The report, which was done by a Senate panel investigating the financial crisis, found that Goldman marketed four sets of complex mortgage securities to banks and other investors. The report said the firm failed to tell the banks and investors that the securities were very risky, secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to those of investors'. http://www.usatoday.com/money/companies/regulation/2011-06-02-goldman-sachs-subpoena_n.htm
What this? You mean there's a gov't agency taking action against GS? There's a gov't agency that isn't headed by GS alumni? Or is it the same old same old and GS will be exonorated after a mock investigation/trial? There is NO WAY any top GS people will go to jail, no matter how blatant the crime or how overwhelming the evidence. At the very worst it will drag through the courts until a financial settlement is agreed upon. But nobody other than the mail clerk goes to jail.
The report said the firm failed to tell the banks and investors that the securities were very risky, secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to those of investors'. -------- Ya just have to laugh when reading this garbage. So the people who bought the stuff for some reason had to be told it had risk? These people couldn't figure it out themselves?? Why is it important to disclose what position the firm had? The dog and pony show continues on.
it might be important to know if GS was broker or agent or an adverse party. Did GS approach these investors as their broker/agent or as an adverse party? Did they say something like I "make" or did they come in as their broker? Brokers have fiduciary duties and should not self deal. We probably all expect a few million slap on wrist by the time politicians like Schumer and the dems are done. for instance here is Schumers list of contributors. 1 Paul, Weiss et al $145,550 $145,550 $0 2 Paulson & Co $137,300 $137,300 $0 3 Weitz & Luxenberg $86,200 $86,200 $0 4 Schulte, Roth & Zabel $80,600 $80,600 $0 5 Fragomen, Del Rey et al $72,700 $66,900 $5,800 6 Credit Suisse Group $69,450 $59,450 $10,000 7 Blackstone Group $68,000 $51,000 $17,000 8 Renaissance Technologies $67,200 $67,200 $0 9 Ernst & Young $66,000 $56,000 $10,000 10 Sullivan & Cromwell $58,900 $58,900 $0 11 Kasowitz, Benson et al $55,750 $55,750 $0 12 KPMG LLP $53,650 $43,650 $10,000 13 New York Life Insurance $52,300 $42,300 $10,000 14 Cablevision Systems $50,800 $40,800 $10,000 15 Cantor Fitzgerald $50,300 $50,300 $0 16 York Capital Management $48,600 $48,600 $0 17 Lockheed Martin $48,500 $38,500 $10,000 18 MBF Clearing Corp $48,000 $48,000 $0 19 Corning Inc $47,500 $37,500 $10,000 20 Lightyear Capital $46,600 $46,600 $0 Download: Organization hires lobbyists to lobby the federal government Organization is an active lobbying firm Lobbyist(s) representing listed organization is a contributor to this congressional member View Top 20 | Top 100 http://www.opensecrets.org/politicians/contrib.php?cycle=2010&cid=n00001093&type=I
The point is that GS presented bundled doomed mortgages as being viable instruments when they KNEW they were worthless. The mortgages were selected for their certainty to fail. It was blatant fraud.
Going back last year, the disclosure statement with ACA was: "The Portfolio Selection Agent has received recommendations as to the content of the Reference portfolio from third parties, including a third party that intends to take a short position with respect to the Reference Portfolio." The PSA was ACA. Really, ACA appears to not have done their homework. The prospectus carries the required info, is it really necessary for Goldman to disclose any further than that? Now this new case is with new complaints? Edit: To the above poster, how is it that Goldman knew the mortgages were doomed but ACA didn't? Or maybe ACA was like Norway in that recent 60 minutes piece, that neither bothered to look at what they were buying and just bought it because of yield and a good credit rating slapped on the equity.
Anybody trying to sell their investment property on the west coast of florida in the fall of 2005 knew prices had dropped big. The buyers knew to offer at 60 cents on that previous summers dollar. I can tell you the day I knew I had lost almost of my money across my 3 remaining properties. Properties were slowly coming on the market to compete with the ones I had for sale. The problem in Sept 2005 was that there were no buyers. About the day bush said he appointed a panel to discuss a way to eliminate real estate tax deductions ---- the MLS became flooded with properties. We quickly turned to an overwhelming buyers market... the inventory ratio shot from about 3 to 4 mos inventory to a multi year inventory. By november I took 410,000 for a house that was worth 575 to 600 the previous July. Later the property was worth 275000. Eventually I had to come to the table with cash on a million dollar property I sold for 635... and I had to walk away from down payments on an another. So I can say this... the buyers in Florida knew prices were down big. Why ACA did not know would be more interesting?