12 thoughts on “For Goldman Sachs, It’s the Crime AND the Coverup

  1. Dennis Lang says:

    “Sounds like we will make some serious money.” Goldman executive Donald Mullen. The profit motive seemed to be working well. Makes you sick.

    1. PM says:

      Mike:

      i liked the presentation you pointed me to–it was clear and interesting.

      the article I referenced above makes the point that the question of whether or not the investors were “sophisticated” or not, and could have/should have understood the risk involved is completely and totally irrelevant to this charge, as a matter of the law.

      The entire question, framed as it is in the complaint in a civil case, hinges solely on Goldman’s actions alone–it is a question of fraud–ie., did Goldman lie?

      the author makes the point that the case is very artfully constructed so that the classic defense–sophisticated investors should know the risks already–is totally unavailable to Goldman. Further, the case really does not hinge upon a conflict of interest–it is simply and completely a question of fraud. The author also makes the point that the actual complaint itself largely proves the fraud charge, because they already have the internal Goldman documents that conclusively show Goldman saying things that they (Goldman) know to be untrue (because they acknowledge this in other documents).

      If this author is correct, Goldman is in real trouble. The author thinks that the SEC has an extremely strong case, and that what they are really looking for is an opportunity to “turn” the Goldman guy at the center of this to get even more info on Goldman and the industry.

      Could be interesting. (at least this level of activity by the SEC suggests that they are looking at things besides porn nowadays)

      1. Mike Kennedy says:

        PM:

        I read the article you posted. It’s very interesting and I don’t dispute anything he or you said. However, it clearly seems there are serious questions about Goldman lying or committing fraud.

        What lawyers call “errors of omissions” are not crimes, even if they can be proven. Goldman does not have any responsibility to alert people on one side of a trade that someone else is taking another side and who that person or organization is.

        This is an interesting take from The Economist.

        http://www.economist.com/opinion/displayStory.cfm?story_id=15951777&source=hptextfeature

        The case and outcome will be interesting.

  2. Mike Kennedy says:

    Good analysis and some very interesting stuff. A friend of mine read the book “This Time It’s Different” (a sarcastic rejoinder to the common belief) and liked it but said it is so dry and heavy that’ it’s hard to get through.

    Regulation is ALWAYS necessary, but it’s the amount of regulation and who is doing the regulating that are the sticking points.

    It’s much like cooking. Too much of anything can spoil the entire dish, as can not enough. The trick is to get it just right. We are still trying to do that.

    On another note, anyone see the History Channel’s first installment of “America. The Story Of Us” last night? It is the first two hours in a 12 hour series. I enjoyed it very much.

    I knew I would like it when Tom Shales of the Washington Post said he disliked it.

    1. PM says:

      I want to clarify one thing–it is almost impossible to use too much garlic when cooking. And chocolate–never too much.

      (but, of course, maybe not together….)

  3. Mike Kennedy says:

    Absolutely. I haven’t worked downtown Minneapolis in 15 years, but I fondly remember the garlic smell of the Palomino wafting through a three block radius of Hennepin and 8th.

    It made me salivate like a dog, as does dark chocolate and a perfect steak. All these thoughts and I just finished dinner.

    1. Good one, Bruce. the level of willful ignorance involved in the entire collapse, not just the AIG – Goldman, Sachs end — is fascinating to me. Since we really are talking some very smart people in every office related to cooking these “products”, deals and oversight, not to mention the watchdog journalists who quite clearly knew as little about the mushrooming derivatives market as Alan Greenspan (or avoided annoying their editors and sources by writing “WTF?” stories about the explosive growth of said “products”).

      i see no reason NOT to take a “guilty until proven innocent” approach toward everyone involved. None of these kids were toothless convenience store clerks blindly hoping to win the lottery. Until proven otherwise I’m assuming they knew damn well what they were doing, and that, at best (and according their in-house counsel) it was a millimeter this side of the “legal line”.

      1. “Innocent until proven guilty” holds as the standard of American justice for accused terrorists, rapists, murders, etc. — but not for accused financial pillagers? It’s these folks who warrant tossing that aside?

  4. Mike Kennedy says:

    Best article I’ve read yet trying to explain the market for financial instruments, the role investment banks serve and the total and complete rush to demagogue an issue by politicians.

    http://article.nationalreview.com/433223/the-senate-and-goldman-sachs/daniel-krauthammer?page=1

    I, for one, still find it laughable that Goldman apparently “defrauded” itself by taking a long position on this investment, resulting in a $90 million loss. Can they file a complaint with the SEC against themselves?

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