Goldman Sachs: Our Pumpin' Dumpin' Repo-Man!
You might think that a Wall Street giant like Goldman Sachs, which has been reporting profits of about $1 billion per month for the last six months, wouldn't waste the time and talent of its fantastically well-remunerated employees on a penny-ante business like single-family foreclosures and evictions.
"Goldman spent years buying hundreds of thousands of subprime mortgages, many of them from some of the more unsavory lenders in the business, and packaging them into high-yield bonds. Now that the bottom has fallen out of that market, Goldman finds itself in a different role: as the big banker that takes homes away" from families like Tony Becker, Gladys Aguirre, and thousands of others, as described in McClatchy's excellent investigative article by Greg Gordon.
Meanwhile revelations continue to surface about Goldman's "pump-and-dump" operation with a mountain of financial derivatives which they claimed to believe were rock-solid...
In 2006 and 2007, Goldman Sachs Group Inc. peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages but never told the buyers that it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled one of the nation's premier investment banks to pass most of its potential losses to others before a flood of mortgage loan defaults staggered the U.S. and global economies.
Only later did investors discover that what Goldman promoted as triple-A investments were closer to junk.
Nasty!
I read about some PR trick of Goldman's, and I was trying to look it up for you. I found that there are loads of Goldman-watch sites. The name of this one cracked me up:
GoldmanSachs666.
http://www.goldmansachs666.com/
November 2, 2009 5:40 PM | Reply | Permalink
From the name of that site I expected something goofy, but it isn't.
November 2, 2009 5:59 PM | Reply | Permalink
Can you remember the recent PR move they made? I wish I had a memory; I didn't find it on the financial sites. It was trying to make them look like Good Guys, fat chance.
November 2, 2009 6:21 PM | Reply | Permalink
George:
Thank you for your opinion of our site.
We look to expose the truth and offer a one stop shop for news and comments such as this blog offers as well as our own commentary and information.
We will be posting a permanent link to this site.
Keep up the Good Work and commentary TPM.
Larry Rubinoff, Publisher, GoldmanSachs666.com (not a goofy site).
November 4, 2009 10:57 PM | Reply | Permalink
FYI: "How Goldman secretly bet on the U.S. housing crash"
http://www.mcclatchydc.com/100/story/77791.html
November 2, 2009 5:49 PM | Reply | Permalink
Thanks for the link, salaha.
By the way, and without getting specific, I realized that I totally misinterpreted one of your posts a couple of months ago.
Apologies, and please don't ask what for!
November 2, 2009 6:19 PM | Reply | Permalink
Mr. Jurgenson, (wow, that avatar may even be creepier than your your blue one), did you want that sharpie photo, or were you just goofin' around? I could give you my email, i guess. Then you could request it, or whatever...
November 2, 2009 7:43 PM | Reply | Permalink
See a little more explication here, with a comment by Greg Gordon following the article.
November 3, 2009 8:30 AM | Reply | Permalink
Isn't Carney defending Goldman Sachs here? '...Bunk' that they were hiding the risk and their opinion of the hosung bubble??
Bundling bad mortgages and selling them, while they are warning AIG they need more collateral for the swaps? Or did Goldman mean Other People's bad swaps?
I t reminds me of Madoff laughing at the 15 investigations by regulators, and not seeing what a Ponzi scheme he had going. Keep smilin', Bernie.
November 3, 2009 9:50 AM | Reply | Permalink
Carney's article is complete bullshit, as Greg Gordon and many others point out in the comments.
But it was also a little surprising to me that Carney actually responded to so many of the posters. "Somebody from Goldman whispered something to somebody from AIG," and that something about the housing bubble didn't necessarily mean that the securitization of large mortgage packages which Goldman was peddling weren't sound.
The whole point of interest-rate swaps and default swaps was insurance against risks in that market, but somehow Goldman never mentioned that the insurance was riskier than the primary risk.
November 3, 2009 10:01 AM | Reply | Permalink
I thought it was surprising too. That's why I posted it. I also included it because it pulls together a couple of related references in one place (like a reference to Matt Taibbi), not because I champion any defense of Goldman Sachs.
I started wondering about investigating Sachs for criminal fraud, but I don't want to get my hopes up, so I put a check on my own enthusiasm for retribution with this already-public excuse for GS.
