Everyone is buzzing — and the Goldman Sachs PR team is desperately spinning — about the powerhouse op-ed in the New York Times this morning by the (as of this morning, apparently) former Goldman Sachs exec Greg Smith who resigned in protest because of their “toxic and destructive” environment. It is a painful reminder of how out-of-control Goldman has become, but this isn’t just about one company or one set of immoral executives; it’s about the Wall Street system and its allies in the political and media world.

Stories like Smith’s, along with a Mack Truck-load of books and articles written since the financial panic of 2008 about Wall Street greed and corruption, are a reminder of the breakdown of basic morality in the entire culture and structure of Wall Street, and of the destruction and potential destruction this lack of ethics causes the rest of our economy. According to virtually all the reporting, writing, and research we have seen in the last four years, this kind of short-term greed and willful corruption — and in many cases outright law breaking — has been baked into the Wall Street system, so that the honest players like Smith are systematically discouraged, punished economically, and driven from the companies. Only the people obsessed with short-term greed remain. The events of 2008 demonstrated in way too dramatic a fashion the incredible harm that does to the entire economy.

You have to be amused by the massive irony of all this, as these pillars of our society and their close allies in government and the media go on and on about what is moral and what is not. Brian Moynihan, CEO of Bank of America, with its $75 trillion in toxic assets and its terrible track record of heartless foreclosures, talks of the moral hazard of writing down mortgage debt for homeowners. One of Wall Street’s biggest defenders in the media is Rush Limbaugh, who calls young women sluts and prostitutes when they disagree with him. Goldman Sachs’ closest political ally, Mitt Romney, wants to shut down Planned Parenthood because they are apparently so immoral.

The irony is deep because the conservatives who are such fans of Wall Street and so worshipful of free markets say that they are the ones who are for traditional morality. The problem is that the kind of greed they defend gets its morality from a very untraditional place: Ayn Rand, who argued that selfishness was not only a virtue, but really the only one that mattered, and that generosity was immoral because it helped society’s leeches. When a company like Goldman encourages its executives to, as Smith put it, “callously talk about ripping their clients off,” they are simply following Rand’s twisted version of a morality based on greed and selfishness.

When Republicans like Romney, Santorum, Limbaugh, or GOP budget author Paul Ryan (who openly sings Rand’s praises and speaks of her as his biggest influence) speak of morality and values, they seem to never talk of things like companies not cheating people, or fairness, or kindness, or generosity. I suspect that is because they agree with Rand that those are false values that don’t actually matter. But maybe the not cheating/fairness set of values is somewhere on their list but not high enough to mention or think about as much as, say, stopping people having sex.

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The buzz is that President Barack Obama is pushing hard for a deal with the big banks over the foreclosure crisis in advance of the State of the Union address on Tuesday. Most observers are afraid that the deal will be too small and that the banks will get a slap on the wrist despite playing a major role in creating the financial crisis that led to a recession.

AFL-CIO President Richard Trumka joined a growing chorus calling for a rejection of such a small deal and calling for an investigation of the banks over potential fraud and illegal activity:

We need to hold banks accountable for the fraudulent practices that brought about the worst economic crisis since the Depression. State Attorneys General have been investigating bank fraud, and these critical investigations must not be undermined by a premature and inadequate settlement. We call on the administration to reject any deal that insulates banks from full responsibility.

We commend state Attorneys Generals like New York’s Eric Schneiderman and Delaware’s Beau Biden for their leadership and courage in calling for a real investigation and relief on a scale that helps the millions of homeowners who face a new wave of foreclosures.

The economy is currently weighed down by $750 billion in negative home equity, so relief on a massive scale is needed to lift home values and stimulate the economy by increasing consumer demand. A comprehensive settlement must force banks to write down underwater mortgages. A sum significantly larger than the rumored $25 billion is needed for the economy to grow and create jobs.

Specifically, the administration must stand strong against the Big Banks and insist on:

1. A full and thorough investigation into problems tied to the residential mortgage-backed securities (RMBS) market, and

2. A guaranteed minimum amount of money set aside for reducing the mortgage principal of “underwater” homeowners in key states impacted by the foreclosure crisis.

