Inside Lloyd Blankfein's Head

Unfortunately, yours is a dated concept of how Wall Street once worked before it became a casino. The house never feels remorseful for the gambler. But we regulate other casinos in order to keep the pain between the house and the gambler.

I couldn't have said it better ....

Your post, for which we are all dumber for having read, shows complete ignorance of the financial system. That's ok, but then don't pretend to criticize something you clearly know nothing about.

And what are you smoking today George? You need to retake finance 101.

"But so were Skilling and Fastow. Now they're the smartest guys on the cell block."

Ha! Good one! Tell it, G!

http://buythecover.com

And that's what's wrong with this country. Laws are supposed to protect us from the hazards OF wrongdoing.

If the SEC can prove they failed to disclose that Paulsen was involved in the creation of the product he was shorting then that is fraud on the part of GS. Paulson part was wrong but legal.

Gauging by the ignorance of these comments, I would have to say Blankenfein is feeling pretty good about the results of the hard day's work he and the other masters of the universe put in yesterday.

Sorry to burst your balloon, but what GS did with the specific issue in the indictment is underwrite and issue a new security, one that has to be registered with the SEC with full disclosure. GS didn't disclose. It broke the law.

The Committee members were right on in their questioning. Obviously GS's obfuscation suckered Mr. Hirschhorn and many commenters. We'll see how well they do selling that story with the Jury.

Since 2001, the Bush Administration issued 34 warnings to Congress about the need to reform Fannie Mae and Freddie Mac before it caused substantial economic turmoil in the financial markets. However, they met continual opposition by Congressional Democrats who feared that tighter regulations on lenders would disqualify low-income applicants from affordable housing

One of the on going problems with trying to stabilize the housing market is that these very same financial institution are better subsidized for serving foreclosures than they are for modifying loans. Which takes us to Fannie/Freddie and that is for another day. Before the GOP makes it their excuse for stalling financial reform remember that you own Fannie/Freddie out right and that it is going to be a bigger bear than reforming Wall Street and needs to be done with the focus solely on it. One of the initial reforms, however, would be to cut off serving fees to banks and to handle foreclosures and modifications in house.

Danbury they teach the same for mortgage,appraisaers,especially realtors.In reaaltorship,there is a specific fiduciary,when you are a single,(whatever,) the end of the story is. No one kept fiduciary Everywhere the realtors would tell you,"give an offer,they are desperate to sell."The developers, all lied. The realtors for the developers, lied, said King Tukuntamen was moving in the building.It is something in the core of a greedy society. But ethical,immoral,does not make it illegal? At the end, the car salesman,if he knew the car was a lemon,and a person dies, he can be sued, because someone died. But people who are financially,broke,got swindled, got suckered,nothing will be done. We need Republicans,and Democrats to work on applying rules, and work together.They, are to blame, for not watching over the country and what was happening.They did this mess, years ago.And Chris Dodd,should not be out there for the Democrats.People associate him,with Andrew Mozillo. Free,sweetheart,money mortgages.I think the president needs to work with Lloyd,by his side.The congress and senators are upset at their arrogance.??How does it feel.? (I do not mean every politician,both parties have good ones, but everyone dropped the ball.))

Nice rationalization, but I don't want to go car shopping with you any time soon. You forgot one important thing: "Let the buyer beware". Blankfein sld his "product" to people who were betting that they weren't buying junk and they would be able to make money off of it. It's a part of the game, and anyone who doesn't see that is naive. If the system didn't tank and everyone was making money nothing would be said, but because it did....now you gotta blame someone. It's not Goldman Sacks that did something wrong, it's the system that allowed them to do it that failed.

Danbury, you are woefully ignorant of the used car business. They are there to SELL CARS. Used cars, used cars that were traded in because of a defect perceived or real. The job of the salesman is to sell it at a profit if possible so the dealership stays in business and the wife and kids of the salesman can eat that night.
The same is true of Goldman, they are there to move money, whether in housing, stocks, bonds, or even bundles of the fraudulent democrat favorite Fannie Mae mortgages that are certain to fail.
All this hate for wall street is only to salve the conscience of those deadbeats who did not pay their mortgages when due and now face foreclosure in a failing real estate market horrible overpriced.
Face it you deadbeats......you bet on buying a house hoping inflation would increase the perceived value thus bailing you out of an impossible monetary situation. Barney Frank and Chris Dodd are complicit in this scenario.

With due respect to those tired of analogies on this issue I will attempt to extend your car dealership analogy a bit. I believe what GS is arguing is as follows:
There are two seperate parts to our business. We are market makers- analogy we buy and sell cars - And we are traders - analogy we make bets on whether those cars are any good. In our second seperate business we make bets on whether people will die when the cars we sell them crash. This has nothing to do with the first part, the buying and selling part of our business. So how can we be held responsible for not telling the car buyer that we are betting on it to crash. Its free market, caveat emptor and all that. So, its not our problem if the car crashes and kills people, in fact we are happy when it happens because we bet that it would.

I believe this is the nauseating reality of Goldman Sachs.

