Comments for http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html en-gb 30 Sat 25 Apr 2015 13:00:19 GMT+1 A feed of user comments from the page found at http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html McJakome http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=98#comment83 83. At 4:34pm on 07 May 2010, GH1618 wrote:JMM (#81) "If a financial instrument is a "product" as a car is a prodeuct, shouldn't standards of truth and responsibility apply to both?""Sure, which is why the case is about fraud rather than fiduciary duty."So we aren't really disagreeing, I was just unclear. Thanks for the enlightening conversation. Fri 07 May 2010 20:30:02 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=97#comment82 JMM (#81) "If a financial instrument is a "product" as a car is a prodeuct, shouldn't standards of truth and responsibility apply to both?"Sure, which is why the case is about fraud rather than fiduciary duty. Fri 07 May 2010 15:34:53 GMT+1 Interestedforeigner http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=96#comment81 JMM:A used car saleman may have been slimy, but he does not owe the buyer a fiduciary duty.He owes the buyer a duty of honesty. If he has made a misrepresentation for the purposes of obtaining money or property the law has both civil and criminal remedies. The buyer has every right to pursue any such remedy.However, a fiduciary duty is something quite different again.A fiduciary is someone in a position of trust. (I would have said the definition is somewhat broader than that provided in Gary's link.) The other person may have a particular vulnerability to misconduct by a "faithless fiduciary" and hence the law attaches to the fiduciary a greater duty: the fiduciary must act with utmost good faith and put the other person's interests ahead of his or her own, whether the fiduciary is being compensated for performing that role or not. The very act of becoming, or knowingly standing in the position of, a fiduciary, is voluntarily to take on that higher duty. Fri 07 May 2010 02:52:07 GMT+1 McJakome http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=95#comment80 78. At 7:08pm on 02 May 2010, GH1618 wrote:JMM (#74) "Saying that they are only selling a product and have no fiduciary or other responsibility is pure garbage.""Are you an attorney? You are getting into a technical area of the law here. I expect there is plenty of room for good-faith argument on both sides of the question whether in particular transactions they were acting as "fiduciary." The sustainability of the complaint does not turn on the question of "fiduciary" in any case.Here is a definition of "ficuciary from the U. S. Code:"No, I'm not an attorney, but I plead guilty to speaking from emotion, not strict logic [having lost more than 60% of my "safely invested" non Social Security retirement money].I was not trying to re-define fiduciary, I was trying to say thatregardless of the fiduciary relationship [or none] lying outright, misrepresentation, bait-and-switch, false advertising, deceptive packaging, and any other technique for dishonestly and/or deceptively transfering money or other assets from someone to oneself should not be allowed and should be punished.To be more specific [if repetitive], if a used car salesman sold you a car that was represented as in good condition, which died on the way out of the lot, would it be acceptable? If a financial instrument is a "product" as a car is a prodeuct, shouldn't standards of truth and responsibility apply to both? My point is that I think the answer is yes, and, moreover, I believe that we have laws on the books that cover this and should be enforced, with maximum penalties, on anyone found guilty of misconduct in the financial market.I also think we need more regulation and more punishment and more application of extant laws and punishments. Reinstituting Glass-Steagle might be a good start. More executives taking the Martha Stewart cure would be a good idea, too. In fact, the "real" people making the dicisions at the unreal persons [companies] should face more scrutiny with real jail time for even minor infractions. It might do wonders for what is now sometimes an oxymoron, "business ethics." Thu 06 May 2010 22:41:15 GMT+1 colin mountford http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=94#comment79 Until someone ends up in jail, no one has done anything wrong. Investment bankers have walked away with millions, while many of their fellow citizens are homeless living under bridges. If no one is held responsible, and the situation reverts back to"business as usual" for the finance industry, expect big problems, with rioting, and people taking the law into their own hands. Mon 03 May 2010 10:29:57 GMT+1 Manneken http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=92#comment78 Listen to this song - says it allhttp://www.reverbnation.com/play_now/song_3868394 Mon 03 May 2010 08:34:33 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=91#comment77 JMM (#74) "Saying that they are only selling a product and have no fiduciary or other responsibility is pure garbage."Are you an attorney? You are getting into a technical area of the law here. I expect there is plenty of room for good-faith argument on both sides of the question whether in particular transactions they were acting as "fiduciary." The sustainability of the complaint does not turn on the question of "fiduciary" in any case.Here is a definition of "ficuciary from the U. S. Code:Definition of "fiduciary" Sun 02 May 2010 18:08:21 GMT+1 PAUL http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=90#comment76 AS TO MR. MARSHALL'S #76 THOUGHTS, THE REAL DELIGHT WOULD BE WATCHING THE MEMBERS OF CONGRESS (DODD, (HE QIUTTING) FRANK (HE COULD NOT ANSWER A ? WITHOUT LOOSING HIS TEMPER IF HE HAD TOO) & PELOSI ( AND SHE IS TOO BUSY TRYING TO RUN THE COUNTRY FROM HER PRIVATE AIRFORCE JET THAT WE PAY FOR) BEING GRILLED ABOUT WHY UP UNTIL NOW THEY HAVE BEEN AGAINST REGULATION & BETTER YET WAKE UP KERMIT THE FROG FROM TEXAS (GRAHAM), THAT SLIPPED ALL OF THIS IN TO A NON-FINANCIAL BILL, WHEN CLINTON WAS ASLEEP @ THE WHEEL OR WHAEVER HE WAS DOING. Sun 02 May 2010 15:42:02 GMT+1 willis marshall http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=89#comment75 I must laugh ! Their is no one who knows what they are talking about in the stock mkt. business. I "play" the market, its a game and its fun ! Do I make money ? Seldom ! More often than in playing the slot machines? There are two brokers I trust in Kansas City and they go in opposite directions 90% of the time ! Its up to me to make the decisions ! GREED drives the market not intelligence ! Greed on the part of the buyers ! Lie, cheat and steal on the part of the sellers ! I think it would be fun to be in front of the congress answering questions and laughing inside ! They know that they will walk away with their millions and enjoy the experience. Now thats a game I'de like to play! Sun 02 May 2010 12:02:22 GMT+1 PAUL http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=88#comment74 ONE ONLY HAS TO LOOK AT THE SERIES OF ARTICLES IN ROLLING STONE, Inside The Great American Bubble Machine BY MATT TAIBBI. GOLDMAN HAS BEEN IN EVERY ECONOMIC BUBBLE SINCE THE 1920'S YES THE GREAT DEPRESSION AS WELL, AND COME OUT "SMEELING LIKE A ROSE" WITH TAXPAYERS $$$'S IN THEIR HANDS. IF ANYONE REALLY THINKS THAT CONGRESS CAN OR WILL COME DOWN HARD ON GOLDMAN OR REAL REGULATION, LOOK AT THE REMARKS OF CHRIS DODD & BARNEY FRANK FROM A FEW YEARS AGO. THIS IS ALL A SHOW FOR THE CAMERAS. ASK THE QUESTION, WHAT COMPANY & IT'S EMPLOYEES WERE THE LARGEST SINGLE DONOR TO OBAMA'S CAMPAGIN TO THE TUNE OF $981,000.00?? Sun 02 May 2010 11:18:10 GMT+1 McJakome http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=86#comment73 These "malefactors of great wealth" [GOP President T. Roosevelt] are only being verbally roasted when they and their boards of directors should be nuked.Saying that they are only selling a product and have no fiduciary or other responsibility is pure garbage.1. Would you buy this argument from a used car dealer who sold you a used car "in perfect condition", a "great buy" that died on the way out of the lot?2. Would you accept that your health insurance company would not pay for an operation clearly covered in your insurance policy because you had already used up your lifetime coverage when they had not told you that there was a lifetime cap? Their excuses:a. you are an adult and should have known betterb. you shouldn't have gotten sick in the first placec. your policy is a product and they are not responsible if it was sold in a misleading way [you should have had a lawyer check it for you].d. they have no fiduciary relationship to you as a sellere. they won't refund any of your money because it was used