SEC accuses Goldman Sachs of fraud in subprime mortgage meltdown

[kcowan]

More Andy Horowitz here:
Goldman to Employ So-called ‘Douchebag Defense’ « Borowitz Report

 

[Nords]

More Andy Horowitz here:
Goldman to Employ So-called ‘Douchebag Defense’ « Borowitz Report

Took me a long time to catch on to Borowitz' satire...

 

[clifp]

Took me a long time to catch on to Borowitz' satire...

Oh you mean this piece on his site isn't really.

NORFOLK, VIRGINIA (The Borowitz Report) – Eleven indicted Somali pirates dropped a bombshell in a U.S. court today, revealing that their entire piracy operation is a subsidiary of banking giant Goldman Sachs.
There was an audible gasp in the courtroom when the leader of the pirates announced, “We are doing God’s work. We work for Lloyd Blankfein.”
The pirate, who said he earned a bonus of $48 million in dubloons last year, elaborated on the nature of the Somalis’ work for Goldman, explaining that the pirates forcibly attacked ships that Goldman had already shorted.
“We were functioning as investment bankers, only every day was casual Friday,” the pirate said.
The pirate acknowledged that they merged their operations with Goldman in late 2008 to take advantage of the more relaxed regulations governing bankers as opposed to pirates, “plus to get our share of the bailout money.”
In the aftermath of the shocking revelations, government prosecutors were scrambling to see if they still had a case against the Somali pirates, who would now be treated as bankers in the eyes of the law.
“There are lots of laws that could bring these guys down if they were, in fact, pirates,” one government source said. “But if they’re bankers, our hands are tied

 

[Nords]

Oh you mean this piece on his site isn't really.

Well, it was my first hint...

 

[kcowan]

BTW if you want another site that seem to have it right, it is Barry Ritholtz blog:
The Big Picture

 

[IndependentlyPoor]

Yet another summary, but a good one.
Jesse's Cafe Americain: A Summary of the Goldman Sachs Fraud Case, and the Downfall of an Icon

 

[teejayevans]

Warren Buffett try to explain what GS was doing, but said there was only a 100 people
in audience of 50,000 who would understand it. He doesn't think they did anything wrong,
but he is a major share holder.
TJ

 

[Brat]

I am sure Buffett doesn't want to admit a mistake. Offensive-defensive behavior IMHO.

As a major shareholder in GS he is in a position to induce corporate capital punishment when appropriate.

 

[kcowan]

Actually at the rates he is getting for his money, he did not make a mistake. He knows about derivatives because he owns a company that invests in them ("Weapons of Financial Destruction"). Anything he says about GS is purely political.

 

[Nords]

Actually at the rates he is getting for his money, he did not make a mistake. He knows about derivatives because he owns a company that invests in them ("Weapons of Financial Destruction"). Anything he says about GS is purely political.

Like:
The Atlantic :: Business :: Buffett's View Explains Why Goldman Will Be Just Fine
Dealbook Column - From Buffett, Thought-Out Support for Goldman - NYTimes.com

Mr. Buffett, who has always approached investing as a dispassionate exercise based on his reading of the numbers, said IKB and ACA had all the relevant facts that any investor would need. They were able to see all the mortgages, which were referenced in full, and yet they made what turned out to be a very bad bet.
“It’s a little hard for me to get terribly sympathetic,” he said. When he makes his investments for Berkshire, he said, “we are in the business of making our own decisions. They do not owe us a divulgence of their position.”

And ACA had probably dozens of people analyzing bonds. Many of the reports don't even explain that they were a bond insurer, but that was their job. Their job was to look at credits and stick a proper premium on if they wanted to insure them. If they didn't know what the proper premium was, they should have skipped insuring them. Almost all of the bond insurers got in trouble during that period, because they drifted over into areas that they really weren't that good.

I can appreciate Buffett's & Munger's sentiments that everybody at that level should be a sophisticated investor and able to handle the rules.

But the e-mails slinging back & forth from GS indicate that some of the people involved felt that they were getting away with something, indicating that their sense of ethics was even shakier than their understanding of the rules. And by extension, the SEC's split vote isn't very complimentary of their ethics experts either.

I think the fact that the case is civil rather than criminal says "You guys know you were doing something wrong, now pay a lot of money to get these irate taxpayers off our back".

I agree with Alice Schroeder... Buffett sold his name too cheap.

Blankfein needs some tutoring on the finer points of body language. He may be doing "God's work", but at that level it never hurts to show a little marketing skill to go with all the brains.

 

[harley]

Actually at the rates he is getting for his money, he did not make a mistake. He knows about derivatives because he owns a company that invests in them ("Weapons of Financial Destruction"). Anything he says about GS is purely political.

Like:
The Atlantic :: Business :: Buffett's View Explains Why Goldman Will Be Just Fine
Dealbook Column - From Buffett, Thought-Out Support for Goldman - NYTimes.com


I can appreciate Buffett's & Munger's sentiments that everybody at that level should be a sophisticated investor and able to handle the rules.

But the e-mails slinging back & forth from GS indicate that some of the people involved felt that they were getting away with something, indicating that their sense of ethics was even shakier than their understanding of the rules. And by extension, the SEC's split vote isn't very complimentary of their ethics experts either.

I think the fact that the case is civil rather than criminal says "You guys know you were doing something wrong, now pay a lot of money to get these irate taxpayers off our back".

I agree with Alice Schroeder... Buffett sold his name too cheap.

Blankfein needs some tutoring on the finer points of body language. He may be doing "God's work", but at that level it never hurts to show a little marketing skill to go with all the brains.

I am as effusive in my admiration of WB as anybody, but it appears to me that he has been a bit to aware of his legacy recently. He has always been folksy and honest, but now he's getting a little too involved into the "appearance" of his decisions and statements. Can't blame him, really, but it's sad to watch. I think it would be hard to be the Oracle of Omaha in his twilight years during a really crappy economic period, trying to manage expectations, maintain his rep, and do the right thing for the country all at the same time. JMO.

 

[Nords]

I am as effusive in my admiration of WB as anybody, but it appears to me that he has been a bit to aware of his legacy recently.

I don't know how much he's changed. Reading his shareholder letters (and Charlie's speeches) over the last 20 years, they've been doing this for quite a while.

There have certainly been persistent inconsistencies between what they say and what they do. But as long as they're building intrinsic value and not visibly ripping off the shareholders, we're willing to put up with those "quirks".

I think Buffett's latest efforts have been devoted to locking up capital so that his successor can't waste it. It'll be interesting to watch him spend the rest of his cash through India & Japan over the next few months.

 

[Brat]

I just finished Michael Lewis' "The Big Short". DD is working through it. It is probably a slower slog for her as she needs to understand not only the investments themselves but the players. She understands that Lewis's next book will be about the European meltdown.

Bonds are typically an important part of a retiree's portfolio. I told her that I am considering solid dividend stocks instead. She commented that the strength in Fed issues is the result of people needing to be confident of preservation of capital as the bond issuers and rating agencies are not trustworthy.