The current SEC Suit is more like him cutting the brake line and taking out life insurance on you.

alloy,Come on not just republicans,Democrats, derregulated years ago. We had a Dem. congress 8 years, who wanted loans, and compensated everyone giving loan, to a dead man on the street. This are our leaders. They were incompetent,lazy,negligent, or greedy.What on earth do the 565 politicians, do all year.?Besides,travel, in private jets,party,socialize,exert power, have fancy meals,spend money,Have healthcare,retirement and then show off and only care for their party.Well with this Pres. they have been working.Both. sides. They still get long vacations,blah,blah.But the pres has them thinking.

FALSE, Goldman did NOT make the failing mortgage bundles. They came from OTHER FIRMS. Most originated at the democrat favorite crook Fannie Mae.
Get your facts straight before spewing these generalizations.
Goldman and other traders including the commodities market and used car dealerships are there to move capital from willing buyers to willing sellers and receiving a commission to do so thus staying in business.

anyway, they were selling to other financial sharks who bet they could make money and lost. the "buyer" was not a regular guy who goes shopping for a car or even a mutual fund or stock.

Citivas, have you NEVER read the disclaimer that says "paraphrased", "there is risk in trading" and other such CLEAR statements?
It matters not that the democrat favorite crooks Fannie Mae was bundling these phony financial instruments and peddling them to others including Goldman.
People who bought them believed they could make money with them. Do you supposed they told that to Goldman with all the details? NOT LIKELY. They lost because in the end, because THE DEADBEATS STOPPED MAKING THOSE MORTGAGE PAYMENTS.

"The crux of the case is did they specifically know that Goldman was outsourcing the formation of the instruments in the product specifically to the party that was intending to short them?"

That's irrelevent. Look at it this way. Why didn't the customer short them instead of buying them? Answer: because he thought he'd make money on the long side, and lose it on the short side. He was wrong of course, but that's not Goldman's fault.

This author definitely gets it.

"Goldman's role is to be a neutral middleman between buyers and sellers of risk"

Not true. Their role as a market-maker is clearly disclosed. On any trade they could be the one taking the other side. As market-maker their only role is liquidity.

Perhaps if we develop an appropriate car analogy we can better understand what most people in the room, regardless of the language they were speaking, seemed intent on keeping out of the public debate. Assume Goldman not only sells cars, but they build cars and their components, collect cars and deal in paper related to car transactions (like financing agreements, pawn agreements and contracts to repair).
Along comes a representative for four golf partners, who says "I think US car manufacturer's are under such financial pressure that they have cut corners beyond the snap back point, overbuilt and over-accessorized the product beyond what the market can bear and car owners will be saddled with broken down gas guzzling dinosaurs that will ruin them financially. [Mind you, that is just the opinion of four guys who routinely walk a couple of miles looking for a little ball]. Goldman is asked to bundle $5 million of "paper" that will increase in value [magnified by leverage (other people's money) as the price of cars decline. This "financial product" doesn't exist, it will have to be custom built. Goldman puts its smart boys on the problem, but they never sold cars, so they ask the golfer, "Well, what would be most sensitive to a decline in the car market?" The golfer gives them several candidates which they put before a team of lawyers who will securitize the underlying assets into a Clunker Swap Agreement. Goldman then sends their financial sales team around to other golf clubs looking for people who think the car market has fallen as much as it is going to and a rebound is in store. Some people are dubious, but a number say they have many scratch golfing friends who would be willing to invest in a piece of paper that promised outsized returns and was sold by people who appeared respectable. Goldman gives them the financial disclosure documents showing some questionable financing agreements, which pleases the scratch golfers because they know there is additional volatility in the subpar paper, which if things go their way, will provide additional juicy profits. Goldman does not tell them golfers were involved in selecting the underlying assets, but they think Goldman is more than capable of screwing them on its own, so they negotiate hard on price and get what they think is a suitable discount. Scratch golfers buy a portion of the Swap benefiting if the market goes up and the original golfers take the other side, benefiting if the market goes down. There is more money wanting to bet on the market rebounding than the original foursome can cover, so Goldman takes a financial position in additional Swap agreements with its own capital. Goldman may sell its interest or it may hold on to it if not offered sufficient price to sell by other members of the golfing public. No one in this entire transaction wants to buy a car, they want to profit on their understanding of the condition of the car and finance industry. Now you may say, this serves no public purpose. But others may argue that this allows people who must live under a public policy that has removed the old China Walls from many financial actors who performed diverse functions, such as raising capital for businesses, advised on investment opportunities, ran exchanges for investment products and financed consumers, to voice their dissatisfaction with the absence of checks and balances in the new system. Much of this behavior is predictable given the rules that the government has in place. If Goldman had to sell their proprietary position to J. P. Morgan, it is unlikely that the government would have broken the back of the consumer finance bubble that kept the US economy functioning during the post 9-11 world (or that Fannie or Freddie would have stopped supporting the home mortgage market). Certainly there are many conflicts of interest built into the Financial Supermarket that evolved post Glass Stegall. Lax enforcement of the law and budgetary cuts in the agencies charged with enforcement cannot all be Goldman's fault. Little publicity has been given to rationalizing the financial system for the twenty first century landscape, although it is fair to assume little credence will be given in the future to the notion that private markets are capable of self-regulation. Public confidence will not return without competent, selfless public officials, of which there seems to be an astonishing shortage. Maybe its time to check with Goldman on how to play that market.

When anyone is in a room full of congressmen, that person is the smartest person in the room.

Sounds like you are having a fantasy garden girl.