in "legitimate" servicing expenses and business profitsIn addition to this, "truth in advertising" laws may still be on the books, there are laws governing misleading or false product claims, and there are laws making those responsible for injury [including financial injury] liable.They need to be pilloried [literally] and preferably in front of the Fed or the NYSE. Sat 01 May 2010 11:48:31 GMT+1 McJakome http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=85#comment72 7. At 9:26pm on 27 Apr 2010, ghostofsichuan wrote: “Nothing more than political theater. The government knew what was going on and in fact were told of the potential harm and chose to do nothing.”It may well have started that way, but we can always hope the self-serving congress creatures will resort, in self-preservation, to the old Russian tactic of throwing someone to the wolves. My choice [and probably that of many Americans] for wolf bait is [guess who?] Sat 01 May 2010 11:27:27 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=84#comment71 TeaPot (#64) "If the proposed financial reform bill doesn't take major steps to control Freddie and Fannie, it's all grandstanding."The position of the Democratic Party is that Fannie and Freddie should be dealt with in separate legislation. I agree with this, because they are unique institutions, not banks.I would say that objecting to bank regulation legislation because it does not apply to other specialized institutions is "grandstanding." Fri 30 Apr 2010 14:41:52 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=83#comment70 TeaPot (#64) "1) How much of the TARP payments went to Goldman? and How much have they paid back (in effect, how much taxpayer funds do they still have?)"Ten billion, according to this article, which has been paid back with interest:http://seekingalpha.com/article/150780-taxpayers-earn-23-return-on-goldman-tarp-investmentHas anybody here ever heard of Google? Fri 30 Apr 2010 14:38:24 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=82#comment69 DemocracyThreat (#68) " . . . since I have now been proved correct by events, . . . "At this point, it's a preliminary inquiry by the Justice Department. Here's a link to a news item on the matter:http://www.cbsnews.com/stories/2010/04/29/business/main6445636.shtmlIt will be awhile before charges are brought, if at all. In any case, the civil charges do not depend on it. Fri 30 Apr 2010 14:32:26 GMT+1 democracythreat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=80#comment68 I wonder if Mark Mardell is perhaps ashamed to have bee caught on the public record, making apologetic noises in favour of people who are now stigmatized with criminal charges?"But I also detected that they are frustrated by questions framed by amateurs who believe themselves well informed."The tone of this phrase was rich with the flavour of superior intelligence, and it is now dripping with irony.Come, Mark. Let us have your learned views on the way the case has evolved.Now that we have defendant in the dock on criminal charges, do you suppose they will be frustrated by the ill informed complaints of lessor men, or will they begin to take the law seriously? Fri 30 Apr 2010 13:55:31 GMT+1 democracythreat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=79#comment67 In my post at 26, which was referred to the moderators and sits in limbo, I made the case that Goldman Sachs ought to have been charged with criminal fraud.The post used moderate language and reasonably detailed legal analysis.At the risk of celebrating my own foresight, and since I have now been proved correct by events, perhaps the moderators can unclench their fear of whatever it was they feared and reinstate the post. Fri 30 Apr 2010 13:38:36 GMT+1 AndreaNY http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=78#comment66 64. TeaPot562 :I suspect that Goldman has little or no taxpayer funds still owing; and that Freddie and Fannie are into the taxpayers for over $ONE HUNDRED BILLION.**********Fannie and Freddie fall into the same category as tort reform. Grandstanding, indeed. Were the president more honest, he'd have told Americans he wasn't a big supporter of that $50 billion fund either. Instead, he says opposition to reform, and by extension the fund, is protecting Wall Street. The democrats were so busy talking about the republicans they failed to mention that the fund will be dropped.Maybe now the merits of the proposals will actually be debated. Or maybe the democrats will turn this debate into another political show. Thu 29 Apr 2010 12:21:49 GMT+1 Worldcitizen1 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=77#comment65 63. At 01:00am on 29 Apr 2010, AndreaNY wrote:Goldman wins every time because they are part owners of the Federal Reserve. At any time, they could simply refuse to sell money in exchange for Government bonds and start a new recession. Our Government knows this. It is all GRANDSTANDING at its finest. Thu 29 Apr 2010 05:28:36 GMT+1 Worldcitizen1 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=76#comment64 64. At 04:29am on 29 Apr 2010, TeaPot562 wrote:"I suspect that Goldman has little or no taxpayer funds still owing; and that Freddie and Fannie are into the taxpayers for over $ONE HUNDRED BILLION. If so, why doesn't the so-called financial reform bill address the problems at Freddie and Fannie, which were the enablers of the banks and others making the liar loans? ("Enabler" - the person providing bottles of whiskey to the alcoholic.) Without Freddie & Fannie, the bubble in home values would have been much smaller.If the proposed financial reform bill doesn't take major steps to control Freddie and Fannie, it's all grandstanding. "Let's blame everybody but ourselves.""Good questions. Want to know the answers? Go to the following website and you will know why. Goldman Sachs is part OWNER of the Federal Reserve Bank. Is it starting to kick in yet as to why they will only get a slap on the wrist when they were partly to blame for the whole economic free fall?http://www.youtube.com/watch?v=WjGy9gjcoIo&feature=related Thu 29 Apr 2010 05:11:02 GMT+1 TeaPot562 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=75#comment63 A few questions so I can make a considered judgment:1) How much of the TARP payments went to Goldman? and How much have they paid back (in effect, how much taxpayer funds do they still have?)2) How much of the TARP funds went to AIG, the big loser when the mortgage market crashed? and How much have they paid back?3) Here's the guts of my inquiry: How much taxpayer funds went to Fannie Mae and Freddie Mac? And how much has been paid back?I suspect that Goldman has little or no taxpayer funds still owing; and that Freddie and Fannie are into the taxpayers for over $ONE HUNDRED BILLION. If so, why doesn't the so-called financial rerom bill address the problems at Freddie and Fannie, which were the enablers of the banks and others making the liar loans? ("Enabler" - the person providing bottles of whiskey to the alcoholic.) Without Freddie & Fannie, the bubble in home values would have been much smaller.If the proposed financial reform bill doesn't take major steps to control Freddie and Fannie, it's all grandstanding. "Let's blame everybody but ourselves."TeaPot562 Thu 29 Apr 2010 03:29:31 GMT+1 AndreaNY http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=73#comment62 Goldman wins every time. Politicians can criticize all they want, yet they paid Goldman 100 cents on the dollar. Thu 29 Apr 2010 00:00:22 GMT+1 publiusdetroit http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=72#comment61 Anyone looking for a long gallows to be built on the Capitol steps is going to be largely disappointed.Keep in mind that all these financial institutions have huge stables of attorneys with degrees in accounting, finance, and economics. These highly paid, legal-eagles may have pressed the laws to their absolute limits; but I am sadly confident that they knew where that limit was, and did not jeopardize their clients.What can best be hoped for is that buyers and investors will realize they must be aware and be vigilant when dealing with financial institutions. Individual investors and Mutual fund investors forgot that old saw, "Let the buyer beware.", and gave a free-hand to the market of very complex, and abstract financial instruments.The Government may well enact laws and regulations in reaction to this economic crisis; but the institutional lawyers will be right back to work testing the limits; and financial personnel will be back to designing new investment vehicles once again.Another old axiom is that the best way to turn a successful business into a failing business is to let the accountants run the business. The investor is the only one looking out for their personal best interest. Trusting one's best