Skip to comments.Senate panel slams Goldman in scathing crisis report
Posted on 04/13/2011 6:48:28 PM PDT by NormsRevenge
WASHINGTON (Reuters) In the most damning official U.S. report yet produced on Wall Street's role in the financial crisis, a Senate panel accused powerhouse Goldman Sachs of misleading clients and manipulating markets, while also condemning greed, weak regulation and conflicts of interest throughout the financial system.
Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, one of Capitol Hill's most feared panels, has a history with Goldman Sachs.
He clashed publicly with its Chief Executive Lloyd Blankfein a year ago at a hearing on the crisis.
The Democratic lawmaker again tore into Goldman at a press briefing on his panel's 639-page report, which is based on a review of tens of millions of documents over two years.
Levin accused Goldman of profiting at clients' expense as the mortgage market crashed in 2007. "In my judgment, Goldman clearly misled their clients and they misled Congress," he said, reading glasses perched as ever on the tip of his nose.
A Goldman Sachs spokesman said, "While we disagree with many of the conclusions of the report, we take seriously the issues explored by the subcommittee."
The panel's report is harder hitting than one issued in January by the government-appointed Financial Crisis Inquiry Commission, which "didn't report anything of significance," Republican Senator Tom Coburn said at the briefing.
More than two years since the crisis peaked, denunciations of Wall Street misconduct are less often heard on Capitol Hill, with lawmakers focused on fiscal issues. But Coburn joined Levin at Wednesday's bipartisan briefing, firing his own sharp attacks on the financial industry.
"Blame for this mess lies everywhere -- from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight," said Coburn, the subcommittee's top Republican.
(Excerpt) Read more at news.yahoo.com ...
Where’s the report criticizing the Feds’ role, Mr. Levin.
CEO of Goldman Sachs Lloyd C. Blankfein listens to President Barack Obama speak at the annual meeting of the Business Council at the Park Hyatt Hotel in Washington, May 4, 2010. REUTERS/Larry Downing
And how about Goldman lying to congress about borrowing from the fed.
I hate hearing about this stuff, as nothing ever happens and it’s always business as usual after anything like this is brought to light.
Maybe Congress will write GS a strongly worded letter. That’ll teach ‘em!
Dog and pony show - public spectacle but utterly meaningless.
“Wheres the report criticizing the Feds role, Mr. Levin.”
Post of the decade!!!
It’s the damn politicians that got us into this mess, not the market.
Where’s the MSM outrage for the numbnuts that really caused ALL of our financial problems?
Nothing will happen. Goldman will skate. Neither will the gubmint ever admit its role in strong-arming banks to loan to unqualified borrowers.
Dog and pony show - public spectacle but utterly meaningless.
That’s Washington D C to a tee. Every last one of them. Congress, WH, Lobbyist, Staffers and on and on. They all suck.
You’re absolutely correct.
15 minutes of bad publicity and they’ll walk with tens of billions in taxpayer funds.
“Maybe Congress will write GS a strongly worded letter. Thatll teach em!”
Yeah. Here, let me draft that letter:
“Bad Goldman, bad. Bad, bad, bad Goldman, bad.”
Can I make a deal. $1 Billion and the senate can write a 1000 page report berating me. Hell. For $1B I will write the report for them. Sheeshh!!!
Even better. Subpoena them and yell at them for 10 minutes on CSPAN. That will scare them.
Where is the panel to accuse the Senate and House of misleading taxpayers and manipulating markets?
The government did not strong arm bank’s to make interest only loans and the other creative financing hog wash they turned out, hell they wanted to make everyone they could. Up until the very end the realtors and home builders associations had their k street monkeys on the hill trying to keep the cash cow alive. They were clearing about 10,000 on each deal, they wanted more.
Yep, Congress will direct all fraud to the black hole called SEC which Congress has full control over...whadda circle jerk.
Did they happen to mention that The Goleman Sax is primarily Democrat?!?
The politicians and crony capitalists. Goldman's Blankfein and Cohen are Keynesians, and Goldman keeps releasing reports that cutting spending will hurt the economy.
