Goldman Sachs Links and News - April 28, 2010 - Featuring Larry's Corner

      Senate Hearings...have you heard?


The media and blogs were up late last night and it seems everybody is talking about the Senate hearings and Goldman Sachs.  Wow, news alerts were coming in steadily from the conclusion of the hearings straught through the night.  Again, the number of alerts I received doubled from their usual volume.  That's a lot of reading.  

What we are seeing is par for the course - a mixed bag of opinions and observations.  Some like it hot and some like it cold.  Almost no one sits in the middle and likes it warm.  So how does one analyze what some portray is a "circus"?  Simply, you don't.  Giving an analysis is largley based on one's personal feelings about Goldman Sachs.  To be somewhat accurate one would have to watch the ten plus hours of he hearing several more times and to be even more accurate in giving an evaluation one would have to actually read the trasnscript.  Whew, that would probably take as long to read as it does a Congressional Bill - and we all know most don't read those.


Those who support Goldman Sachs - like former President Bill Clinton - have said GS has done no wrong.

Former President Bill Clinton said he’s skeptical that Goldman Sachs Group Inc. broke the law...(click here to read Ex-President Clinton Says He's Skeptical That Gold,am Violated Any Law in Bloomberg BusinessWeek)

Some are saying that GS won a victory at the hearings.  I am not sure how one can be victorious at a Congressional hearing where you are sworn to tell the truth, the whole truth and nothing but the truth, so help you God.  But of course, when you have a direct relationship with God and a mandate to do his work, what ever you say must be Gospel.  The truth according to the Lord (Blankfein).rules victorious above all.

Then there are those who do not like GS ( like us ) and would love to see their demise who even go as far as saying that their testimony at the hearings was their death bell.  (I personally don't think these hearings will lead to the end of GS...sadly). 

I saw something die today. It didn't die accidentally either. It was killed.
This was a very painful event to watch, not just because death is tragic and not because this death was intentional rather than accidental.   (see complete story in HuffPost by Steve G. Brant, The Death of Goldman Sachs)

 So what can we take away from spending over 10 hours of precious time watching this Washington drama, our eyes and ears glued to our TV screens or computer monitors, Ipods or other 3G devices?  Just some observations with no judgement of right or wrong.


The first panel of witnesses were all very guarded, some nervous and uncomfortable (understandable) and very evasive.  Very few questions were answered directly or even answered at all.  Of all the gentlemen on the first panel, I would have to say Fabrice Tourre was the most confident and eloquent, which for someone who is at the core of the SEC law suit, speaks highly of his strength of character.  (I am making no judgment as to his guilt or innocense nor his ethics.  I was just very impressed withthe way he spoke and handled himself.

Then came the second part of the hearing with GS CFO David A. Viniar.  If one were to form a first impression of the company from his presentation and demeanor, that impression would be very positive.  He handled himself with a lot of confidence, self esteem and knowledge. What was most impressive about him, as a colleague watching with me said, was that he spoke with respect even when disrespected.  He talked directly to the questioner, not above him/her as previous panelists did.  He did not represent himself as that typical arrogant - better then you - Goldmanite.  He was, I must say very eloquent.

Finally came panel 3 whose sole member was none other then GS CEO Lloyd (Lord of the Rings) Blankfein.  Wow, I found him to be embarrassing to say the least, evasive due to insecurity as well as lack of knowledge.  More over, if his constant lack of knowledge was due to plausible reliability, he should have been a little more convincing.  It was not very plausible..

He rarely finished a thought often changing direction in mid sentence.  He hemmed and hawed quite a bit obviously looking for ways not to step on his tongue and mis speak the truth.  I personally found him to not to be the buck stops here, I'm in control and have done nothing wrong top executive of the company.  I personally feel he will be a casualty if being thrown out with billions of dollars can be considered a casualty.

All in all, some valid and damaging information did come out mainly in the reading of the documents contained in that very thick loose leaf binder everyone had in front of them.  An interesting fact that was brought out is that the only emails released by Goldman Sachs were those of Fabrice Tourre.  When questioned why - there was - no answer.  It is obvious to all - at least to me - that they - GS - were throwing him to the wolves as a sacrificial lamb.

One other major point was made and that was ethics or lack thereof.  There did seem to be a great deal of conflict of interest and ethical violations in many GS transactions and business dealings.  I suppose the two combined can equal fraud but that is for a judge and jury to decide- not you, me or the Senate.  Those allegations should be brought by those directly or even indirectly impacted.  Apparently this is happening.  Other lawsuits are forthcoming and one - specifically  - coming from GS stockholders. 

Ladies and Gentlemen, Boys and Girls, Children of All Ages, Welcome to the Capitol Hill/Wall Street Circus.

Yes, this is a three ring circus..  In ring number 1, the Senators.  In ring number 2, the Goldmanites.  (Upcoming shows will feature other Wall Streeters in ring number 2).  In ring number 3 the SEC charge of fraud against one very small element of Goldman Sachs.  Send in the clowns.

