Goldman Sachs: At war with Washington

[CHIMO]

One tweet yesterday said it all: "How can the government sue Goldman Sachs? I thought Goldman Sachs ran the government." That charge is just a tad harder to make today, now that the biggest investment bank on Wall Street is fighting a civil suit for fraud filed by a government watchdog. For anyone who wants a reckoning for the economy-devastating episode that is the banking crisis, this bears the promising indications of war between Wall Street and Washington.

Even more satisfying, this case goes straight to the heart of the financial crisis: it is about the dodgy sub-prime mortgage vehicles that drove all the market madness. According to the Securities and Exchange Commission, Goldman Sachs created a package of dodgy home loans and flogged it to investors – without disclosing that one of its hedge-fund clients had picked the loans that went into the package, and had bet that the investments would fall in value. What this amounts to is an allegation that Goldman knocked up a stinky investment that it knew would tank and scammed investors into buying it. Goldman Sachs made money, the hedge-fund billionaire John Paulson made money – and the suckers lost more than £650m. If any British taxpayer wants to know who these suckers were, look in a mirror: our own RBS was the ultimate insurer for the deal and had to pick up the tab.

Goldman calls the allegations "unfounded in law and fact". But without wishing to get into what is set to be a big, bloody battle, it is possible to make three observations. First, Goldman Sachs is going to have a hard time warding off the damage to its reputation done by this case. For a taster, look at page 7 of yesterday's SEC filing, which quotes an email from Fabrice Tourre, the executive who helped make and sell this investment: "The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fab … standing in the middle of all these … exotic trades he created without necessarily understanding all of the implications of those monstruosities!!! " Coming from a bank that bangs on about its good name and fair dealing, this stinks.

http://www.guardian.co.uk/commentisfree/cifamerica/2010/apr/17/goldman-sachs-lawsuit-banking

[bemildred]

1. Can you imagine this happening under any recent Republican President? nt

[Demeter]

2. The Crime Did Happen Under Republican President

and it continued under Obama.

The only reason war is declared on Goldman is they've managed to tick off Europe and most of Asia, and some of the liberal lefties here at home, who have been paying attention, have been getting the word out to others who are wondering which bus hit them and left them for dead. And Andrew Cuomo, god bless him, the man who should be President and the only official in power who is doing his job, is defending the People.

The next big divide will be when and if Obama decides to cut out his Goldman "advisors", or if he decides to keep "dancing with them that brung him" to Pennsylvania Avenue. These "advisors" should be fired summarily, investigated and prosecuted to the fullest extent of the law, and their ill-gotten gains should be stripped from them and distributed through some kind of compensation fund to those they looted. Their too-big-to-fail banks should be dismantled and sold for scrap, too.

It's coming. Obama is going to have to make a real decision on his own. I, for one, will be interested to see if he's capable of it.

[bemildred]

3. I'm talking about the "civil suit for fraud filed by a government watchdog".

I'm not trying to assert that Obama is perfect, not by any means, but he's not Bush (the elder or the usurper) or Reagan either.

[Demeter]

4. There Were Lots of Suits Filed Under Republicans that Were Suppressed

or bungled or overturned in the courts. Ask Siegelman. Ask Cindy Sheehan. Ask a bunch of others.

As for this one, it hasn't even started yet. Obama will have to prove his mettle, and decide which side he's on: Justice and Rule of Law, or Influence-Peddling. I am afraid of the answer.

[bemildred]

5. Well, exactly. nt

[MisterP]

6. "That charge is just a tad harder to make today"

translation: indictments will be dropped late November...

:banghead: