national foreclosure crisis had chained themselves in front of the entrances on all four sides. In one of the entrances, about eight people were squeezed in, their arms inside big yellow PVC pipes that were connected together. A policeman came up and politely informed them they were creating a public health risk and would be arrested if they didn’t leave. Dozens of police waited on the corner.
A woman with a bullhorn shouted slogans. A wildly energetic street band, three saxes, a trumpet, a big bass drum and a snare, played surreally cheerful Kurt Weill-like tunes, their vaguely Weimar sound oddly appropriate.
A fresh-faced young woman with glasses was sitting among the crowd in the entrance, with a sign that said “Give us our homes back.” I asked her why she was there. “My parents had their home in Southern California foreclosed,” she said. Her said her name was Sarah Lombardo and she was 28 years old. “They couldn’t make their payments because of medical costs. My mom had breast cancer and my dad had a stroke. They were told to leave in two weeks and our house was auctioned off. Now they’re living in an apartment, but their credit was destroyed so they had to pay three times the normal deposit.”
Lombardo said her mom was a purchasing agent and her dad was a factory worker. “I’m the first one in my family to go to college.” She said she came out because she wanted “to put a face to the statistics.” It was a face that looked like it belonged to the girl next door, or to your daughter.
She said that now that she had finished college, it made it possible for her to be arrested. “It’s for a good cause.”
I asked her if she had ever been arrested before. “No.” Was she afraid? “No, I’m not scared.”
Later, behind a cordon of police, I watched as protesters on the north side of the building were arrested, frisked and loaded into a paddy wagon. I rode off on my bike to cover some more actions. When I came back, Lombardo and the rest of the group of people in the doorway had been arrested.
Back up at 555 California, beyond the big turd-in-a-plaza artwork jokingly called the “banker’s heart,” I came upon an older man in a suit, carrying a sign that said “Give Us Our City Back.” I was intrigued: he was definitely not the usual Occupy protester. But when I asked him who he was, he turned out to be even more unusual than I could have expected. He was Warren Langley, the 69-year-old former head of the Pacific Stock Exchange.
What brought a man with his background out to protest?
“I was in the industry. I worked for an option trading firm that was sold to Goldman Sachs. So I played the game on the other side. But I have two grandkids and two daughters, and I became increasingly concerned that their future wouldn’t offer them the same opportunities that I had as a young man. The income inequities in our society are a huge problem.”
Langley said he first heard about the Occupy movement from his pal Ben Cohen, of Ben and Jerry’s ice cream. “He was scooping ice cream for them in New York. And he told me, ‘These are the real deal.’ So one day I was eating lunch at the Ferry Building, and I walked across the street to the camp and started talking to these young people. And they were the real deal. They’re folks who lost their jobs, or are just out of school and can’t get a job. I could bring my credibility to the movement, so I decided to get involved.”
Langley decried the deregulation of the financial industry, in particular the repeal of the Glass-Steagall Act that eroded the wall between banks and investment houses and gave birth to the wild, insanely profitable speculation
that ultimately dealt the world’s economy a devastating blow. “They bet our money and then we paid off the bookmaker.”
I asked Langley what his former colleagues in high finance thought about the Occupy Movement.
“Well, there are some who say, ‘They’re a bunch of whiners and need to get a job.’ But those are the ones who haven’t actually talked to the people in the movement. There are others who are more open-minded. I know one guy, very wealthy, who told me, ‘What’s their plan? I’m ready to give them $250,000 if they have a plan.’ And I told him, ‘It’s not their job to give you a plan. They’re hurting.’ So whether it’s job opportunities, or better health care, or fairer taxes, we need through the political system to come up with a plan. It isn’t their job. He didn’t get it. But his kids, who are also very wealthy, were more sympathetic. It’s a generational thing.”
Langley went on to say that Occupy was sharpening its ideas. “It’s moving to get a more specific message across, from ‘We’re hurting’ to “This is what’s hurting us.’ He said he didn’t see the Occupy movement ever aligning with any political party. “Chuck Schumer does as much damage as John Boehner. In the end, it’s about occupying people’s minds, so people who aren’t down here will see that the system is not fair.
There was also a nurse-led protest across town against the big medical group California Pacific Medical Center, which RN Jane Sandoval said is shifting resources away from poorer patients. Another nurse, Eileen Prendiville, said CMPC is emblematic of America’s broken, for-profit health care system, even though it is nominally a non-profit.