interest into the hands of another often leads to disaster. Wed 28 Apr 2010 21:38:03 GMT+1 Philly-Mom http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=71#comment60 As I've said before, too many people are confusing retail banking with investment banking, - SquirrelistAh. But, financing property purchase and then building on it is an example of investment aligning with retail. Yes? And if you can prove that the right hand didn't really know what the left hand was doing, you've just gotten your 'Get out of jail free' card.Arguably, the crash of hedge fund trading pertaining to overinflated real estate valuations (and potentially overzealous commercial & residential development) was key to the market freeze and subsequent market crashes.Whatever. These poor sacrificial suits will squirm, but I've no idea what will come of the whole show. Due to the level of international investing and trading involved, my crystal ball is looking very cloudy. -- If we could get rid of those silly tea bags, maybe I could read the leaves... Wed 28 Apr 2010 20:14:19 GMT+1 LucyJ http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=70#comment59 America should make a new law that says English is our national language. Wed 28 Apr 2010 19:41:38 GMT+1 Philly-Mom http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=69#comment58 RE: RedSquirrel #54"As long as you can show you've got someone in the pillory and invited people to bring some rotten vegetables along, that fixes the whole crime problem in the village for ever after. . ."Gosh, and Obama was just in The Village last week... Oh! Wait! That's it! Maybe we should bring out the umbrellas and smoke bombs and rotten veggies? Just Imagine what kind of an inter-cultural catharsis we could have. Dang. I'm up for it. Don't that work on all ya'll's continent?Hmmm... No? okay. Maybe not. Fine. Then let the charade continue. All the world's a stage and whatnot. Let the dog be wagged.And now -- to peek behind the stage's curtain: Most of us voters are angry. Most people who can make change happen need voters to keep them in their seats long enough to invoke change. In order to encourage voters to keep them in their seats, they need to "Quick! Look Busy!" as the beloved old pope once said... Wed 28 Apr 2010 19:37:49 GMT+1 Snagletooth http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=67#comment57 37. At 12:18pm on 28 Apr 2010, Wannabeyankee wrote:What bothers me is that no-one gets the real point of the cause of the economic meltdown. It has its roots in the Clinton Administration's forcing of the banks to lend money to people who had no possible means of repaying those loans (the so called "NINJA" mortgages). This lead inevitably to the massive foreclosure mess that closed out the Bush Administration, and carried on into the Obama term. This is obviously a mess that was created by the Democrats, but they seem to be able to blame the Republicans with impunity. It's real pity that most of my future fellow countrymen don't follow history.-----------------------well, some of us do. Carter wrote the law that made the loans , and Clinton strong-armed the banks and lenders to administer the loans. Dodd and Frank have been covering the paper work to make it look "all OK" since. Politics made this mess, and the fact Clinton, Carter, Dodd, and Frank aren't on trial is a disgrace. Goldman did the best it could to get that hot potato out of their hands before it went bad. They should turn the tables on the "Inquisitors", with the fluffy pillows and comfy chair, and start pointing out that the government made the bankers give bad loans, they just did what they could to reduce the risk to themselves. That's the sad part of Senate investigations like these, the accused hasn't the right to call it's own witness to cross-examine, like, say, Clinton, or Frank, or the Federal Reserve itself. Wed 28 Apr 2010 19:32:29 GMT+1 LucyJ http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=66#comment56 In all honesty, as an American, I should care more about Goldman, but I really don't care much for the financial garb. Politicians are blaming them for all sorts of things, but the politicians have made bad decisions and done deceitful things, too, like paying excessive amounts of money to Halliburton, ect. It all seems like politics and the politicians are no innocents. That includes the Dems.President Obama has made one of the most important declarations of his life during his speeches in the Midwest. He said that he wants to reform immigration, so that illegals can become legal.To me, this means that President Obama is willing to strike down the federal law in order to support illegals.What is the point of Americans following federal laws if Obama, our President, thinks that illegals don't have to follow them? Legalizing illegals is unjust and misguided.I have voted Democrat my entire life in elections. (Well, the last two, of which been elgible). But now, I can see that the Democrats are just as bad as the Republicans. In fact, they are worse. The Republicans are the lesser of the two evils. At least, they are not trying to take our rights away and make us depend on the govt. for everything.I do not trust any of the Democrats anymore and I refuse to vote for any of them in November. I am in full support of deporting all illegal immigrants from all of America.Green cards and work visas are legal, because they pay taxes and are registered. We know who they are.Legal immigrants are 100% USA citizens.Illegal immigrants are 100% criminals.Let people come to America the legal way. But we cannot grant illegals legal citizenship because they broke our law crossing the border. We should only grant legal citizenship to people who come here the right way- legally. If Obama grants illegals amnesty, there would be a neverending swarm of illegals and no one could stop them.President Obama and the Democrats are going to have a showdown with the American people in November. WE must take away their power by voting Republican.Bush was a rotten President. But after having Obama, I miss Bush. Bush and his cronies, Cheney, Rumsfeld, Rove, ect. are preferable to Obama and his cronies, Holder, Napolitano and Emanuel, who support the illegal immigrants over Americans. They also are soft on national security.They have made their choice. And we will make ours in November.Vote for Republicans to stop amnesty for illegals!!!!!!!!!!!!!!!!!!!Vote for Republicans, so the Democrats do not take all our rights away! Wed 28 Apr 2010 18:43:16 GMT+1 ghostofsichuan http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=65#comment55 The Republican members will be harsh with GS on TV but will block any legislation that might correct these problems. Two-faced is a way of life with them. They are looking for campaign clips not change. Wed 28 Apr 2010 18:31:54 GMT+1 baircash http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=64#comment54 GS claims that they offer a product & does not twist any arms to get buyers. Yet, I wonder if they did indulge in buffing the proverbial turd believdfing that their reputation would carry the day. The other question is where were the rating companies? I think that there were some hearings on these guys. what I've read is that they provided positve rating or lose the contract with GS to do it? Wed 28 Apr 2010 18:29:27 GMT+1 squirrelist http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=63#comment53 I wrote a little thingy after reading FRobert Peston's Rolex analogy (which I recommend) but the comments crashed and it seems to have vanished. Can't be bothered to do it again.However, it does seem to me that hearings like these are a distraction. All they are going to discover is that a lot of investment/merchant bankers/hedge funds were amoral (what a surprise!) and there was nothing to stop them dreaming up and disguising, or being coy about to outsiders, all kinds of fancy schemes to make themselves more money. (Again, what a surprise.)They could have been asking questions like 'Why' and 'How' a year ago, but. . .And at this very moment, they are happily ignoring the opportunity to make this kind of thing either moral or illegal, which is what really matters.As long as you can show you've got someone in the pillory and invited people to bring some rotten vegetables along, that fixes the whole crime problem in the village for ever after. . .As I've said before, too many people are confusing retail banking with investment banking, and traders with brokers. A lot of the former basically boxed up fake Rolexes by the hundred and gave the impression they were real, and you might even find a 24-carat solid gold Patek Philippe with diamonds round the face in one if you were very lucky, then insured themselves against the chances of their buyers sending them back when they