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Goldman Slimeball Hearing

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Well, the big Goldman Sachs hearing just wrapped up 10 hours of grueling testimony, and I’m still reeling from the stupendous prevarications their executives offered. The financial bloggers were out in full form today with some great live-blogs here, here and here. I’m sure I’ll have more to say about this as the hearings progress, and I’d love to see how Goldman will justify its fraudulent deals with AIG once the Senate gets around to asking about them; but until then, a couple comments:

1) I really have to hand it to Sen. Carl Levin for his rigorous and adversarial line of questioning. Watching him tear these executives apart for knowingly engaging in outright fraud is gratifying, though of course some jail time for these executives would be even more so. Watch this video for the money shot (as it were).

2) I was really astounded by the total lack of contrition these executives showed. They defrauded investors to the tune of $500 million (at least) by selling them bonds which they knew were worthless and then betting against those bonds. The basic refrain from all these executives, particularly Mr. Sparks, was that “these bonds were traded on the open market and at market values” – but of course that’s an entirely spurious argument because Goldman was withholding valuable information from their clients (that the bonds were worthless). Amazingly, the Goldman executives don’t seem to think they were doing anything wrong! Fraud is totally acceptable in their world, just so long as it makes them money. Just don’t buy a used car from them – they’d probably sell you a death-trap and then take out car insurance and life insurance on you.

Before I get too gushy on Senator Levin, I should hasten to remind my readers that he voted for the Financial Services Modernization Act back in 1999 – the same act that allowed Goldman Sachs to trade unregulated (“over-the-counter”) derivatives. Without the FSMA, the sort of fraud Goldman engaged in would have been impossible, and any attempt to prevent this sort of behavior in the future is meaningless without repealing the FSMA. Needless to say such a repeal is not even being discussed.

Watching the hearings today gave me a strange, other-worldly feeling. Some of the same senators who took major campaign donations from Goldman Sachs were sitting there and grilling these executives.  A cynical observer might have gotten the impression that this was all a bit of political theater designed to soothe the public’s anger, which by all accounts is badly in need of catharsis. Certainly when one remembers that the very behavior for which Goldman is now being indicted was standard practice for nearly all of the major banks, it seems strange that the Senate should decide to focus all of its ire on Goldman. But then again, they are, after all, the most visible symbol of Wall Street insanity.

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Written by pavanvan

April 27, 2010 at 11:21 pm

Posted in Economy

Tagged with , , , ,

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