Goldman Sachs probably considers itself one of those companies that is too big — or even too important — to fail. But it’s really just too greedy to exist.
Lloyd Blankfein, Goldman’s head, made a comment a few months back that was as audacious as it was despicable when he said his company was doing “god’s work.”
I’m using a small “g” on Blankfein’s God because no deity of any known religion would condone the kind of avarice Goldman has shown.
I’ve been tracking and condemning the antics of this company for years.
I’ve especially criticized Goldman’s unfettered and unchecked access to government officials like former Treasury Secretary Hank Paulson, who once was Goldman’s leader and (as his phone records that I obtained attest) was at his former firm’s beck and call.
At a time when there was tons of money to be made in the unstable financial markets, Goldman’s Blankfein could get the US Treasury on the phone without fail.
These calls to Washington big shots could have resulted in Goldman receiving intelligence far beyond what anyone else on Wall Street or in the general public could have ever hoped for.
That’s the real scandal surrounding Goldman Sachs, or Government Sachs as the wisecrackers have come to call it. And if regulators dig even a little, that’s the dirt they will be shoveling.
But for now I guess we’ll just have to settle for the small stuff — that $1 billion scandal announced Friday by the Securities & Exchange Commission. The SEC woke from its decade-long nap and smacked Blankfein’s firm with a lawsuit that alleges one of Goldman’s mortgage-backed securities was rigged to fail.
And it charged that this security, called the Abacus 2007 AC1, was sold to investors as a good investment.
There’s going to be a lot of contradictory facts on this allegation: did Goldman itself actually lose money on this investment?
Is the Obama administration playing politics by announcing these charges just as reform of Wall Street is being discussed?
And, ultimately, does anyone really care if a bunch of rich folks were lied to by Goldman when it called “Abacus” a good buy?
At the very least, the SEC charges will allow us to say goodbye to some of the “good buys” that Wall Street touts. Perhaps investment firms will be a little more careful with their enthusiasm in the future.
The bigger question is whether the SEC charges are the first step that’ll lead to us saying goodbye to Goldman, which will undoubtedly report stunning earnings today that will further antagonize its critics.
Goldman has long been very proud of the fact that it foresaw the decline in the US housing market.
Everyone now has to ask: how could it have then sold securities like Abacus that allowed its customers to make a bet in favor of a market that Goldman was so certain would fail?
That’ll be dealt with in the SEC lawsuit, which is a civil proceeding that can only result in a fine.
Let’s see if anyone in the Obama administration has the nerve to look into this matter in criminal terms.
But I have another question, a more important one. How does it happen that Goldman was so sure about the upcoming troubles in the housing market?
Was it because Goldman’s analysts were so much better and smarter than those at Bank of America, or JPMorgan Chase, or the rest of Wall Street?
Or was Goldman privy to information not available to everyone else, perhaps through its contacts at Treasury?
But what I’ve also wanted to know for a long time is whether Goldman somehow earned itself a “get out of jail” free card through all its Washington contacts.
Perhaps in the tit-for-tat political world, Goldman is allowed a cou ple of stumbles before regu lators finally draw blood.
That’s why the SEC charge last Friday, while small in scope, could ac tually be a monster change in direction. In the small view, the SEC could simply be a rogue regulator looking to get its chops back.
In the bigger view, the Obama administration might have just revoked Goldman’s immunity — it’s “too big to touch” status — and the firm could now be treated like everyone else.