stopped ticking. And, once they'd offloaded them all, placed one bet with the bookie on the corner that half the customers would send them back and another with the one on the opposite side of the street that half of them wouldn't.OK, they lost a bit on one bet, but the other came up 100 to 1. And now they're saying: "So what? We aren't watchmakers. If that's what the front of the shop looks like, well, the law and the rules let us pretend. You should have looked behind the curtains, spotted the clocks in the window didn't have any works, or gone round the back. So tough. So we made a lot of money out of it and a lot of people got broke. Well, that's the American Way."Except it was banks and countries and the people in them that went broke. Wed 28 Apr 2010 18:14:09 GMT+1 ChrisP http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=61#comment52 Zero sum Game.Bankers do not produce anything.If bankers make a profit it is at someone else's expense so when Tycoon makes $70 million not only is a he a greedy greedy person but that money has come from someone else (perhaps someone who had to "discount" their mortgage). It is not possible in a cash transaction where neither actually makes anything for both to win financially.One may mitigate their losses as the other gains but that is the best you can get in a closed system. Bring in insurance if you must but insurance payments come from premium (unless the insurer is loosing it) so all premium payers loose as their rate reflects the loss. Sure no one person has a large hit but all the little one add up - to the banks profits.Ah you might say banks provide a service - to whom? It used to be simple savers deposited money which banks lent and so by adjusting the the interest rates earned a crust. Bread, and butter, was not enough for the banks they wanted jam on it so they went out to raise money from other sources promising untold wealth with the interest rated reflecting the risk - or so they said. Bankers gambled and they got the risk wrong but they still took their crust (with butter and jam). Greedy banking people. Little people took a loss, those who create things took losses and the economy went down the tubes. The bankers kept their crust . They beseeched the government to help them out - (that means the little peoples' hands in their pockets -taxes etc) and government did help them out.And they are doing it again. StillPerhaps Joe S had it right string the greedy people up.One last question for the poor bankers - what do you do with $7,000,000? how do you manage to spend it? Wed 28 Apr 2010 16:44:03 GMT+1 Scott0962 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=60#comment51 re. #29. At 08:37am on 28 Apr 2010, Mark wrote:"Let's see if Lloyd Blankfein manages to survive the 'Soft Cushion' or the 'Comfy Chair' when he faces further interrogation from the Senate Investigation Committee."No, not the Comfy Chair!Sorry Mark, it's very unlikely you'll see Blankfein in the Comfy Chair. The Obama administration reviewed the use of coercive interrogation techniques and found that people would tolerate a lot from their government--as long as it was done secretly so people could look shocked and say they didn't know if it later became public. That means the Comfy Chair is out while the cameras are on--and turning the cameras off would defeat the purpose of the Senate hearings. Wed 28 Apr 2010 15:49:36 GMT+1 Scott0962 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=59#comment50 re. #29. At 08:37am on 28 Apr 2010, Mark wrote:"Let's see if Lloyd Blankfein manages to survive the 'Soft Cushion' or the 'Comfy Chair' when he faces further interrogation from the Senate Investigation Committee."No, not the Comfy Chair!Sorry Mark, it's very unlikely you'll see Blankfein in the Comfy Chair unles you attend the hearings in person. The Obama administration reviewed the use of coercive interrogation techniques and found that people would tolerate a lot from their government--as long as it was done secretly so people could look shocked and say they didn't know if it later became public. That means the Comfy Chair is out while the cameras are on--and turning the cameras off would defeat the purpose of the Senate hearings. Wed 28 Apr 2010 15:49:09 GMT+1 Philly-Mom http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=58#comment49 34. SaintDominick wrote:"From grilling to drilling. I wonder how many of the drill baby drill crowd will be heading for Louisiana to help clean up all the environmental damage..."The same number of "Pro-Life" GOP'ers who held up Health Care Reform and who have adopted American children from foster care. Wed 28 Apr 2010 14:48:28 GMT+1 Philly-Mom http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=57#comment48 "Some questions clearly make them uncomfortable, such as whether they have a duty to promote the interests of their clients. The reason is obvious. They often had several clients, with different interests.".This should not be a problem. The investment manager should align the investments to match the concerns of the investor. There are MANY MANY investment firms who avoid sweat-shops and invest in fair-trade business. Even TIAA-CREF has a 'Socially Conscious' investment option for green people like me. Heck, a few Trustees found out that one of our managers was investing in cigarette companies, and they told the manager to get out of the cancer trade! Srsly! -- These boyz need to own up."But I also detected that they are frustrated by questions framed by amateurs who believe themselves well informed."No Kidding. Politicians hire Accountants to manage their cash. They haven't got a freakin' clue. Besides, can Washington hold investors accountable when they were 'looking the other way' for YEARS?? ('twas only for the good of the kingdom. I am so very sure. Yeah. Right. BTW, I've got some waterfront property in Camden, NJ I'd like to sell you...) Wed 28 Apr 2010 14:40:13 GMT+1 powermeerkat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=55#comment47 I thought it was Gordon Brown who's been really grilled 'bout this 'bigot' comment. :) Wed 28 Apr 2010 14:23:32 GMT+1 Philly-Mom http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=54#comment46 Okay - I really can't sympathize with ANY of the rich white guys in DC right now. Frankly, they all piss me off so much - I'm rather happy I'm a pacifist lest I get myself into trouble.Welcome to the Irony of My Life:I'm a working mom. I'm 37, college educated, and I discovered the hard way that my 'liberal arts' education wasn't worth crap in the 'real world'... so I support my kids on 38,000/year. My checking account dances the red line. I've been on food stamps. The only reason I could finally buy a home this past summer was because I qualified for an FHA Loan and I knew I'd get a big tax credit this year. (Thank you, Obama.)What do I do for a living? I work in Finance and Business Operations. I work in HR, Accounting, Project Budget Analysis, Grant Accounting... at the moment I coordinate a small University's operational insurance, I answer phones, make copies, file paperwork -- and I update reports to the Board of Trustees about the status of our University Endowment. Oh... and I read the wall street journal more than my boss-man does. Just for fun, since I don't actually have any money to manage.Let's see... as I rifle through my files... ah yes. Here they are:In September 2007 our Endowment was valued at 14 Million. (we're a vry small school)In June 2008 it was 13 Million. (No pay raises folks. Sry.)By June 2009 it was 11 Million. (Tuition had to go up. Sry.)By Sept 2009 it was 12 Million. (phew)As of March 2010 -- we're back up to 13 Million... Those were the Facts. Now for the Opinion. From My Humble 'Main Street' Perspective:-- On one hand, I may only have $300 in my checking account right now, but I have a tiny little home, my children are healthy, happy and I'm planting veggies on my front stoop. Compared to my Pappy's stories about the Great Depression, this was nuthin.' We're all smarter now.-- On the other hand, business have closed, I have friends who can't find work, and my parents are very worried about whether they'll have enough cash to die with dignity.And, from my 'Wall Street' perspective:-- things are very gradually improving.-- a few people have made a lot of money.-- most of the cash the US poured into the market went to State civic projects that kept people working. Good Job ya'll.