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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, January 26, 2010

Did Goldman Sachs' Blankfein commit perjury?

Maybe not to the exact letter of the law but certainly not the "whole truth". ZeroHedge does another outstanding job as does the WSJ on this one....
The implications of this discovery are huge as they essentially destroy all the arguments presented by the FRBNY about an inability to extract concession out of Goldman (which being the largest AIG CDO counterparty, was the critical negotiating factor). It also casts doubt on the veracity of any arguments presented in Congress by Goldman representatives discussing the potential to take a haircut on their AIG exposure. What this means in plain English is that, in the month before the Fed entered the scene, GOLDMAN SACHS ITSELF OFFERED TO TEAR DOWN THE CDS ON AIG'S CDO PORTFOLIO (we don't use caps lock lightly). This is basically a smoking gun on the moral hazard issue perpetrated by the FRBNY when it got involved, and indicates that through their involvement, Tim Geithner, Sarah Dahlgren or whoever, not only did not save US taxpayers' money, but in fact ended up costing money, when they funded the marginal difference between par (the make whole price given to all AIG counterparties after AIG was told to back off in its negotiations) and whatever discount would have been applicable to the contract tear down that had been proposed by Goldman a mere month earlier. This, more so than anything presented up to now, is the true scandal behind the New York Fed's involvement.


Last but not least, was it not Mr. Blankfein who just two weeks ago, before the FCIC committee, noted he had never gotten a request to take less than 100 cents on the dollar on AIG CDS? So what happens if it was he who offered less than 100 cents? Should that maybe have been at least mentioned in passing? Is that some equivalent of perjury, or will the semantics lawyers come out in force?
It looks like Goldman was willing to take a haircut on their CDS/CDO gambling spree but Geithner or someone at the Federal Reserve Bank of New York (Sarah Dahlgren?) wanted to burn the taxpayers by paying 100 cents on the dollar.

Read the whole article here and more comment from TickerGuy here


Larry Rubinoff said...

If the testimony at the hearings were done "under oath" then perjury is the right word to use.

If not under oath, then lying to a committee created by our government (the people) is still a crime.

And that is the problem we are facing. Many in government and the private "too big to fail" sector lie and deceive the public and are allowed to get away with it. Is this not corruption?

What a tragedy watching this whole scenerio unfold. Tragic for the citizenry but even more so, if we allow it to continue, future generations will find themselves enslaved in a country similar to those we are fighting and have fought over the years. America is losing its luster.

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