This is an opportunity for the administration to demonstrate leadership and show that it has the political will to do what’s right for homeowners and right for our economy.

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Matt Taibbi has done a stellar job of researching and really digging down into the causes of the Wall Street meltdown. When Megan McArdle faces off with him over whether Goldman Sachs deserves to face criminal charges for their participation, she's outclassed and outspent.

By the way, the "Timberwolf" deal referred to in the video is the same one Carl Levin referred to as a sh*tty deal in the Senate committee hearings as he repeatedly quoted emails turned over to the government during discovery.

Since May, when Taibbi and McArdle went head on at each other over this, the lawsuit filed by Basis Yield Alpha Fund was dismissed and refiled. Basis Yield is seeking $1 billion in damages, alleging that Goldman knew they were selling toxic securities at the time.

So $150 million of our money is going to a government facility in lower Manhattan where representatives of Wall Street firms get to sit alongside the New York Police Department and spy on your basic law-abiding citizens. Written by Pam Martens on Counter Punch:

According to newly unearthed documents, the planning for this high tech facility on lower Broadway dates back six years. In correspondence from 2005 that rests quietly in the Securities and Exchange Commission’s archives, NYPD Commissioner Raymond Kelly promised Edward Forst, a Goldman Sachs’ Executive Vice President at the time, that the NYPD “is committed to the development and implementation of a comprehensive security plan for Lower Manhattan . . . One component of the plan will be a centralized coordination center that will provide space for full-time, on-site representation from Goldman Sachs and other stakeholders.”

At the time, Goldman Sachs was in the process of extracting concessions from New York City just short of the Mayor’s firstborn in exchange for constructing its new headquarters building at 200 West Street, adjacent to the World Financial Center and in the general area of where the new World Trade Center complex would be built. According to the 2005 documents, Goldman’s deal included $1.65 billion in Liberty Bonds, up to $160 million in sales tax abatements for construction materials and tenant furnishings, and the deal-breaker requirement that a security plan that gave it a seat at the NYPD’s Coordination Center would be in place by no later than December 31, 2009.

The surveillance plan became known as the Lower Manhattan Security Initiative and the facility was eventually dubbed the Lower Manhattan Security Coordination Center. It operates round-the-clock. Under the imprimatur of the largest police department in the United States, 2,000 private spy cameras owned by Wall Street firms, together with approximately 1,000 more owned by the NYPD, are relaying live video feeds of people on the streets in lower Manhattan to the center. Once at the center, they can be integrated for analysis. At least 700 cameras scour the midtown area and also relay their live feeds into the downtown center where low-wage NYPD, MTA and Port Authority crime stoppers sit alongside high-wage personnel from Wall Street firms that are currently under at least 51 Federal and state corruption probes for mortgage securitization fraud and other matters.

In addition to video analytics which can, for example, track a person based on the color of their hat or jacket, insiders say the NYPD either has or is working on face recognition software which could track individuals based on facial features. The center is also equipped with live feeds from license plate readers...read on

In order for me to feel truly optimistic, I'd have to believe that these lawsuits are intended to break up the banks and bankrupt them, and of course that's not going to happen. Plus, I can't help but notice this isn't the Justice Department and we're not seeing criminal charges. So is this a real come-to-Jesus moment for the bankers -- or kabuki? Are the Feds really going to recover enough of the money they stole? Of course it would be good if they did, but nothing but some high-profile perp walks will really make up for the devastation these bastards have left behind:

The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.

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More on our little former Goldman Sachs VP. Of course, I'm sure he would never have anything to do with trying to set up Elizabeth Warren:

ThinkProgress has now obtained more evidence that suggests that Haller’s employment under Issa is more akin to a bank lobbyist than a public servant entrusted with protecting the public interest. In May, GOP members on the Oversight Committee invited Professor Elizabeth Warren, then a special advisor working on the creation of the Consumer Financial Protection Bureau, to testify about the new agency. The hearing quickly became a media sideshow, with Republican lawmakers trying to trip Warren up and embarrass her.

One congressman, Rep. Patrick McHenry (R-NC), became infamous overnight for berating Warren and accusing her of lying about her scheduling with the committee. It turns out that Haller, again carrying water for financial corporations afraid of new regulations, was behind the scheduling controversy at the heart of the McHenry confrontation with Warren.

