Tag Cloud
Friday, February 10, 2012
Mayor lauds Goldman Sachs' work, Cohn sues the bank
by Kathleen Haley, published on February 11, 2010 at 7:55 PM
Storyline: Sacramento City Hall / Politics
Community Tags
aig
bank of america
business
citibank
city of sacramento
goldman sachs
kevin johnson
michael duvally
municipal derivatives
politics
public policy and administration department at california state university
rob wassmer
sacramento
sacramento city council
sacramento municipal utilities district
steve cohn
wells fargo
Loading images
A major international bank that has generated controversy on the national level is being welcomed to Sacramento by the city’s mayor. At the same time, Goldman Sachs is being sued by a city councilman.
Sacramento Mayor Kevin Johnson’s volunteer arena task force has applauded Goldman for volunteering to work with task force members to analyze proposals for a new entertainment and sports complex.
Meanwhile, City Councilman Steve Cohn is suing Goldman as part of his day job. Cohn is the Chief Assistant General Counsel for the Sacramento Municipal Utilities District, which is fighting Goldman in federal court in New York.
SMUD alleges that Goldman and 46 other financial companies together cheated the utilities district on "municipal derivatives," which are complex financial mechanisms.
Goldman’s billions in profits have received attention because the Bush administration gave the company $10 billion during the 2008 bank bailout, according to a New York Times report.
Goldman reimbursed the $10 billion to the federal government last June, the Times reported.
Johnson praised Goldman at a press conference last month, saying the firm could help the city.
“We wanted to negotiate from a task force standpoint from a position of strength,” Johnson said. “So, if Goldman Sachs is one of the best in the country, if I can get them to serve on the task force to evaluate proposals, the city wins.”
Rob Wassmer, a professor of Public Policy and Administration at California State University, Sacramento, said that while Goldman is currently volunteering with the task force, the company will likely be interested in future business involving a Sacramento arena and entertainment complex. If a proposal for an arena moves forward, Goldman would likely be interested in working on bond sales and financing, Wassmer said.
Goldman is not volunteering “out of the charity of their heart,” Wassmer said.
Michael DuVally, a Goldman spokesman, declined to answer questions from The Sacramento Press.
While Johnson praises Goldman, SMUD claims the bank has deceived public agencies.
Cohn told The Sacramento Press he was SMUD’s in-house attorney, managing the lawsuit with an outside law firm.
A SMUD press statement explains that the municipal derivatives are “financial products that allow SMUD and other entities to earn money on the unused portion of funds they get from selling bonds.”
The utilities district accuses 47 companies of working together to cheat public agencies. SMUD claims in the press statement that Goldman and 46 other firms “conspired to rig the bidding process for derivatives so they would know beforehand who would win the business of SMUD and other public entities.”
Cohn noted that Goldman’s volunteer work with the task force is not directly related to the SMUD lawsuit. He also pointed out that Goldman is one of many financial companies named in the lawsuit. Other companies being sued by SMUD include Bank of America, AIG, CitiBank and Wells Fargo.
SMUD’s case is now being joined with other cases, Cohn said. “This is a very, very large and complex litigation,” he said.
Cohn said he expects that the case will not see trial for at least one year, and possibly several years.
SMUD sued the financial companies Nov. 12 in federal court in Sacramento. Since then, the case has been moved to New York federal court.
Read SMUD’s Nov. 12 lawsuit here.
Photo of Steve Cohn, Sandy Sheedy and Ray Tretheway by Anthony Bento.
Photo of Johnson by Jonathan Mendick.
Kathleen Haley is a staff reporter for The Sacramento Press.
Conversation Express your views,
debate, and be heard with those in your area closest
to the issue.
Leave a Comment
--Matt Taibbi, from Rolling Stone magazine
http://www.rollingstone.com/politics/story/28816321_inside_the_great_american_bubble_machine
Inside The Great American Bubble Machine
Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression
I would look closely at the financial credentials of anyone who currently lauds them and especially the fine print disclaimer notes to any advice they might provide!
But Cohn has GOT to be at least SOMEWHAT conflicted about these issues -- if he has any semblance of ethics... which, may be doubtful....
But what is so laughable about this is KJ's laudatory praise of Goldman especially in light of the past year's revelations about the conduct the firm has engaged in, and the mantle the firm has been given by the mayor, which is tainted at best, and the kiss of death, at worst....
Also of note, as mentioned in this piece, are Goldman's interests in pursuing such a relationship... with a possible beneficial and lucrative outcome on their behalf -- all courtesy of KJ... I just wonder what KJ promised in return for whatever 'blessing' Goldman will lend toward whatever obviously pre-determined outcome KJ's little groupies will opt for....
Do we need yet another investigation?????
2., What makes Steve Cohen think he is such a white knight?? SMUD should be suing HIM along with Goldman Sachs. If Mr Cohen cannot in great detail explain the nuances and risk of utility futures derivatives, he had an obligation at the time to ensured SMUD never got entangled with them. The first thing SMUD needs to do now is to fire him along with the rest of its Counsel staff.