-- we're seeing a global market shift moving us towards a 'global' standard. No big deal. This was a mere hiccup. THEREFORE - if these bastards committed fraud, they oughta be strung up. The masses are pissed off, homeless, jobless, and angry. We've lost faith in our banks and in our government. Elderly folks will have to die on their children's sofas because they can't afford hospice and they can't keep their homes. Greedy bastards who break rules and take advantage of other deserve to have all their finest riches taken from them and to be left on the streets like the people they used. Oh wait - I'm a pacifist. Right. Then burn them in effigy and send 'em to Guantanimo, 'cause they don't deserve to be in our over-crowded prisons with the poor bastards who turned to drugs and petty theft 'cause "they needed the money".Justice? Really? What's Justice? I can't quite remember... what's it look like?Aha! That's it! They SHOULD put those greedy bastards in the poorest of American Jails. It might jus' learn 'em a lesson or two about what desperation and pain actually feel like.... stepping off soap box in 3... 2... 1 Wed 28 Apr 2010 14:08:22 GMT+1 SaintDominick http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=53#comment45 Ref 41, crash"If the Government had left the stock market alone and let the banks,GM,Chrysler fail we would all be a lot better off right now and these shysters pulling these schemes would be gone!"Allowing our financial institutions, financial market, and other major components of our capitalist system is not something most Americans would support. We abhor what has been taking place in Wall Street, despise the executives that contributed to the demise of our corporations, and are disillusioned with our government, but neither anarchy nor socialism are options most of us are willing to accept.President Bush's bank bailout, President Obama's bailout of GM and Chrysler, the stimulus package, and heavy infusions of money (real or imaginary) fended off financial and economic disaster. Until viable alternatives are offered, they are the only game in town and we better hope it does the trick! Wed 28 Apr 2010 13:19:38 GMT+1 ghostofsichuan http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=52#comment44 Bit of irony that Congress is questioning Wall St. about honesty. We will know when the truth is spoken as both groups will turn to dust. Wed 28 Apr 2010 12:59:14 GMT+1 Monty Tweeny http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=51#comment43 After listening to the testament from the members of the GS management team,I now realise it is possible to "shine a turd " Wed 28 Apr 2010 12:39:39 GMT+1 arclightt http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=50#comment42 @36 (StD): "...and provide as little information as you can when challenged or asked..."Yes and no. I believe, as I believe you do, that the behavior of the larger Wall Street firms has become more unethical; however, (a) I suspect that the legal industry has coached them to believe that taking that position IS "advancing the interests of the shareholders", and (b) CAVEAT EMPTOR has been in the vernacular since the time of Rome..."The sad part of all this is that what has been taking place in Wall Street for decades is perfectly legal and is the foundation of our financial market."Dominick, I'm not positive that the last part of that is completely true. Naked short selling sure hasn't been standard practice; it's been blatently illegal. GS's conduct is right at the line on fraud; if their behavior had been carried out in any other venue, I think we WOULD call it fraud.I would agree with you that Wall Street has lost its moorings, but only because Main Street has lost its moorings as well. "I am not sure I would call it gambling, which gives it a semblance of knowledge and intent"It absolutely IS gambling. Every person who makes a loan or buys or sells a stock is betting that the future will come down to suit him, just the same as the person who bets on dice or cards or the roulette wheel. The loan-maker, and the stock buyer / seller, believes that he understands the risks better than he understands the risks of dice, etc., but at the end it's still betting on the future.Americans wanted high-grade profits without the risk that inevitably attends such profits. They bought the "new economy" nonsense in the late 1990s; when that inevitably cratered in 2002 they turned to real estate to "make their pile and retire at age 40". What they should learn from these two debacles is that if they want to amass a fortune for retirement, they do it the old-fashioned way...with a lot of hard work and self-denial."Wall Street is a house of cards bound to unravel sooner or later."It doesn't have to be; however, if we continue to allow the complex financial instruments to be constructed and sold, we'll have more such crashes. Real standards, limited abstraction from risk (and no making profits private but risks public), a general lowering of the tempo, and above all a return to realistic expectations on the part of individual investors would fairly easily restore soundness to Wall Street, and to Main Street as well. Wed 28 Apr 2010 12:27:09 GMT+1 Jesse http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=48#comment41 Liars and thieves grilling liars and thieves. The Senate grills these individuals about wasting taxpayer dollars that were GIVEN to Goldman by these same "representatives". Was it really a surprise when they wasted the money. Is it really a surprise that they misled their investors. Maybe to our "enlightened" senators, but not to real Americans. I wouldn't be surprised in the least if they all went out for drinks afterward. Wed 28 Apr 2010 12:06:59 GMT+1 crash http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=47#comment40 If the Government had left the stock market alone and let the banks,GM,Chrysler fail we would all be a lot better off right now and these shysters pulling these schemes would be gone! Wed 28 Apr 2010 11:57:23 GMT+1 crash http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=46#comment39 The drill baby drill crowd,All states have a fund for these types of disasters.No doubt though Louisiana probably spent their fund on a new marina for New Orleans or the local police trips to Colorado for training ! Wed 28 Apr 2010 11:50:16 GMT+1 crash http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=45#comment38 It is so ironic,the people who have stolen billions from the US tax payers over the years acting so indignant!!This displays how two faced all these crooks are from the white house,senate and congress. Wed 28 Apr 2010 11:43:20 GMT+1 frayedcat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=44#comment37 I think some of y'all are missing a fact. Goldman Sachs affiliates were in and on every angle of these products. Not just as a broker, but also as an underwriter, issuer, insurer, servicer, and buyer/seller. Google GSAMP Trust Securities - they're still on the market, and they're still foreclosing on people. Bye the bye, they also have an REO affiliate that's buying and holding the distressed properties. Second missing fact...GS ain't the only one...JP Morgan Chase, et als, are doing the same thing. They're playing with a double headed coin, loaded dice, stacked deck...and their own people are the marks. Time for the paper equivalent of a Guillotine... Wed 28 Apr 2010 11:42:29 GMT+1 Wannabeyankee http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=42#comment36 What bothers me is that no-one gets the real point of the cause of the economic meltdown. It has its roots in the Clinton Administration's forcing of the banks to lend money to people who had no possible means of repaying those loans (the so called "NINJA" mortgages). This lead inevitably to the massive foreclosure mess that closed out the Bush Administration, and carried on into the Obama term. This is obviously a mess that was created by the Democrats, but they seem to be able to blame the Republicans with impunity. It's real pity that most of my future fellow countrymen don't follow history. Wed 28 Apr 2010 11:18:37 GMT+1 SaintDominick http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=41#comment35 Ref 33, arclightt"Business folks operate under an entirely different rule, and by law in most cases: Make every decision to advance the interests of the shareholders."...and provide as little information as you can when challenged or asked...The sad part of all this is that what has been taking place in Wall Street for decades is perfectly legal and is the foundation of our financial market.I am not sure I would call it gambling, which gives it a semblance of knowledge and intent; Wall Street is a house of cards bound to unravel sooner or later. Some posters have suggested political posturing, and I have no doubt there is some of that, but there is no question that regardless of the timing of these hearings they should be taking place. The only question I would have for the senators (Democrats and Republicans) is where have they been all these years? Wed 28 Apr 2010 11:12:31 GMT+1 AndreaNY http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=40#comment34 17. Scott0962:"Of course no one is going to ask 'Where were the government regulators while all this was going on?" or "Why did Congress encourage the mortgage lenders to make loans to people who didn't qualify under traditional lending guidelines?'"