According to e-mail correspondence obtained from Judicial Watch, Haller oversaw the scheduling of the Warren testimony. According to Flavio Cumpiano, a congressional liaison for the CFPB, Haller reportedly changed the time of the hearing at the last minute, then misled Warren staffers by promising to end the testimony by 2:15 pm that day. In the emails, Haller denies ever agreeing to 2:15. But, Haller had been informed that Warren could not go beyond 2:15:

– Monday May 23 8:43pm: Haller writes to Flavio Cumpiano, a congressional liaison for the CFPB, the night before the hearing to make “an [sic] late change to 1:00.” At 11:00pm, Cumpiano responds to figure out a better time.– Tuesday May 24 morning: After Haller and Cumpiano go back and forth with e-mails about which time would be best, a phone conversation occurs between Haller and Adewale Adeyemo, chief of staff to the CFBP implementation team, and a schedule is set. At 10:11am, Cumpiano e-mails Haller: “Hi Peter. I understand from Wally -copied here- that you both spoke and she’ll [Elizabeth Warren] testify from 1:15pm to 2:15pm. Thanks, Flavio.”– Tuesday May 24 afternoon around 2:15pm: McHenry, with Haller sitting behind him, accuses Warren of trying to evading the committee by trying to leave at the agreed-upon time. When Warren noted that McHenry’s aides had agreed upon the schedule, McHenry elicited audible gasps in the room by declaring Warren a liar: “You’re making this up, Ms. Warren. This is not the case.”– Tuesday May 24 2:32pm: As Warren leaves the hearing room, Haller fires off an e-mail to Cumpiano demanding that he “please confirm” that he did not “confirm the end time.” Later that afternoon, Cumpiano responds by reiterating that Haller had confirmed the 2:15pm end time, and had even told Adeyemo that he would inform McHenry of the schedule during the call.

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Weingarten is a very heavy legal hitter, so it looks like old Lloyd really is worried. Geeze, Lloyd, haven't you noticed bankers don't go to jail? (h/t odd man out.)

Goldman Sachs Chief Executive Lloyd Blankfein has hired high-profile Washington defense attorney Reid Weingarten, according to a government source, as the Justice Department continues to investigate the bank.

Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank, which has spent two years fending off accusations of conflicts of interest and fraud.

The move to retain Weingarten comes as investigations of Goldman and its role in the 2007-2009 financial crisis continue.

The news spooked already jittery investors. Goldman shares fell sharply in the final minutes of regular trading after Reuters reporting the hiring, finishing down 4.7 percent at $106.51, their lowest level since March 2009.

They slipped further in after-hours trade to $105.45.

The Senate's Permanent Subcommittee on Investigations (PSI) in April released a scathing report that criticized Goldman for "exploiting" clients by unloading subprime loan exposure onto unsuspecting clients in 2006 and 2007, and concluded that its top executives misled Congress during testimony in 2010.

[...] "This was the last thing that Goldman Sachs or any institutions in the sector needed," said Peter Kenny, managing director of Knight Capital in Jersey City, NJ. "There is zero tolerance for risk or perceived risk right now."

What a touching story:

A staffer working for Rep. Darrell Issa's Oversight Committee on financial regulation issues has come under scrutiny by ThinkProgress for changing his name after he left his previous position at Goldman Sachs. The story implied that he changed his name three years ago to hide his background with the company.

But Peter Haller, formerly known as Peter Simonyi, said in a statement to TPM that he and his sister switched their names a few years back to respect the last wish of his grandfather to carry on his mother's family name.

His mother's father, Alfred haller-koi gr Haller, was killed by fascists in Budapest in 1944 when he tried to stop children from being conscripted into the military, Haller said.

“My mother, whose maiden name is Theodora Maria Theresia haller-koi gr Haller (in the U.S., Dora Haller), married Imre Gabor Simonyi and took his name. Her father Alfred haller-koi gr Haller was killed in Budapest in 1944 by fascists as he attempted to prevent children from being conscripted into the military. Prior to his return to Hungary in 1944, he served under Regent Miklos Horthy, as a Hungarian diplomat stationed in England supporting the British in opposition to Germany. His last request was that if Theodora marries, her husband and children would carry on the Haller name.”