As with those in the hot seat some of our Senators did not exhibit control or even what I would call professionalism.  Their function, if this were a true hearing, was to ask questions and get answers.  Too often they made comments and passed judgment. They brow beat the witnesses and sometimes told them what they wanted to hear from them.  Some Senators showed their anger - which as our representatives mirrors the anger of many of us.  But I personally don't believe that this was the forum to do so.  I think it simply added to the drama and entertainment value of what can be considered a reality TV program.

The committees job, I believe,  was to ask questions, get answers of those called to testify under oath.  If no answer was given or a diversion taken by a witness it should have been so noted and questioning continued..  Personal opinions and comments made to witnesses were also inappropriate even though I enjoyed some of them.  the comments and opinions should have been made after all the testimony was heard, analyzed and a report given by the Committee Chairperson.

Whose opinion is correct?
Browse the links below.  Listen to all the different opinions and observations, listen to the testimony again and decide for yourself.  Your opinion is as good as anyone's.  Any and all of our opinions are just that - opinions  The opinion that will matter will be the opinion that is rendered by a judge, jury or court, a regulatory agency with teeth and punishment or by the U.S. Government if vioations and actions against the country or its people are found to have occurred.  The real justice will be in the punishment - if any.  . The guilt or innocence of the specific SEC fraud charge is not the real issue.  Again, it must be brought out that this is a civil suit that could very well never see the inside of a court room and guilt or innocence never determined.

This hearing and the SEC civil law suit are part of this three ring circus.  The real issues and the real questions have yet to be brought out and asked although if you listen very carefully there does seem to be a foundation being laid for the real issues and questions to be raised.

My next post will be on the real issues and questions  Goldman Sachs should be asked.  What was their  real role in the economic crisis.  Who is responsible and Why?  Who should be accountable to the millions and millions devastated?


Senate hearings made politicians look worse than Goldman Sachs
Baltimore Sun
All-Star Panel on 'All-Star' panel on Goldman Sachs, Democratic Push for ...
FOXNews
Goldman Trader 'Hedging' Means 'Conflict' to Senator
BusinessWeek
Organized Labor Puts a Bull's-eye on Wall Street
DailyFinance
Goldman Sachs Crossed Ethical Lines in Selling CDOs, Levin Says
BusinessWeek
Goldman Sachs deal in fraud case involved unsophisticated investors
Los Angeles Times
Goldman Sachs Hearing: Senators Wield Oversimplified Metaphors, Execs Fight ...
Huffington Post (blog)
Self-Evaluations Pose New Concern After Goldman Sachs Hearing
BusinessWeek
Political Wisdom: Arizona, Goldman Sachs Stir the Pot
Wall Street Journal (blog)
Goldman Sachs Says SEC Case Hinges on Actions of One Employee ... 
Bloomberg
Goldman Sachs Emerges From Senate Showdown Ahead $549 Million ...
Bloomberg
Comparing Goldman Sachs to a Casino is an Insult to Casinos
Huffington Post (blog)
Goldman Sachs: Playing Devil's Advocate
Forbes (blog)
Bill Clinton Says He Isn't Sure Goldman Broke Law
BusinessWeek
Political Grandstanding: Wall Street Slams Goldman Sachs Hearings
ABC News
Lincoln gives Goldman Sachs donations to charity
Washington Post
RBS Chairman Says Too Soon To Act On Goldman Sachs Transaction
Wall Street Journal
RBS Chairman Says Too Soon To Act On Goldman Sachs Transaction
Wall Street JournalJon Slattery: Thomson Reuters chief defends Goldman Sachs
By Jon Slattery
 Goldman Case Is Just 'the Beginning' for Banks, Malmgren Says
BusinessWeek
 Goldman's Viniar, Sen. Levin Agree: Don't Say Securities 'Crap'
BusinessWeek
'Fabulous Fab' Goldman Sachs exec Fabrice Tourre, Wall Street sext king, is a ...
New York Daily News
For Some on Wall St., the Spectacle on TV Was Background Noise
New York Times
Goldman Sachs Gets Potty Mouth Grilling
FOXNews
Congress berates Goldman Sachs
Chicago Sun-Times
Accused Goldman Sachs Exec Crowed Of Pending 'Collapse' -SEC - WSJ.com
NEW YORK (Dow Jones)--
Viniar Says Firm Didn't Negotiate With Treasury on AIG Payments
BusinessWeek
Goldman Sachs Grilled: Join the Live Chat
CNN (blog)
Goldman Sachs Knows How to Get 'Er Done!
Vanity Fair
Goldman Sachs' Long Day In Washington « Forbes.com's StreetTalk
By Nathan Vardi
Goldman Sachs's Tourre to 'Categorically' Deny SEC's Claims ...
By By BLOOMBERG NEWS
Goldman Armed Salespeople to Dump Bonds, E-mails Show
BusinessWeek
 Fabulous Fab Shows Managers Oblivious to E-Mail Peril
BusinessWeek
Goldman Sachs executives face senators investigating role in financial crisis
Washington Post
Goldman Sachs, Goldfish Eat Their Young
Huffington Post (blog)
Goldman Sachs Gains as Senate Hearing Questions Executives
BusinessWeek
Wall Street Comparison Offends Las Vegas, Ensign Says
BusinessWeek
Goldman Sachs bankers disagree on duty to clients
MarketWatch
Enron law firm sues Goldman Sachs
CNNMoney
 Probe: Goldman Eyed Profits from Housing Bust
CBS News
Goldman Sachs Suffers The Perils Of PR Spin
Forbes
Goldman Sachs fraud is criminal
Chicago Tribune
Will their bite match their bark? Obama advisor rails against Goldman Sachs ...
New York Daily News

Will Goldman fraud lead to real reform?

