The Senate hearings on Goldman Sachs got underway this morning, and what a show it was. Senators opened their 5 minute remarks with statements that it was “unsettling” that Goldman Sachs sold securities to clients when it was taking substantial short positions, betting against those very same products. Unsettling indeed. A word like outrageous might have been more appropriate, but the semantics will flow depending on one's opinion of the matter.
What ensued was a series of opening statements by the four Goldman reps, all heavily laden with investment jive, and a heavy emphasis on the firm's role as a “market maker” as an apparent cover for the schemes they concocted. Then, when confronted by an 8 inch thick exhibit book with copies of internal emails, the Goldman strategy was to flip through the pages while offering up halting, confused answers, like school boys asked to turn to page 171 of their textbook and being unable to find the material in question.
At one point Senator Levin presented an email where internal Goldman Sachs officials referred to securities offered by a firm called “Timberwolf” as a “shitty deal” and asked if Goldman had an obligation to inform its clients that it was offering up this steaming platter of toxic waste when in fact they were shorting the deal themselves. Levin read email after email where Goldman senior managers urged sales teams to continue selling this “shitty deal” to clients after they made that assessment about it.
As the other senators took their turn, questions arose about the numerous mortgage “originators” during the boom who were issuing the so called “stated income” loans (liar loans) like candy on Halloween. The thought came to me that Goldman's role in then selling off the bad loan tranches as securities and their deft short selling of same for profit was just the tip of the iceberg. Where was the FBI while companies like Long Beach Mortgage, Countrywide, WAMU and countless others were cranking out these bad loans? Where were the regulators at the SEC while the securities were being structured and sold? The “unsettling” answer was that they were browsing porn sites on the Internet.
What we are seeing now is the barest glimpse of how the Big Boyz in their expensive suits work on Wall Street. And what we continue to see in the nearly half million first time claims for unemployment insurance each month is the inevitable result of the greed and corruption that has now been adopted as a market making best practice by the Alpha Plus of our society, the men who all pull down millions in points fees, interest and bonus money while all the rest of us struggle on trying to pay that 30% interest back on our credit cards.
Americans get this in their gut, even if 99% of them will not be watching the Senate hearings on CSPAN like I was this morning. Did Goldman Sachs have an obligation to serve the best interest of their clients as a market maker? The hemming and hawing and inability to find the correct page in the exhibit book was what we got in answer to that question.
Folks, this is just the beginning. These are things I, and other informed bloggers, have been writing about for years now, in one article after another. The whole “unsettling” mess has finally reached the kabuki theater of the Senate hearing chamber. Will it result in any meaningful reform? That remains to be seen. Up until now, as Senator McCaskill put it, the securities traders have had less supervision that a pit boss in Vegas.
What ensued was a series of opening statements by the four Goldman reps, all heavily laden with investment jive, and a heavy emphasis on the firm's role as a “market maker” as an apparent cover for the schemes they concocted. Then, when confronted by an 8 inch thick exhibit book with copies of internal emails, the Goldman strategy was to flip through the pages while offering up halting, confused answers, like school boys asked to turn to page 171 of their textbook and being unable to find the material in question.
At one point Senator Levin presented an email where internal Goldman Sachs officials referred to securities offered by a firm called “Timberwolf” as a “shitty deal” and asked if Goldman had an obligation to inform its clients that it was offering up this steaming platter of toxic waste when in fact they were shorting the deal themselves. Levin read email after email where Goldman senior managers urged sales teams to continue selling this “shitty deal” to clients after they made that assessment about it.
As the other senators took their turn, questions arose about the numerous mortgage “originators” during the boom who were issuing the so called “stated income” loans (liar loans) like candy on Halloween. The thought came to me that Goldman's role in then selling off the bad loan tranches as securities and their deft short selling of same for profit was just the tip of the iceberg. Where was the FBI while companies like Long Beach Mortgage, Countrywide, WAMU and countless others were cranking out these bad loans? Where were the regulators at the SEC while the securities were being structured and sold? The “unsettling” answer was that they were browsing porn sites on the Internet.
What we are seeing now is the barest glimpse of how the Big Boyz in their expensive suits work on Wall Street. And what we continue to see in the nearly half million first time claims for unemployment insurance each month is the inevitable result of the greed and corruption that has now been adopted as a market making best practice by the Alpha Plus of our society, the men who all pull down millions in points fees, interest and bonus money while all the rest of us struggle on trying to pay that 30% interest back on our credit cards.
Americans get this in their gut, even if 99% of them will not be watching the Senate hearings on CSPAN like I was this morning. Did Goldman Sachs have an obligation to serve the best interest of their clients as a market maker? The hemming and hawing and inability to find the correct page in the exhibit book was what we got in answer to that question.
Folks, this is just the beginning. These are things I, and other informed bloggers, have been writing about for years now, in one article after another. The whole “unsettling” mess has finally reached the kabuki theater of the Senate hearing chamber. Will it result in any meaningful reform? That remains to be seen. Up until now, as Senator McCaskill put it, the securities traders have had less supervision that a pit boss in Vegas.