"As my sister and I became adults, at some point discussions began that we should carry on the name of my mother's family, which had lived in Transylvania, up until it was granted to Romania under the Treaty of Trianon after World War I," Haller said.

"During a period of unemployment following my time at Goldman Sachs, I found the time to proceed with the name change, as did my sister," Haller said. "Please note my father and mother remain happily married to this day."

The War Nerd's Gary Brecher, however, begs to differ about this family tale, contending that if Peter's grandfather was killed by fascists, it was merely because he was from a different faction of fascists:

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Is there no end to the perfidy of Wall Street and their enablers? Even for Darrell Issa, who's been rumored to boost a car or two, this is truly outrageous:

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Peter Haller Simonyi.

Has Rep. Darrell Issa (R-CA) turned the House Oversight Committee into a bank lobbying firm with the power to subpoena and pressure government regulators? ThinkProgress has found that a Goldman Sachs vice president changed his name, then later went to work for Issa to coordinate his effort to thwart regulations that affect Goldman Sachs’ bottom line.

In July, Issa sent a letter to top government regulators demanding that they back off and provide more justification for new margin requirements for financial firms dealing in derivatives. A standard practice on Capitol Hill is to end a letter to a government agency with contact information for the congressional staffer responsible for working on the issue for the committee. In most cases, the contact staffer is the one who actually writes such letters. With this in mind, it is important to note that the Issa letter ended with contact information for Peter Haller, a staffer hired this year to work for Issa on the Oversight Committee.Issa’s demand to regulators is exactly what banks have been wishing for.

Indeed, Goldman Sachs has spent millions this year trying to slow down the implementation of the new rules. In the letter, Issa explicitly mentions that the new derivative regulations might hurt brokers “such as Goldman Sachs.”Haller, as he is now known, went by the name Peter Simonyi until three years ago. Simonyi adopted his mother’s maiden name Haller in 2008 shortly after leaving Goldman Sachs as a vice president of the bank’s commodity compliance group. In a few short years, Haller went from being in charge of dealing with regulators for Goldman Sachs to working for Congress in a position where he made official demands from regulators overseeing his old firm.

It’s not the first time Haller has worked the revolving door to help out Goldman Sachs. According to a report by the nonpartisan Project on Government Oversight, Haller — then known as Peter Simonyi — left the Securities and Exchange Commission (SEC) in 2005 to work for Goldman Sachs, then quickly began lobbying his colleagues at the SEC on behalf of his new firm. At one point, Haller was requiring to issue a letter to the SEC stating that he did not violate ethics rules and the SEC agreed.

UPDATED via TP:

Haller tells TPM that he changed his name after his employment at Goldman Sachs to honor his Translyvanian heritage. In his comment, he did not dispute that he worked on Issa’s letter to bank regulators.

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The Project on Government Oversight has identified three more letters from Issa’s office bearing Peter Haller’s name, including one that specifically references Goldman. “If Haller’s name change had not been discovered, would anyone have been able to piece together his history?” POGO asks.

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Despite the Issa office’s furious efforts to pushback on our story and obfuscate our key findings, the story remains factually true. See our explanation here.

Sounds like Spitzer's on a campaign to push hard for the prosecution of Goldman Sachs. This, from last week:

Eliot Spitzer challenges investment banker Goldman Sachs: "Sue me. I don't care. You lied to the public, you should be prosecuted" during an interview with Sen. Carl Levin, chairman of the Senate subcommittee charged with investigating the causes of the financial crisis.

Here's a transcript of what Spitzer said:

SPITZER: Senator, I'm going to take a leap. I'm going to say it out loud. Very directly.

Goldman Sachs, you lied to the public. You lied to your clients. You've got a problem. You come on the show. Sue me. I don't care. You lied to the public, you should be prosecuted.

I'm going to say it right now. And I hope they are.

Listen to Spitzer challenge Holder in his appearance on Anderson Cooper, then go read this William Greider article on "How Wall Street Crooks Get Out of Jail Free".

Then read this Politico piece on how conservative members of Congress are more upset that Holder is refusing to devote DoJ resources to prosecuting something much more important: online pornography.