That’s just it — they were not going broke, but still got Billions of our money.
If y’all ain’t figured out yet that the federal government is a wholely owned subsidiary of about 15-20 corporations, you’re either willfully blind or too stupid to breathe without reminders.
This is news? Go look at Goldman Sachs’ history and they have been involved some of the ugliest financial crises in the last 100 years. Remember, it was Goldman Sachs’ selling of stocks on margins that was a major reason we had the 1929 stock market crash.
Yeah, that's why they paid $11 billion in taxes the last 2 years. Because they're a welfare case.
Did they point any fingers at him???
Corporations do and never have and never will, pay taxes, they collect them. You must have flunked that accounting course.
They collected and turned over to the Treasury $11 billion in the last 2 years. Doesn't sound like they're collecting anything from the government, does it. Unless you flunked math.
‘This is news? Go look at Goldman Sachs history and they have been involved some of the ugliest financial crises in the last 100 years.’
I hear ya.. you ain’t the only asking questions.
Karma at play? ;-]
Is Goldman Sachs too big to fail?- NYTimes
Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”
If Goldman Sachs were to hit a hypothetical financial rock, would it be allowed to fail — to go bankrupt as did Lehman — or would it and its creditors be bailed out?
Cast your vote.
We pay to keep Goldman Sachs afloat so we can berate it?
GS had nothing to do with the actual homeloan mortgages, Did you read the linked article?
“As for Goldman, the subcommittee said, the firm “used net short positions to benefit from the downturn in the mortgage market.” It said Goldman designed, marketed, and sold CDOs in ways that created conflicts of interest with clients, while also at times providing the bank with profits “from the same products that caused substantial losses for its clients.”
GS marketed these mortgage-backed securities to various investing entities - like retirement and pension funds -who can only invest in the safest securities *by law.*. At the same time, GS was so certain that these CDOs were dogmeat that they *shorted* the same securities.
That way, GS profited hugely - as their clients suffered tremendously losses. It was not only a conflict of interest - since their profit could only come as their clients lost their money. It was also criminal.
The banks created these ARM and other strange new mortgages; these mortgages were *NOT* those guaranteed by Fannie and Freddie, but regular commercial mortgages. They pushed them *hard* on homeowners, assuring the homeowners that everything was great, while the banks and the mortgage companies then cheated to get the mortgages approved. GS used these mortgages as the basis for creating securities - which they then traded on the derivatives market for up to 600 times the amount of actual homes that were included in the package.
When the homeowners couldn’t continue the payments after the ARMs went up, or the bubble payment came due, the originators foreclosed and took the properties.
I will promise never to have a good thing to say about GS.
The Fed, US Treasury and GS have their weekly policy/planning meeting on how to best to play US taxpayers and individual investors as schmucks. Goldman gave mega $$$$ to Dems and put Obama into office, and if the truth was known probably pulls the strings of many on the right.
Until we have a country that is run for “WE THE PEOPLE” as enumerated in the US Constitution, and not for the international banks and corporations that view US sovereignty as a PITA (with the T meaning “their”), we’re on a slope that is downhill.
Goldman pays taxes, but they can gamble to their heart’s content while the Fed and the government protect them from failure. They are both a bank and an investment house. I don’t mind their gambling, but I don’t want to cover their losses if they lose.
Obama denounces them in public but agrees with Blankfein and Cohn about many issues, including Keynesian spending and Cap and Trade (no, I did not say that every Goldman employee agrees with Blankfein and Cohn). Their lobbyists included many Barney Frank ex-staffers when Frank was chairman of House Financial Services Committee.
Meanwhile, Obama and company use big Wall Street firms as an excuse to raise taxes on small business, and to demagogue the GOP’s resistance to higher taxes. Goldman was Obama’s #2 contributor in 2008 (and who knows how much more their blue chip family and friends contributed). I wonder if they expect favors in return.
Which retirement and pension funds? Or is the writer imagining they were among the "various" buyers?
At the same time, GS was so certain that these CDOs were dogmeat that they *shorted* the same securities.
If GS created and sold the CDOs, how could they also short them?