*********************Politicians make a bee-line for the chairs behind the table so they are the ones asking the questions instead of answering them. This keeps them from the hot seat themselves. It's a nice setup except when they are exposed as political grandstanders.Regulators have a way of answering questions as though they were uninvolved third parties. Wed 28 Apr 2010 11:04:03 GMT+1 SaintDominick http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=39#comment33 From grilling to drilling. I wonder how many of the drill baby drill crowd will be heading for Louisiana to help clean up all the environmental damage... Wed 28 Apr 2010 10:58:58 GMT+1 arclightt http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=38#comment32 @30 (KsC): Nice summary...that is, indeed, "how it works"."When they were asked if they felt they were obligated to serve their client's interests (over GS's), all but one of the four middle managers demurred. They gave the clients what they asked for."This is a very telling question, and their answer is equally telling. Recall that attorneys in this country (including the Congressmen doing the grilling) operate under an explicit rule: aggressively represent the interests of their client. Business folks operate under an entirely different rule, and by law in most cases: Make every decision to advance the interests of the shareholders."Like everyone else, GS made its money betting on the waves of the sea, - they made billions because they did it better than most.Apparently all this got out of balance with respect to the US mortgage market, and the market mechanisms that were supposed to be corrections failed to keep it in balance. Too many people lost too much money, major institutions failed, money stopped moving even in the real economy."Your last paragraph here is worth thinking harder about, as we debate what to do about all this. What, precisely, failed? As far as I can tell, there were several things that failed:a. The original underwriters of mortgage loans made loans they should not have made (i.e. to people who were in no shape to repay them). Some of this was the result of Congressional pressure, and some of it was interest in trying to recreate the conditions that existed in the late 1990s (remember the stupid "new economy"?). In any case, it was the first wrong thing done.I would not object to standards in this area, but almost certainly someone would find that the standards were not "fair" and that would be the end of that. There's no getting around the fact that different people and entities have a different probability of being able to repay a loan. If all people are presumed to be the same in their loan-repaying ability, everyone pays a higher interest rate to spread the risk. If we want to get an interest rate commensurate with our ability to repay the loan, then different groups of folks are going to wind up with slightly different interest rates for the same loan, with the folks most capable of paying off getting the preferred rate. That may not seem "fair" but it accurately reflects the risk involved. It is what it is. b. The models used by the regulators to assess risk of mortgage-backed securities were not properly designed for the financial scenario in play during the past few years. These models were based on a more sedate real-estate market, with historical values of loan failure. To be explicit: They were not designed to be used in an environment where real estate was as large a part of the overall economy as it was. They were also not designed for the types of mortgages being issued (interest-only, "teaser loans", etc.) which had a higher risk of failure.The correction of the models to more accurately predict loan failure in the changed market conditions was actually the thing that started the collapse. c. Regulators succumbed to pressure from various directions to uprate (make look better) the risks of mortgage-backed securities. This is probably one area where some time needs to be spent in this lawmaking procedure...the regulators definitely need to be insulated from this kind of pressure. I'd opt for publishing revised models / algorithms that are calibrated to the kind of economic activity we are really engaged in, and then "dump in the numbers and turn the crank". This is one area where individuals should NOT be able to influence the system. I doubt that Congress will surrender that kind of power, however.d. Too many layers of abstraction were allowed. Financial institutions were allowed to create financial instruments that were removed by several degrees from the actual underlying obligation (and the actual risk). In other words, the institutions offered opportunities to invest in vehicles whose actual assets could not be pinned down and identified. Further, these higher-order instruments were interconnected and biased in such a way that without as much analysis on the part of the instrument-holder as was done by the instrument-builder, it was impossible to determine what was connected to what.When the loan-failure percentages were corrected, all of a sudden all kinds of financial institutions no longer had any sense of what they might or might not have on their balance sheets. As a result they stopped lending, with the results that everyone is familiar with.This is another area where I'd spend some time. This kind of "financial engineering" doesn't really add anything to the society as a whole IMHO, and it sets the stage for the kind of collapse we have experienced.We haven't talked about things that are clearly over the line (e.g. naked short selling).@15 (er):"...it appears to miss the fundamental point that to sell a security IS to short it - by selling a security you are expressing a bearish view."That appears to be accurately stated. Wed 28 Apr 2010 10:20:27 GMT+1 aegean ghost http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=36#comment31 @18 YES ! I agree with you ! Send all those commies to the gulag , that's what they deserve - hard labor . Elect Palin for President - she will sort them out , all these red commie liberals who threaten the foundations of the american society . As a matter of fact , you can make her President for life , so these subversive elements won't surface again . Adolf Palin - that's what America needs ! Sieg Heil ! Wed 28 Apr 2010 10:05:20 GMT+1 MagicKirin http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=35#comment30 No sympathy for Goldman but Senator Levin when is Chris dodd and Barney Frank going to be grilled? Wed 28 Apr 2010 08:18:12 GMT+1 KScurmudgeon http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=34#comment29 I'm very glad that the Senate Finance Committee is holding these hearings - and not because I hate financiers. I learned a lot starting from almost zero, about this business watching about three hours of the discussion. The pity is that relatively few of us common folk will take the time to dig through it in even that detail.I think the Senator who opened by calling them all gamblers was closest to the mark. It appears to me that GS is in the business of creating opportunities for high dollar institutional investors to bet on the future value of something - anything. These investors are more interested in 'vehicles' that have greater potential to change value - the more the change, the more the potential profit.Investors can either buy long - bet that the vehicle will increase in value, or buy short - bet that it will decrease in value.The service Goldman offered to investors was to estimate the present long and short values of the vehicle, and offer them to investors at those prices. If the vehicle was a package of loans, the investors who bought long bought some of the loans (equity) from the lender or an owner of the loans, and could receive a share of the payments made on the loan or resell their interest when the package went up in value. Investors who bought short bought insurance on the value of the package which would pay off if the package lost value. (The insurance was another vehicle created as a commodity by someone like GS, the price of the insurance would vary according to the performance of the insured package and according to factors that made it more or less attractive. The price of all these vehicles went up and down constantly within the marketplace.GS's business was to create these vehicles (or paper, or securities, or instruments, or 'markets'), analyze their current values, and sell them to interested investors. They could also do this for businesses that had originated loans (for example), and who