November 3, 2009 10:19 AM | Reply | Permalink
I'm trying to pull a few thoughts together about fraud, and it isn't exactly as clear a charge as folk-law wants it to be.
Maybe tomorrow I'll have something worth posting.
And thanks for posting the link to Carney, gasket. It's always worthwhile to see what kind of case the defense can make, even when it's bogus.
November 3, 2009 12:39 PM | Reply | Permalink
Good post Ruta!
One wonders how it is that Obama can continue to protect these criminals and enrich them at our expense. I guess though it isn't all that far removed from how he is shileing from prosecution the criminals who planned, authorized and committed unspeakable war crimes in the name of "national security" eh?
November 3, 2009 11:33 AM | Reply | Permalink
Sorry, should have read "shielding from prosecution"
November 3, 2009 11:34 AM | Reply | Permalink
Thanks, Ruta. Please keep these blogs coming. Definitely rec'd.
What really is disgusting is that our bailout of AIG allowed Goldman Sachs to receive the payout on their CDS'. They bet on the failure of the housing market by placing bets - not with a regulated casino - but rather with AIG who had no cash reserves to back it up. (How much of this were in "blind" CDS', wherein GS did not actually own the mortgages they were insuring? I'm not sure I ever heard.) When the whole scheme fell apart, Paulson and the GS cabal at Treasury made certain AIG was suffused with sufficient taxpayer funds to pay off these bets - and not at pennies on the dollar as might be expected, but at full value.
Everyone took a haircut, including you and me. Everyone, that is, except Goldman Sachs which was up to its neck in promoting and then betting against the very financial instruments that prompted the collapse of our financial industry in the first place. How do you suppose that happened?
For God's sake, where is the outrage?
November 3, 2009 12:13 PM | Reply | Permalink
Even the Wall Street Journal is beginning to smell a rat somewhere in the Paulson/Bush/Geithner/Obama bailout give-away to Goldman, and specifically about short-selling their own packages...
If Goldman Was Hedged, Why Take Government Money?
But the bosses don't bother to answer, because they don't have to. Obama/Geithner won't prosecute Obama/Geithner, or Paulson/Bush, and the next gang likewise.
November 3, 2009 12:35 PM | Reply | Permalink
What has Obama done that would make him a target for prosecution?
November 3, 2009 1:28 PM | Reply | Permalink
"Malfeasance in office" has a slightly antiquated sound, but as grounds for impeachment it also has sound historical precedents. For example, when Supreme Court Justice Samuel Chase was impeached in 1804, the charge was "malfeasance in office."
So just to pull one example out of a mountain of similar examples, Timothy Geithner was guilty of malfeasance in office when he forced AIG to overpay its creditors (including Goldman Sachs) while he was still Chairman of the New York Fed.
That $14 billion to Goldman was paid to cover bets which Goldman had already hedged, as described in one of the articles from McClatchy which I linked in my diary.
Is giving away public money for nothing a crime?
Yes.
And every small-time embezzler in Folsom Prison could make just as good a case as Geithner, that his misdirection of money was really "in the public interest."
November 3, 2009 2:49 PM | Reply | Permalink
That can't be, can it? Who in the Treasury Department would ever have approved such a thing?
November 3, 2009 3:58 PM | Reply | Permalink
End of snark (see above comment)
November 3, 2009 4:08 PM | Reply | Permalink
Here was my question
Here is your reply
In fairness you might feel that you replied when you wrote
That's certainly true and would be relevant if Obama had committed a malfeasance in office.
Has he?
November 3, 2009 4:51 PM | Reply | Permalink
I actually think that enough people are trying to understand how the Shadow Banking System worked enough to become outraged, and demand change. Even articles like this on bloomberg:
http://www.bloomberg.com/apps/news?pid=20601109&sid=a_iis3lSizIE&pos=12
even though they make Obama's watered-down regs sound stronger than they are.
I am encouraged, to tell you the truth.
I would like to know what, if anything, is going on with the Angelides commission; shouldn't reporters be trying to find out??
November 3, 2009 1:35 PM | Reply | Permalink
Shoulda said "how the SBS works', not worked. Evidence says they are bindling more toxic shite and selling it faster than ever.
November 3, 2009 1:38 PM | Reply | Permalink