Posted on 01/13/2010 2:47:25 PM PST by NormsRevenge
WASHINGTON — The chairman and CEO of investment titan Goldman Sachs acknowledged Wednesday that his company had engaged in "improper" behavior when it made financial bets against $40 billion in securities backed by risky U.S. home loans that it was selling to investors as safe products.
Lloyd Blankfein made the shocking acknowledgement before the Financial Crisis Inquiry Commission , a 10-member panel that Congress created to look into the causes of the worst financial crisis since the Great Depression.
During that inaugural hearing, the CEOs of the nation's most prominent banks acknowledged serious flaws in their models and business practices that helped bring about the nation's financial crisis.
Many of the toughest questions from panel members were put to Blankfein, whose firm is a goliath and a virtual farm team for top government posts in the White House and at the Treasury Department .
Commission Chairman Phil Angelides , a former California state treasurer, warned Blankfein that he'd be "brutally honest" in his questioning. Then he went straight to the question of why Goldman thought it was necessary to take out protection against securities it was selling by purchasing insurance-like credit-default swaps. Angelides likened it to selling a car while knowing that its brakes were bad.
Blankfein acknowledged "that the behavior is improper, and I regret the consequence that people have lost money in it." However, he went on to defend his company's role as a market maker, suggesting it's a middleman that's exposed to risks both on what it buys and what it sells.
All the CEOs, including the heads of JPMorgan Chase , Morgan Stanley and Bank of America , acknowledged that they'd paid a huge price for failing to build the possibility of declines in home prices into their risk-management models.
(Excerpt) Read more at news.yahoo.com ...
Caught part of the same interview on Fox before I left for work this AM. Another tidbit was his admission that employees weren’t compensated for their performance. This leaves the question of ‘why the bonuses’ wide open.
The analogy in the snip you provide is just damning. Looks like the panel was ready.
Goldman Sachs = Legal Organized Crime
And they should have gone BANKRUPT not be bailed out.
Not sure they are "legal" rather the law doesn't apply to them due to their political connections. IMHO they are criminals at the very least they are guilty of fraud.
Shut it down and sell it off in bits.
*ping*
Improper? No s*** Sherlock.
So now resign and give back the 14 billion Paulson robbed for you. Then get immunity and turn state's witness for this and the long list of other various discretions.
Then you'll REALLY be doing "God's work."
The 160 IQers at GS can parse it all day anyway they want but thet obviously they were pretty sure the Cdo’s they were selling were AAA in name only. Otherwise they would not have bet against there securities. They were selling and in the same breath betting for failure with derrivatives, probably on the same day. This is fraud.
Improper Hell! This has to be illegal.
I think in the old West it was called ‘salting the mine”, implying putting gold from other sources into a mine to influence investors to buy.
When found out, the con-men didn’t face a hearing, they faced horsewhips, tar and feathers, and a .44
I’d like to see any one of these CEO’s grow a set and flat out state that they wouldn’t have made those risky home loans if the government (name names) didn’t force them to do so.
Keep your mouth shut money?
The more we find out, the uglier it gets.
I can’t believe you wrote this!!
I had the SAME THOUGHT last night driving home as I was ruminating on the news after I posted.
It’s the only explanation.
There’s a very good movie that didn’t get a lot of play called Boiler Room.
The CDS and CDO mess, plus the Fannie/Freddie/Sallie mess makes what these guys were doing in that movie look like penny-ante stuff.
Think about it - Goldman creates securities THEY KNOW ARE BAD - based on debt written to people with ZERO credit history, bad credit, or NO PROOF OF NATIONAL DOCUMENTATION (Citizenship). Then they BUY INSURANCE on their belief THE SECURITY WILL DEFAULT!!!!
It’s worse than the bad brakes analogy. These guys robbed people on a scale that has literally no parallel. Even the Nazi’s confiscation of the Jews property in Germany doesn’t come close. Even the sacking of Rome by the Visigoths doesn’t compare.
If your local police force went door to door confiscating personal property from individuals for the next year, all over the country, it wouldn’t come close to what Goldman and the rest of the banks perpetrated. People would be angrier, but the fact is they’d be better off.
I hate to say it, but this rises to the level of a capital crime. People should be losing their freedom over this permanently.
After the hearing, Angelides told McClatchy that he was "troubled" that Blankfein "never admitted that there was any responsibility of Goldman Sachs to make sure the products themselves were good products."
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