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On Goldman, Securities Fraud, And Skepticism

 April 19, 2010 09:54 AM

By now of course you know that Goldman Sachs was charged by the SEC with civil securities fraud Friday - unless you live under a rock.

The weekend has brought forth several interesting points, all of which I believe our political (and bankster) class had better pay attention to.  In no particular order:

  • The rest of the world is tired of this crap too.  Britain and Germany, to name two, are now looking at going after Goldman.  This will not end here by any stretch of the imagination.
  • Goldman may have violated more than one lawIsn't receipt of a Wells Notice a "material event" that requires disclosure via an 8-K filing?  I'm sure they'll claim "no", but I wouldn't be so sure of that.  Never mind their hasty response on Friday afternoon.  We'll see how this plays out.
  • Goldman was not the only large bank involved in deceptive deals.  We should really talk about Magnetar, shouldn't we, and the nine banks that enabled their piece of this (that would be Merrill, Citi, UBS and more.)  They were all involved in a number of deals that smell suspiciously like the one the SEC went after Goldman over.  Or shall we talk about Jefferson County, Alabama again?  You know, where JP Morgan was involved in a deal to "help" the county replace its aging sewer system, and wound up costing them 25 times the original (and actual) price of the work?  Oh, and let's not forget that several government officials and private-sector folks have gone to prison already for their involvement in this scandal - for bribery and related acts, while not one indictment has issued against a bank executive or the banks involved themselves. 
  • Jamie Dimon is threatening governments (again), this time in Germany.  The people have had quite enough of extortion and blackmail, Mr. Dimon.  You might also want to consider that some of those "less-regulated" markets you might flee to, such as China, have a habit of solving regulatory problems not with indictments and juries but rather with summary imprisonment or even execution.  Consider the folks in the "basic materials" business who allegedly got caught gaming the system in China recently - and were summarily tried and convicted.  Others have simply been shot.  We claim to be more civilized here in this country, which is one of the reasons your threat rings rather hollow - in those "unregulated" markets you're more likely to find a disgruntled investor wields an AK-47 rather than a summons or subpoena, and you know it.  I double-dog-dare you to take your capital and move to any of those places - I'll be watching for the Youtube of your execution when you screw someone over in East Buoffo as a consequence of their "unregulated market", and promise to chortle when it is posted.
  • The people don't believe the SEC, Congress or the Obama administration.  Bill Clinton is now saying he took "wrong advice" from Larry Summers and Bob Rubin.  That "advice" included Gramm-Leach-Bliley, I might add, as well as derivatives.  Let the record show that Larry Summers took a clean shot at bankrupting Harvard University, losing $14 billion of its endowment in just over a year's time.  I'm sure some of that has come back with the stock market "recovery" (engineered via more phony accounting) but the fact remains that as Harvard's Corporation (in the legal sense) consists of seven members who are accountable to nobody but themselves.  Bob Rubin, for his part, was entangled in Citi at the time of the Gramm-Leach-Bliley act's passage.  Oh, and Rubin is on Harvard's board. 

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The people have every right to be skeptical.  Indeed, perhaps cynicism is more appropriate than skepticism in this case, in that every step of the last ten years when it comes to financial firms and regulation appears to have been driven by one goal: to allow banksters and their cronies to loot and pillage the American people, who are then supposed to back them up when their fancy games go awry.

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