It was not only a conflict of interest - since their profit could only come as their clients lost their money.
And their loss could only come as their clients made money.
It was also criminal.
That's funny. Do you have the text of the law you imagine they broke?
GS used these mortgages as the basis for creating securities
Yes, mortgages are the basis of some CDOs.
which they then traded on the derivatives market for up to 600 times the amount of actual homes that were included in the package.
Yes, they became a bank holding company in order to borrow from the Federal Reserve.
I dont mind their gambling, but I dont want to cover their losses if they lose.
How would you cover their losses?
I didn't want to, but congress foisted TARP on us anyway. That triggered one bailout after another. The next time the investment houses lose their underwear in a crap game I hope congress won't be so irresponsible.
You didn't have to be a bank to get TARP.
You got that right!!!! :)
Rep. Maxine Waters (D-Calif.): Through nearly a dozen hearings, where frankly we are trying to fix something that wasnt broke, Mr. Chairman, we do not have a crisis at Freddie Mac and in particular at Fannie Mae under the outstanding leadership of Mr. Frank Raines.
Rep. Maxine Waters (D., Calif.): Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals.
Rep. Gregory Meeks (D-NY): In a hearing several years ago about a report on the safety and soundness of Fannie Mae and Freddie Mac from their regulator, Armando Falcon, Federal Housing Enterprise Oversight Director, Falcon came under fire. Meeks said; The GSEs have done a tremendous job. There has been nothing that was indicated thats wrong with Fannie Mae, Freddie Mac has come up on its own, adding the regulator was trying to give the two a heart surgeon [sic] when they really dont need it.
Rep. Barney Frank (D., Mass.): The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities [Fannie Mae and Freddie Mac] that are fundamentally sound financially and withstand some of the disaster scenarios.
Rep. Barney Frank (D-Mass.): In the same hearing several years ago about a report on the safety and soundness of Fannie Mae and Freddie Mac from their regulator, Falcon, Frank attacked Falcon: I dont see anything in your report that raises safety and soundness problems.
Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time.
Sen. Charles Schumer (D., N.Y.): And my worry is that were using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddies mission.
Franklin Raines, former head of Fannie Mae: These assets are so riskless that their capital for holding them should be under 2%.
Richard Syron, former head of Freddie Mac: If I had better foresight, maybe I could have improved things a little bit. But frankly, if I had perfect foresight, I would never have taken this job in the first place.
Note: Raines was forced out of Fannie Mae in December 2004 after the Securities and Exchange Commission launched an investigation into alleged accounting problems at Fannie Mae involving an estimated $6 bn in accounting problems. The Office of Federal Housing Oversight sued Raines in 2006, accusing him of aiding accounting shenanigans at Fannie, which allegedly involved the delay of reporting losses so top executives could earn large bonuses.
The suit attempted to recover the $50 mn Raines in pay got based on billions of dollars in overstated earnings. In total, OFHEO demanded $110 mn in fines and a clawback of $115 mn in bonuses for three executives accused, including Raines.
Raines, Fannies former chief financial officer and its former controller settled the case in April 2008, agreeing to pay fines totaling about $3 mn, paid for by Fannies insurance policies.
Raines also agreed to donate the proceeds from the sale of $1.8 mn of his Fannie stock and to give up stock options, though the options were worthless. Raines also gave up an estimated $5.3 mn of other benefits said to be related to his pension and forgone bonuses. In the end, Raines kept most of his largessein 2003 alone, his compensation was estimated at over $20 mn.
a list of ‘unindictable co-conspirators’ in the financial debacle we have been subjected to..
Follow the mOnets! Uhhh Money..
Gave Dems 75% Of Its Campaign Donations In The 2008 Election Cycle
Goldman Sachs, one of Wall Street’s most prestigious investment banks was also among the many banks in 2008 and 2009 to receive billions of dollars in taxpayer money to help it stay afloat...
The firm tends to give most of its money to Democrats...
Cycle 2008 Total: $5,934,089. Democrats: $4,463,788 (75%). Republicans: $1,459,961 (25%)
Total contributions 1990-2010: Democrats 64%, Republicans 35%.