If the new Occupy is meatier and more substantive, it still thrives on spectacle and encounters with authority– and the latter can be a double-edged sword. After one nasty encounter outside 555 California when a young guy who engaged in a scuffle with the cops when they rushed forward was arrested, quite a few people in the crowd began shouting “fuck you, pigs!”, “you slaves!”, “pigs go home!” and “your warrant is to serve your corporate masters” to the police, probably not winning any hearts and minds in the process. No one told them to can the Black Panther rhetoric. At the same time, in one of those weird juxtapositions that Occupy specializes in, across the street stood two gentle souls holding a big black banner that read, “Buddhist Peace and Justice League: May All Beings Be Happy and Secure.”
Based on Friday’s actions – which I only saw part of — Occupy’s new approach seems to have three components.
First, it has become more of a big-tent movement, welcoming outside groups like labor unions. Second, it is taking deliberate, loud, public aim at specific corporate targets, like Goldman Sachs and Bank of America. Perhaps most important, as David Solnit pointed out, it is reinventing itself as a grass roots organization – reaching out to ordinary people who may not know much about the Occupy movement, but whose lives have been devastated by anonymous corporate decisions.
It’s an ambitious, multi-faceted reset, and there’s no way of knowing how effective it will be. Simply camping out and saying “We are the 99 percent” has the downside of being vague, but for that very reason it has an abstract, jarring purity. More specific, targeted protests are more substantive and show the movement is serious, but also make it more conventional. Still, as long as the movement attracts followers as committed, intelligent and impressive as the people I talked to, it will remain a force to be reckoned with. It seems certain to play a role in the national discourse not just during this election season, but for a long time.Continue Reading
Gary Kamiya is a Salon contributing writer. More Gary Kamiya
All of Wall Street’s big banks are equally guilty of bad citizenship. But some are more equal than others
By Andrew Leonard
In the magisterial report released in April by the Senate’s Permanent Subcommittee on Investigations, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” a section recounting how Goldman Sachs profited off speculation in mortgage-backed securities — at the expense of its own clients! — closes with the following j’accuse:
Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high risk, poor quality loans and that magnified risk throughout the U.S. financial system. The investment banks that engineered, sold, traded, and profited from mortgage related structured finance products were a major cause of the financial crisis.
In this formulation, all the investment banks are equally guilty of bad corporate citizenship. But as anyone who has been to an Occupy protest or read a Matt Taibbi Rolling Stone screed or simply scanned the business headlines for the last three years knows, the name Goldman Sachs means something different to the general public today than Morgan Stanley or Citigroup or Merrill Lynch. Goldman Sachs, once lauded as the acme of capitalism, is now, in the popular mind, a watchword for Wall Street greed and irresponsibility. It is the vampire squid. None other can compare.
There are many reasons, large and small, for Goldman’s notoriety. Not least is pure arrogance — perfectly exemplified by the sorry spectacle of Lloyd Blankfein declaring that Goldman was “doing God’s work.” Or we could start with the legacy of one Goldman CEO turned treasury secretary, Robert Rubin, who supported and helped pass many of the deregulatory measures that encouraged Wall Street irresponsibility. Or another, Hank Paulson, who not long after leaving Goldman for Washington orchestrated a massive handout to his own industry, without any strings attached. And then there’s even a third, Jon Corzine, who has spent much of this week disingenuously testifying about his lack of knowledge as to what employees at his most recent firm, MF Global, were actually doing as the company somehow misplaced billions of dollars of its clients’ money.
It has not been an edifying spectacle. Goldman’s political influence has historically been greater than any other investment bank’s. This is no longer a mark in the bank’s favor.
But what singles Goldman Sachs out for special opprobrium isn’t the culpability it shares with other investment banks for helping to create the financial crisis and then get bailed out with taxpayer dollars. It’s the fact that Goldman Sachs figured out, before any of its Wall Street colleagues, that the housing boom was a house of cards and the entire mortgage-backed security market was headed for a crash. Goldman wasn’t caught by surprise by the revelation that the mortgage securities it was creating were toxic junk. Quite the opposite. But instead of sending up an alarm bell and using its political influence and lobbying muscle to try to fend off the coming disaster, Goldman Sachs simply liquidated the positions in which it would be vulnerable to a downturn and started betting, instead, on the likelihood of disaster. As the Senate report acidly notes, in December 2006, “when it saw evidence that the high risk mortgages underlying many RMBS and CDO securities were incurring accelerated rates of delinquency and default, Goldman quietly and abruptly reversed course.”
