Goldman Greed, GOP Hypocrisy

The Senate had executives from Goldman Sachs on the carpet yesterday.  It wasn’t pretty.

The question at the center of Tuesday’s Senate hearing on the role of investment banks in the financial crisis: Are Goldman Sachs bankers criminals or merely a big bunch of jerks?

Put another way: Did the employees of Goldman Sachs deliberately mislead investors by failing to disclose that one of the people creating a certain mortgage-backed security was also betting against it, as a new lawsuit by the Securities and Exchange Commission alleges? Or did they simply recommend mortgage-backed securities to investors, then turn around and bet against them—essentially betting against their own investors?

The Permanent Subcommittee on Investigations may have failed to prove the former, but it presented a strong case for the latter.

The hearing pitted senators determined to find wrongdoing—they sifted through a five-pound stack of internal e-mails, company memos, letters to investors, and financial statements—against Wall Streeters insisting they were just doing their jobs. As a result, the hearing was less about litigating the SEC case than it was about senators highlighting and assigning blame for the causes of the financial crash.

Committee chairman Carl Levin, D-Mich., who as always appeared to have stepped right out of The Pickwick Papers, got right to the point in his introductory remarks: "Goldman Sachs didn’t just make money. It profited by taking advantage of its clients’ reasonable expectation that it would not sell products that it didn’t want to succeed, and that there was no conflict of economic interest between the firm and the customers it had pledged to serve." In other words, Goldman has an obligation to be honest with its customers. And part of that obligation is to tell them what Goldman thinks of the investments it’s selling.

Goldman Sachs didn’t just disagree. The half dozen current and former employees dragged before the panel, including CEO Lloyd Blankfein, took a position so contrary, it’s as if they were speaking a different language. Levin said Goldman was "shorting," or betting against, the housing market. Goldman said it wasn’t—it was merely hedging against its bets that the housing market would succeed—and that its "short" was hardly "big." (The shorts just happened to outweigh the longs.) Levin argued that Goldman was misleading its clients by hiding the fact that it thought subprime securities would fail. Blankfein argued that its clients don’t care what Goldman thinks of the assets it’s selling, even if it were possible to ascertain what all 35,000 Goldman employees "think" of a security. Levin said Goldman has an obligation to disclose how an instrument is created. "I don’t believe there’s a disclosure obligation," Blankfein said… [emphasis added]

Inserted from <Slate>

They were unrepentant at every turn.

Are the Goldman Sachs executives testifying at today’s governmental affairs hearing sorry? Do they have regrets about their role in the financial crisis?

Sure doesn’t sound like it.

"Regret to me means something that you feel that you did wrong," said former Goldman partner Dan Sparks. "And I don’t have that."

What I do have though is — we made mistakes in our business, like any business does. And we made some poor business decisions in hindsight.

But did Goldman Sachs play a part in causing the financial crisis?

"I don’t know," Sparks said. "I’d like to think about that and respond. I haven’t thought about that specifically."

What about you, Joshua Birnbaum?

"I would second what Mr. Sparks said," said Birnbaum, former managing director of the banks’ structured products group trading. "We’re all sympathetic to the negative impact to that bubble."

And "to the extent that investment banks and commercial banks may have extended too much credit at certain periods of time," Birnbaum said, "then it’s possible" Goldman played a role.

Michael Swenson — who now holds Birnbaum’s old job — was more definitive.

"We did not cause the financial crisis," he said. "I do not think we did anything wrong."

"There’s things that we wish we could have done better in hindsight, but at the times that we made the decisions, I don’t think we did anything wrong," Swenson said.

And Fabrice Tourre, who boasted by email of selling financial products to a "widow and orphans"?

"I firmly believe that my conduct was correct," Tourre said… [emphasis added]

Inserted from <TPM>

In spite of all this, the GOP blocked financial reform for the second day in a row.  If they want to keep pairing themselves with Bankster behavior, let them.  But, since this merely opens debate,  what does the Repuglican party fear?  I’ll tell you.  There are several progressive amendments waiting.  Once debate starts, the GOP will be forced to either allow up or down votes on them, votes that they would lose, or filibuster issues so specific that they won’t be able to cover up their true position.  The next vote is scheduled for Noon eastern time today.

Then there is the matter of Ben Nelson (DINO-NE).  He sided with the Republicans again.  But Rachel Maddow has exposed his true motive.

Visit msnbc.com for breaking news, world news, and news about the economy

The son of a bitch is lining his own pockets.