The Case Against Goldman Sachs

mainIn his usual clear, profane manner, Matt Taibbi lays out why Goldman Sachs’s executives must face criminal charges as soon as possible. Via Rolling Stone:

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.

To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn’t exist) was almost completely unconnected to the systematic corruption that led to the crisis.

But 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.

Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.

In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC’s inspector general described the program’s regulatory army: “The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office.”

Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman’s CEO at the time. And in exchange for “submitting” to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.

In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC’s inspector general described the program’s regulatory army: “The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office.”

Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman’s CEO at the time. And in exchange for “submitting” to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.

Read the rest at Rolling Stone.

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  • Anonymous

    Not having learned the lessons of the last three years, the DOJ and Congress promise that the next time the masters of the universe fuck up, they will get really, really serious. Until then, they’ll let the kleptocrats enjoy their freedom. There’s a big election coming up, after all, and nobody wants the campaign contribution gravy train to jump the rails.

  • Guest

    Not having learned the lessons of the last three years, the DOJ and Congress promise that the next time the masters of the universe fuck up, they will get really, really serious. Until then, they’ll let the kleptocrats enjoy their freedom. There’s a big election coming up, after all, and nobody wants the campaign contribution gravy train to jump the rails.

    • EAGD

       They learned the lessons of the last three years: Wall Street calls the shots.

  • jinsk

    Good luck, here in Brazil we are trying send to jail one crook named Dantas that remember alot yours bankers, and until now nadica de nada.

  • jinsk

    Good luck, here in Brazil we are trying send to jail one crook named Dantas that remember alot yours bankers, and until now nadica de nada.

  • http://www.facebook.com/victor.r.franca Victor R. Franca

    they only don’t stand trial because the very fabric of the idea of capitalism is at stake. Money is about control of the masses, its not a game where any play can win if he tries hard enough. Can’t prosecute capitalism itself yet. If people lose faith in the system of everything goes capitalism there is no control. But the system is an elaborate very elaborate illusion

  • http://www.facebook.com/victor.r.franca Victor R. Franca

    they only don’t stand trial because the very fabric of the idea of capitalism is at stake. Money is about control of the masses, its not a game where any play can win if he tries hard enough. Can’t prosecute capitalism itself yet. If people lose faith in the system of everything goes capitalism there is no control. But the system is an elaborate very elaborate illusion

  • Spamway

    Earth, the biggest scam going.

  • Spamway

    Earth, the biggest scam going.

  • EAGD

     They learned the lessons of the last three years: Wall Street calls the shots.

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