wanted to sell them so they could get fresh money to lend more. Some of these were dealers in junk bonds, some were dealers in high risk mortgages. GS would take the list of mortgages, discount their value, and market them as an opportunity to make money.Goldman Sachs also had its own money and was busy investing for itself, both short and long, often in these same 'vehicles'.In these markets, how 'good' an investment is, is only a question of whether it will make you money and how much money it will make. That is, the difference between its price when you buy it and its price when you sell it. If you believe its value will go up you buy long. If you believe its value will go down, buy short. Buying trash can be as profitable as buying good quality. GS also created 'synthetic' instruments that had no real content at all - they were purely vehicles for gambling long and short on their future values.Apparently Goldman did not offer advice about the future value of these investments - the only services they offered was to give them a fair price today, or to find or create 'markets' or opportunities that investors wanted to pursue.When they were asked if they felt they were obligated to serve their client's interests (over GS's), all but one of the four middle managers demurred. They gave the clients what they asked for. In a marketplace of pure speculation based on constant fluctuation, the only thing that approaches certainty for anything is the price at this moment.Like everyone else, GS made its money betting on the waves of the sea, - they made billions because they did it better than most.Apparently all this got out of balance with respect to the US mortgage market, and the market mechanisms that were supposed to be corrections failed to keep it in balance. Too many people lost too much money, major institutions failed, money stopped moving even in the real economy.I think that is roughly what they do - if anyone can correct this, please do.KScurmudgeonwho used to like fantasy Wed 28 Apr 2010 08:01:21 GMT+1 Mark http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=33#comment28 Let's see if Lloyd Blankfein manages to survive the 'Soft Cushion' or the 'Comfy Chair' when he faces further interrogation from the Senate Investigation Committee. Wed 28 Apr 2010 07:37:52 GMT+1 Slamlander http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=32#comment27 Dale Johnson wrote:This "Witch Hunt" is a political grandstanding to try to improve their ratings before the elections. They also seem to be trying to circumvent the Constitution and take over provate companies. The Constitution does not allow the Government to "Nationalize" companies. The democrats seem to have forgotten this when they did this with the pharmacuticles, Auto and Banking industries. ---Why not? It worked for GW Bush (PA I, PA II, etc)! Ignoring the US Constitution seems to have become a favorite pass-time of American politicians, of all parties. I am waiting for them to bury it out of sight because it has the word 'tit' in it and could be offensive to some. Wed 28 Apr 2010 06:41:59 GMT+1 Electric Ray http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=30#comment26 @democracythreat you're really missing the point. I fully agree there are some huge problems - too big to fail and all that - in the system, but the SEC has picked the wrong target here. This was a static transaction, no fiduciary element, with a pre-defined set of mortgage securities in it that both ACA and IKB had full opportunity to inspect, comment on and consider *before* they put down their money. All the parties - sophisticated mortgage securitisation professionals all - knew what they were doing (or if they didn't, Goldman really can't be blamed for that). Wed 28 Apr 2010 05:41:19 GMT+1 democracythreat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=29#comment25 This post has been Removed Wed 28 Apr 2010 05:13:47 GMT+1 amalans http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=28#comment24 All these investigations (auto and banking industry etc.) appear like "closing the stable doors after....". What were the law/policy makers doing while the predictable crisis was coming ? Why are they carrying out this investigation now ? Why was'nt there any interim audits/reviews of such processes and activities ? What was the SEC doing all the while ... twiddling thumbs ...weaving baskets... ? The whole world knew that these yuppies and the "old boys clubs" were makin money like crazy. And now everything is called out in Black and White ? Laughable.It's only fair that the law/policy breakers and the makers split the punishments in a 60:40 ratio. Then it would serve as an effective lesson to get both aware and conscientious (why are good words so hard to spell..let alone pronounce :)). Wed 28 Apr 2010 04:15:13 GMT+1 shiveringofforgottenenemies http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=27#comment23 The Congressmen look like fools....there is a REASON for that! They went in there unprepared. These Congressmen have staffs who research this stuff and no doubt reams of information was prepared but just like the Congressmen don't read the bills, they don't do their homework either.So, yes, it is more comedy than drama.The whole thing is just a circus to entertain the public. Goldman Sachs is "too big to fail" and in the end they are going to leave with their wrists slapped. The answer that they are not "fiduciaries" is a nice legal point but is simultaneously an admission of their total lack of morals...they have far overstepped the line and should be prosecuted as racketeers. Wed 28 Apr 2010 00:36:14 GMT+1 kwiniaskagolfer http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=26#comment22 I like the fact that the Senate is united, for a welcome change.These guys did their dirty work on Republican watch and will be prosecuted during a Democrat administration.A perfect storm for everyone to be at their most sanctimonious and self-righteous.Wonder when they'll be allowed to use the gents. Wed 28 Apr 2010 00:30:40 GMT+1 sayasay http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=25#comment21 Barbara @ 9, you are so right; these rich Goldman folks should be able to take care of themselves. Personally, if I am not paid by them, I will not defend them.Dave Jonson @ 11, do go away and bring your peeve to the US Supreme Court. What is wrong with US Senators exercising their duties and asking questions? Cuba and Venezuela did not make Asian people poorer with Lehman Mini Bonds and similar stuff. Get your points of reference or contention correct.Simon @ 13, you seem to know a lot. But “Chinese wall” or not, a scam works best when all the perpetrators of the plot worked hard together in synchronicity. Why are you against curious and concerned people (myself included) getting an education with your hasty and derisive description of us as “lazy” and “dumb”. Tue 27 Apr 2010 23:41:02 GMT+1 democracythreat http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=23#comment20 Electric Ray wrote:"Market makers ARE NOT FIDUCIARIES: there is an explicit, and entirely welcome, conflict of interest in any arm's length transaction, and the fact that these people are "clients" doesn't change that (even Morgan Stanley is Goldman's "client" for the purpose of market making). "An admirable position, full of ideological certainty regarding the uplifting power of the unseen hand,You will now grace us with your views in whether Goldman Sachs should retain the numerous billions it received from AIG and other financial "institutions" as a result of the government handouts.Let us be under no illusions, Ray. If the US taxpayer, that poor gubment mule, had not bailed out the financial system, where do you suppose the free marketeers of goldman sachs would be now?I venture to suggest that they would be either flat broke or hanging from a lamp post in a burned down crossroads. The discussion of the financial markets has become a shell game. When we ask "Where are the losses?", we are instructed to looked under the shell on the left, marked "taxpayer". When we ask "Where are the profits?", we are told to look under the shell on the right, marked "Private owners of large banks."Mao would have shot the lot, and sent the families the bill for the bullets. Tue 27 Apr 2010 23:05:45 GMT+1 Barbara http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=22#comment19 Wow. "Electric Ray". Straining hard to explain duplicitous greed.You are ignoring that the golden 'Goldman Sachs' used to be the definitive player in the market. They HAD a spotless record and could do no wrong...until those 'synthetic' i.e. made-up securities that they not only invented but knew full well that they were CRAP. They then SOLD to their bated breath customers the golden (rotten) fruit.By your analogy, those