Goldman Sachs Hearing (NYSE: GS)
Topic of Debate
Today's topic of debate centers on Goldman Sachs. Do you believe Goldman and/or its executives questioned in Congressional hearings Tuesday did anything wrong? Give your 2 cents via the banner link below.
I listened to the Goldman Sachs (NYSE: GS) hearing all day long on Tuesday, which delayed the publishing of our weekly copy (in case you missed me). The spectacle of Congressional questioning of a man self-nicknamed "The Fabulous Fab" and other fabulously shady fellows, who smartly sought to game the process by attempting to confuse and frustrate the Congressmen, had all of Wall Street's attention. The contrast between the panel members' financial illiteracy and the likelihood of real wrongdoing on Wall Street offered a riveting radio experience perhaps not seen since the days before television. We know many of you had to listen to the radio broadcast, while sitting in your cubicles pretending to work, so we sympathetically tuned in to Bloomberg Radio with you.
There are two ways to look at the situation. While it is true (and unfortunate) that many of the Congressional questioners knew not what Goldman did, it is also true that greed and selfishness drove ethical missteps that led to the worst financial crisis since the Great Depression. While it seems clear to us that the credit rating agencies overlooked (negligence might be the word we are looking for) a few light risks (Congressmen: this is sarcasm) for the sake of making money, market-making (what the Goldman execs in question do) is a necessary task of the market and is delegated to some of its participants.
We are sure Congress is going to try to figure out a way to break up market-making and proprietary trading, and perhaps unemployment is high enough now to get that done. Market-making is not the greatest business, though if the activity is significant enough, the numbers on paper thin bid/ask spreads can add up. Wall Street firms have always been best equipped to get the job done properly and keep markets moving efficiently.
Still, back to the question at hand: Can we really blame Goldman Sachs for doing its job? Yes, its prop-trading desk held directional positions, but its market-making efforts sure seemed kosher to me. The SEC charge against Goldman and the Fabulous Fab may hold merit, especially since Paulson was allowed to choose certain credits and kick the strong Wells Fargo (NYSE: WFC) credits out of the pool, but the legal system will decide that.
That is a separate issue than the "sh_t" Senator Carl Levin said Goldman was selling. The company was only selling sh_t, because people wanted to buy sh_t. Some folks had a taste for that sh_t, and they wanted it now! Goldman made a market it that sh_t, meaning it had to put buyers and sellers together in the sh_tty trade. Yes, I enjoyed that...
Goldman Sachs Hearing (NYSE: GS)
So anyway, please tell us what you think. Did Goldman Sachs do anything wrong? How might Congress screw this up? Will the true wrongdoers face their due punishment or will our government blunder it all up and create fences around parakeets while letting wolves run free?
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Labels: Wall Street
posted by The Greek | 9:50 AM
5 Comments:
Dude,
The hearings were silly. Our Congress is made up of fools.
If this was meant to be subtantive, than there should have been representitives from Fannie Mae and Freddie Mac and Citigroup and BofA and others. All of them had a hand in the fiasco.
For example, why ask Goldman if they disclosed the make-up of a CDO to the buyer? That's the wrong person to ask. Ask the buyer. Did you know the make-up? If they say, "no," then the follow-up question is, "why in the heck are you in this business?"
Goldman succeeded while others failed. So we penalize success. What a great system!
Wrong = illegal, probably not
Unethical, absolutely
Un-American, yes! GS and other involved in the financial mess screwed their fellow countrymen big time. Their greed has been a disaster for America.
I especially liked how, after grilling the Goldman team wrongly in many instances, the Congressmen would then say something like, "You guys are smart. We hope you will help us design the new rules."
First of all, they give away the fact that they are only serving their constituents with all this loud sounding but empty questioning, by then asking the so-called criminals to help design the new laws?
There is no way in hell Goldman or any Wall Street firm should be involved in designing the new rules that will govern them. Come on Washington, can't you find any smart people who understand financial markets outside of the guys who gave us the Kool-Aid to drink? @#%$& I'm angry!
That said, THERE IS NOTHING WRONG WITH THE MARKET-MAKING THAT GOLDMAN ENGAGED IN. However, conflicts of interest exist and we need to make sure they do not.
I was disgusted with Blankfein and the way all the Goldman guys played dumb. I am just glad that I am not related to any of those guys, because I would be ashamed of them today.
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