Friday, June 03, 2011

The People vs G-man Sachs

Matt Taibbi/RollingStone:

""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..."

BLANKFEIN! Taibbi's one of a very few authentic gonzo-scribes remaining (among hundreds of dyslexic HS Thompson wannabes)


Moriarty said...

Goldman-Sachs may have had billions of dollars invested in "shorts" (e.g., going bearish on the value of the mortgage blocks, and thus betting they decrease in value) but that in itself does not appear criminal, as Taibbi and his new friend Eliot Spitzer want to suggest. At any rate, Taibbi, however "gonzo" he seems to the cognoscenti, has not in my view provided a very convincing argument --or even citations of the relevant laws--which would establish criminal activity on the part of GS.

Blankfein's testimony--assuming Taibbi's reporting is accurate-- does appear to be close to perjury, but that's a different issue involving one individual, however unsavory, and not sufficient for the massive fraud case against GS as a whole that Taibbi wants the DOJ to take on. Moreover, with conservative politicians involved (like Coburn) in the report on GS and campaign season coming up, it's unlikely that the Obama Admin is too enthused about taking them to court.

J said...

You probably know more about this than I do Mor., but it's quite unbelievable to me that big banks such as GS should be able to rake in huge profits via "shorts" while the market declines--one of the perqs of finance capitalism, or is it one of the absurdities. Sounds something like Rothschilds-era speculation, or the Great Depression--a few very wealthy insiders make millions while companies go bankrupt and property values fall.

Taibbi may not be a professional economist but that's a plus IMHE: he avoids the usual Krugman or Delong-ish econo-sludge for one. Instead of polite disagreements about some macro. data, he's taking on the Giant Vampire Squid aka Goldman Sachs. Hopefully the DOJ will take the Squid to trial but I'm not holding my breath.

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