The Securities and Exchange Commission on Friday charged Goldman Sachs Group Inc. and one of its vice presidents with defrauding investors by misstating and omitting key facts about a financial product related to subprime mortgages.
Fabrice Tourre, a Goldman vice president whom the SEC said was mainly responsible for creating the questionable mortgage product, known as ABACUS, was charged with fraud.
The case also involves John Paulson, a hedge fund investor whose firm Paulson & Co made billions of dollars by betting the nation's housing market would crash. This included an estimated $1 billion from the transaction detailed in the lawsuit, which the SEC said cost other investors more than $1 billion. Paulson was not charged.
The lawsuit puts Goldman Chief Executive Lloyd Blankfein further on the defensive. If you shine a light on a cluster of cockroaches, they scatter and hide. But when you shine a light on a cluster of investment banking conmen, they simply stare back and reply, "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation."
But this is largely a cosmetic fight between two warring factions of the same financial oligarchy. You've got Goldman Sachs, the poster child for Wall Street's innovations and machinations. And you've got the politicians Goldman has done its best to get on its side with campaign money. Both sides have to placate the public, which now knows it's been getting screwed six ways to Sunday.
Having previously declared that he was doing God's Work, Lloyd Blankfein may hope for divine intervention. In his first public statement, Lloyd Almighty issued the following:
"Blessed Are Those Who Ask For Nothing For They Shall Receive It In Abundance.
Blessed Are Those Who Are Merciful For They Are Unsuitable For Employment At Goldman Sachs.
Blessed Are The Goldman Sachs Market Makers, For They Generate Commissions Whether Clients Win Or Lose.
Blessed Are The Foreclosed Of Homes For They Provide Goldman Sachs Some Really Good Deals.
[and]
Blessed Are The Meek Who Inherit The Earth, For the Mineral Rights Are Not Included, And Goldman Sachs Will See Them In The High Court To Challenge Any Inheritance."
How does Goldman Sachs make its profits? Part 1 and Part 2.
The firm was founded in 1869 by Marcus Goldman, a Jewish immigrant from Bavaria (PHEW!!! for a moment I thought he had been German!) [More]
