Sunday, May 15, 2011

The People vs. Goldman Sachs

Some commentators (particularly the indispensable Karl Denninger) have for years been highlighting the fiduciary irresponsibility (if not outright criminal conduct) of Goldman Sachs prior to and during the current financial crisis. Now Rolling Stone puts it all together in a devastating article. Here's an extract.

They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.

Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.

The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history - "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators - details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department - stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.

. . .

... Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them - and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime - a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.

There's much more at the link. Essential reading, IMHO.

It boggles my mind that no Goldman Sachs executives have yet been arrested and charged with all sorts of financial crimes. Of course, the fact that the company has its tentacles buried deeply and widely throughout the Obama administration probably has a lot to do with that.

We'll let Karl Denninger have the last word. (Bold print is my emphasis.)

If we can't see these guys prosecuted now, before the Statute of Limitations runs [out] (which, incidentally, is exactly what they're hoping for) then you may as well put a fork in this nation and our ability to actually attract honest capital, from here or elsewhere.

It's done.




trailbee said...

Thanks for this important post.

Unknown said...

"... the company has its tentacles buried deeply and widely throughout the Obama administration probably has a lot to do with that."
And congress, and the Bush administration, and and the Clinton administration, and ANYWHERE power is for sale. It's been going on for years. This is not a partisan issue, or corruption on the part of a single administration. This is career politicians securing their personal futures.
People are scared, and understandably turn to tribalism, but the real tribes aren't Republican and Democrat; they are Morality and Immorality. To blame one political party is to exonerate the guilty members of the other party. Wouldn't it be great if we could ignore the straw men and go after the true villains?

Anonymous said...

Anyone who looked at the employment records of the head of the Fed, SecTres and their top assistants and deputies should have sniffed the stench of Rattus Rattus (with all due apologies to any rats I may have maligned). Yes, Goldman Sachs is as corrupt as they come, at the upper levels at the very least.