Smart for Goldman — in 2007, the company had one of the best years any investment bank has ever enjoyed. CEO Lloyd Blankfein alone earned $68.5 million that year. But not so smart for the rest of us. We despise Goldman Sachs more than we despise any other Wall Street institution because Goldman was smart enough to know what was happening to the economy, smart enough to mint billions in profit while the world headed toward the worst economic disaster since the Great Depression, but not smart enough to share the news. A responsible CEO of one of the nation’s most influential corporations should have been testifying before Congress every week warning of imminent disaster. But that might have ended up negatively influencing his compensation.
With that background in mind, a review of some of our favorite metrics seems beside the point. But for what it’s worth:
Executive compensation: In 2010, Lloyd Blankfein earned $13.2 million as CEO of Goldman Sachs. A far cry, to be sure, from his 2007 heyday, but still pretty good for the head of a company that had to settle civil fraud charges brought against the firm by the SEC. In 2011, even as the company reported a quarterly loss for only the second time since going public in 1999, the firm still managed to put aside $10 billion for a bonus pool to be divided up among its 30,000 employees.
Lobbying: For the perfect, paradigmatic Goldman lobbying story, we must go back to 2004, when five Wall Street investment banks, with Hank Paulson taking the lead, pressured the SEC to change a rule that limited how much debt a bank could take on. The banks wanted the SEC to lower its requirement for how much capital the banks had to keep as a cushion against possible trading losses — Hank Paulson had been personally arguing for a change in this rule as far back as 2000. The banks won — and then proceeded to employ their new leverage to engage in a speculative frenzy that left them all desperately vulnerable — and requiring a federal bailout — when the market crashed. Who delivered the bailout? Hank Paulson!
Taxes: Goldman Sachs paid no income taxes in 2008, but paid a hefty tax bill in 2009 (at a 38.0 percent rate) and came in at close to the average in 2010 (a 20 percent rate).
We’ll leave you in suspense no longer: Salon’s corporate citizenship grade for Goldman Sachs is an F-.Continue Reading
Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard
A Salon writer claims it doesn’t hurt the 1 percent. Here’s how he’s wrong
By Aaron Bady
Protestors leave the Port of Oakland after successfully blocking the entrances on December 12. (Credit: AP/Beck Diefenbach)
The Occupy movement is sailing into murky waters. The coordinated West Coast port shutdown wasn’t just risky because of police violence against occupiers. Shutting down the ports of Longview, Wash., Portland, Ore., and Oakland, Calif., as the protesters did (along with more limited shut-downs in Vancouver, Seattle, Bellingham, Wash., San Diego, Los Angeles, and at a Walmart distribution center in Colorado), has had the result of taking some work hours away from port and shipping laborers who are in a very precarious situation. Actions in Ventura, Calif., Tacoma, Wash., Houston and Anchorage targeted the ports as well, but for this reason did not actually attempt to shut them down.
So we should put Monday’s action into perspective. As Andrew Leonard pointed out, there is almost no way to effectively target the 1 percent without causing serious collateral damage among the many workers who are just barely scraping by. And so Leonard argued that a prolonged port shutdown would devastate California, while leaving Goldman Sachs comparatively untouched. In “The costs of a port shutdown,” he declares that “Despite noble intentions, Occupy’s tactic hurt a wounded economy more than it hurt the 1 percent.”
Leonard has a point. It would be callous to deny that Monday’s work stoppage hurt “independent” truck drivers who lost a day of work. This is a serious thing; as Leonard himself reported two months ago, being one of the 82 percent of truck drivers who are classified as “independent contractors” means being responsible for all the costs of driving a truck without any of the protection afforded to employees. So when a driver can’t bring in any income—say, because protesters have blockaded the port—drivers will still be on the hook for costs of the operation, paying overhead without any income.
It is hardly surprising that some independent truck drivers were quite upset about the shutdown; Gavin Aronsen of Mother Jones reported that a trucker on Oakland said he risked losing $200 to $400 in pay, and even kicked over a sign reading “truckers have rights to union wages.”
At the same time, this was not a prolonged port shutdown. The longest lasting blockade was in Oakland – in which I took part – where one shift was actively blocked and the two shifts following it were preemptively canceled by the port. And on Tuesday, when ILWU workers asked the occupiers to allow the port to re-open, Occupy Oakland complied. Those ships are being unloaded right now, and truckers are back on the road.