From Ampedstatus:

Not only did Goldman Sachs profit on betting against CDOs they designed to fail; more importantly, they insured them through AIG which led to a $182 billion taxpayer bailout.

Have you heard the news? It’s everywhere! The SEC and Congress have all of a sudden sprung to life and are now “getting tough” on Goldman Sachs. Is this all the first phase of a long-awaited investigation that will reveal the causes of our current economic crisis, or is this just more show trials and psychological operations designed to manipulate public opinion and make the American people feel that our elected officials are finally standing up to their campaign funders on Wall Street?

First off, let’s address these SEC charges against Goldman Sachs. At first glance you might think, oh big deal, this is just a minor civil suit that only indicts a low-level Goldman employee. Goldman will just throw some money at it and it will most likely go away. After all, Wall Street firms have already thrown over $430 billion out to derail 1500 cases against them, so what will make this any different?

We are also left wondering, if the SEC was serious about this case, why aren’t they investigating and prosecuting John Paulson and top Goldman executives under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) statutes? Even the NY Times reported that top executives were involved in the process. If you think Lloyd Blankfein wasn’t fully aware of this billion dollar deal involving John Paulson, you’re delusional. Blankfein became CEO of Goldman due to his outstanding expertise in this particular area, serving as Goldman’s head of the Fixed Income, Currency and Commodities Division (FICC) since its formation in 1997.

So unless this is just the first of many moves on the part of the SEC, this whole case amounts to a psychological operation designed to once again quell popular outrage. These indications lead me to believe that this is a classic “limited hang-out.”

....

Read the rest here

More Goldman Incestuos Relationships

From Alternet:

Ex-Goldman Trader Bought Major Stake in ACA, Shorted Subprime CDOs

The Goldman-Paulson fraud suit threatens to throw a spotlight on a realm of Wall Street that has escaped most scrutiny throughout the financial crisis: the hedge fund industry. Top hedge fund managers profit from Wall Street’s business model of fraud and collusion more than any CEO at the big banks, but tend to evade accountability because of the opacity of their industry and their extraordinary power.

One such hedge fund manager is Richard Perry. Perry, a former Goldman Sachs trader, became known as one of the subprime winners in 2007 — one of the hedge fund managers who saw the crisis coming, and placed profitable bets that the housing market would collapse. Perry reportedly shorted $3 billion in subprime-related securities, netting a $1 billion profit on the trade.

....

Perry’s winning billion-dollar subprime short, alongside his major investment in ACA, is all the more notable because of his ties to Goldman Sachs. He was a star trader at the bank under former Goldman Sachs head Robert Rubin, and has partnered with the bank on investments in recent years. Perry is extremely close to Rubin, outside of the professional context — former babysitter to his children, teaching assistant, and advisory board member at Rubin’s Hamilton Project. Despite being extremely close to someone who made $1 billion shorting the subprime market, Rubin has called the financial crisis a “perfect storm” that no one saw coming.

....

Read the rest here

Goldman Hearings Followup

Well, the hearings are over. Predictably, Blankfein attempted to dodge all blame. Their strategy of misdirection may have worked for some but that's not gonna fly here.
It is exactly what we expected and with the exception of Levin, it was a dog and pony show. The Automatic Earth (among many others) predicted it as well:

For now, Blankfein et al will be fine, they may just not like all the pesky questioning, but they'll leave confident that they've won the day. That's their default mindset, after all, and an addiction to boot. It could also, however, easily be their undoing.

It seems they followed their strategy well and Levin was none too pleased about it.
From the ABA Journal:

A lawyer reportedly helping Goldman Sachs executives prepare for a Senate hearing today revealed his usual strategy for congressional hearings in an interview last year.

O’Melveny & Myers partner K. Lee Blalack II told the American Lawyer last March that a congressional hearing room is not a forum for divining the truth, according to The BLT: The Blog of Legal Times. The goal, he said, is minimal damage to reputation.

“Long, thoughtful pauses followed by rambling nonresponsive answers can easily devour half of a member’s allotted questioning time,” Blalack told the American Lawyer.

Looks like ole Abe Lincoln is as relevant today as he was back then:

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question its methods or throw light upon its crimes…....corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Recommended Reading:

I'm only part way through Amped Status' Report "The Economic Elite Vs. The People of the United States of America" but so far it looks to be an excellent and complete article.

I have the "Lost Science of Money" from the AMI on order and I'll post more about that later.