We need a sense of perspective here. On the one hand, anyone who thought a one-day disruption of West Coast ports was going to bring Goldman Sachs to its knees is out of their minds. I don’t know anyone who believed that was going to happen. But actions like this one keep the movement alive, something that has very much been in question.
When police destroyed Occupy Oakland’s camp, for example, they scattered and fragmented its occupants (who cannot reoccupy the space, by the way, because the city leaves sprinklers on to keep the ground a saturated muddy mess, dubbed “Lake Quan”). And as Ben Ehrenreich puts it, with part one of the movement over, Occupy finds itself at a crossroads. Now that all the camps have been destroyed by concerted police crackdowns, does the Occupy movement even exist anymore? Monday’s action demonstrated that it does. When denied the local orientation of its roots, the Occupy movement is capable of playing another hand, even of raising the stakes.
Raising the stakes, of course, raises hard questions. On the other hand, what else is there? As we have learned, peacefully setting up camps — in one of the least confrontational forms of civil disobedience imaginable – is something that American cities will simply not allow. So what is left to the Occupy movement but more aggressive and confrontational tactics? Since they are not allowed to camp peacefully in public parks, expect more work stoppages, more foreclosure defenses, and more building occupations.
I think this is a good thing, when put in proper perspective. Andrew Leonard’s argument is a common one: While protest is fine in theory, the cost of this particular protest is too onerous. But in an economy where every shock to the system disproportionately hurts the working class — first, last and worst — vulnerable workers will always serve as an effective human shield for the Goldman Sachs of the world, who will always be too big to fail. And if we wait for the magical silver bullet, and we do nothing until we find it, nothing will change. No target will ever be the right and perfect one, no action will ever specifically and exclusively target the 1 percent, and so we will take no action at all.
Inaction is unacceptable. As one of the truck drivers who wrote this eye-opening Open Letter From America’s Port Truck Drivers on Occupy the Port told Andrew Leonard a few months ago, “Every day is getting worse.” And from the beginning, Occupy Wall Street has argued one very simple thing: that our political and economic system is not only broken, but incapable of fixing itself; that the game is not only rigged, but closed to new players; that the status quo is not only bad, but radically unacceptable and getting worse, every day.
This fact changes the political calculus. The ongoing silent violence of the status quo is vastly greater than whatever very mild damage might have been caused by the port shutdown. Compared to the earthquake to working Californians, for example, that Gov. Jerry Brown’s trigger cuts will soon cause – not for one day, but with no end in sight – a day’s loss of wages is a relatively minor matter (if only relatively).
Which brings us back to the root problems that require more radical solutions. The port was the target in Oakland, after all, because it’s a public agency, owned and run by the city of Oakland and required by its charter to be run for the benefit of the city of Oakland at large. But, in practice, it isn’t, and in this sense, it’s a perfect symbol for the public subsidies to private industry that we all pay for, but from which only the 1 percent actually benefit.
While the infrastructure that makes the port’s activities possible – the railroads and freeways and utility grids – were all built by enormous public investment, and while the land was taken by eminent domain (in many cases, from disadvantaged African-American homeowners and businesspeople, in the days when Oakland was strictly segregated), very little of the enormous wealth passing through the port ever finds its way to Oakland’s impoverished schools, for example.
Oakland is not a poor city, as the president of the Oakland Education Association pointed out at an Occupy press conference, or at least it shouldn’t be. Its apparent poverty is a function of the shell game paid with the finances of the port, its major industry, which operates rent-free on public land. While bondholders absorb most of the profits from the original investment, operating profits from the port never seem to find their way back to Oakland’s coffers.
Instead they are being reinvested in making the port as profitable as possible for companies like SSA Marine shipping (in which Goldman Sachs is a primary investor), in real-estate speculation, or in things like making Oakland airport more accessible to the city’s wealthy travelers (while cutting funding for the buses used by lower-income workers).
In short, while Andrew Leonard is at least a little bit right to see a port blockade as something like cutting off the nose to spite the face, I want to offer another metaphor: stopping the port for a day was a poke in the eye to stop the mouth from eating its own hands.
(Read Leonard’s “The costs of a port shut down” here. See Leonard’s comments below.)Continue Reading
Aaron Bady, graduate student at UC Berkeley, is an occupant of Oakland. His work has appeared in the Guardian, Technology Review, the Chronicle of Higher Education, American Literature, Possible Futures, and his blog zunguzungu. More Aaron Bady