GS customers should be THANKFUL for what they got because that's how life goes.You greedy conservatives have holes in everything including your ethically-challenged spine. Tue 27 Apr 2010 22:53:58 GMT+1 Scott0962 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=21#comment18 Is it my imagination or did I see Senator Fudd tiptoeing across the room in his hunting togs with his trusty shotgun telling the audience: "Shhhhh! Be vewy qwiet. I'm hunting witches." Tue 27 Apr 2010 22:52:17 GMT+1 dumbamerican http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=20#comment17 im so disappointed in the bbc coverage today of this congressional debate going on now here in america.the lady on tv comments that the republicans are blocking the process because they are in the pockets of wall street. also claiming that it is the republicans are going against mainstreet in favor of wallstreet, who IN ACTUALITY have been subject to a liberal progressive democratic supermajority since 2006 when these problems seem to have started!!!! how exactly is it even possible for the republicans to block or stop anything that this administration and congress is doing against the will of overwhelming majority of american people???this is inflamatory false representation of what is going on.there are 6 former or current goldman sachs executives currently in the white house administration!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!this is all a smokescreen to demonize market capitalism so our current progressive administration, house and senate majority members can push their marxist socialistic government takeover that Gold.Sach is a part of.the republicans are trying to slow the vote and continue debate because they dont want another rushed HUGE bill to get passed without the contents being known like this unconstitutional healthcare takeover and money grabbing theft of a 'stimulus' bill.we are all being taken for a ride...and while im used to the media in america lying, im so very disappointed this day that the international bbc would be so irresponsible and neglegent towards public opinion of the conservative movement in america.you are voting soon my english friends...word of advice...get the liberal big spending "democrat" PROGRESSIVE MARXISTS out or you wont recognize you country very soon. Tue 27 Apr 2010 22:50:59 GMT+1 Scott0962 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=19#comment16 Of course the folks from Goldman Sachs looked uncomfortable in front of Congress. The purpose of the inquiry wasn't to find out the truth but to enable politicians to grandstand in front of the cameras and ask questions with no right answer like "Have you stopped beating your wife yet?" Of course no one is going to ask "Where were the government regulators while all this was going on?" or "Why did Congress encourage the mortgage lenders to make loans to people who didn't qualify under traditional lending guidelines?"It's all for show. The Goldman Sachs people are expected to sit there and endure the righteous hypocracy of the Senators without giving them more ammunition for criticism until there is no more political gain to be wrung from further the sessions and the Senators get bored and move on. Then the Justice Department will file suit against Goldman Sachs and the real show begins. Tue 27 Apr 2010 22:46:08 GMT+1 american grizzly http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=17#comment15 It is a witch hunt, I mean, a scapegoat for all the maliase of government. Yeah wall street is volitile, it is about risk taking! With investment or gambling (like investing in Social Security) there is a risk. How much, how little (Afghanistan and Iraq)? Nothing is carved in stone. Hell, some of those individuals that didn't pay taxes and worked with those accused (issue a new soul!), now work for the government? Wow (I can see the light!). Government must be the new hole in the wall gang. A witch burn her. What if there is more than one witch? What if the witch that far surpasses the guile of the first is the best at deciption and is our own government? What motive? $$$$$$$$$$$ Just another grandstand ploy of these inept cronies shining a spotlight elsewhere while the true crime is by these elected officials. They all bear a measured amount of responsiblity, now I wait for the 100' tape to see where our elected officals fall in numbers in regards to the private individuals. Well until a third party starts to emerge from those that still vote, to fire these party hacks. All that fail in representing us as the peoples will be damned at each new election. If a Democrat or Republican wield power incorrectly they should be tossed out of office. Until the people of substance arise away from both of these corruptions to break this pattern if will only worsen. If either party wins, simply vote out the ones who cannot seperate themselve from either parties lunacy, and lead. Immeadiately next election, if we can give neither party a steady hold, decent people will emerge. The only thing we as independents can do is deny them any cover and can them (sack them)in every election until these career loser politicans leave! Allowing citizens to gain candidates of quality, not these party stooges. To truly represent the independent peoples who are leaving in droves to declare independence from this madness. Tue 27 Apr 2010 22:33:59 GMT+1 Electric Ray http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=16#comment14 The chairman has repeatedly asked a question along the lines of "Do you think it's right to sell someone a security if you are shorting it, or you don't want the security 'to do well'". Viniar looked, rightly, quite baffled by the question, as it appears to miss the fundamental point that to sell a security IS to short it - by selling a security you are expressing a bearish view. Market makers ARE NOT FIDUCIARIES: there is an explicit, and entirely welcome, conflict of interest in any arm's length transaction, and the fact that these people are "clients" doesn't change that (even Morgan Stanley is Goldman's "client" for the purpose of market making). If I sell and you buy, *by definition* we have conflicting interests: I want to sell it as high as I can, and you want to buy it as low as you can. All this talk of it being a bad thing for Goldman to sell a "s----y security" are spurious - as Dan Sparks said (looking similarly baffled) "if it's a bad security I might sell it at 20 cents on the dollar". Tue 27 Apr 2010 22:19:56 GMT+1 Fredfromlondon http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=15#comment13 The Goldman defence seems a bit rich. Now GS is not only a very powerful but also very secretive bank and to be fair to GS one should look at all the evidence and start with digging out all the GS e-mails and documents related to the subprime market since 2007. Maybe a clearer picture will emerge. Tue 27 Apr 2010 21:56:02 GMT+1 simon http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=14#comment12 Even allowing for political theatre it's depressing how little the senators know about the sector they cover. Goldman's view and shorting was widely reported in the national press in 2008 (and 2007?) as was Deutsche's (who were much more aggressive and successful at it). It was by no means clear that the roof had fallen for much of 2007 and by year end many analysts felt the worst was over - Lehman boasted of adding exposure to real estate. And yet we are being treated to a display of shock at the discovery of Goldman's actions in 2007 combined with 20/20 hindsight about probable loss and profit. While never underestimating the legal and political strength of the SEC, I can't help feeling that Goldman may win this one.There is a much more interesting issue here but the senators and their aides are too dense or lazy to pursue it. All the big players and many smaller ones run a proprietary position as well as service clients. The prop desk can be more or less an independent profit centre, but in each case there is supposed to be some chinese wall between the house risk/profit view and the client areas. The real question for Goldman is how did this prop vs client division work and were its client people adequately walled off from the prop view? Inadequate walling-off may not be an ethical breach but it certainly is a front page news risk, which seems to have been the case here based on the limited info available.Goldman is not an angel but attempts to paint them as the devil incarnate just show how dumb our leaders are and how they like to avoid real analysis of mistakes. The SEC, Spitzer and Congress chest beat about fat cat bankers but are silent about the failure to act on evidence about Madoff and even more so Stanford, and about the fact that they hounded Ackerman at Pershing for very openly blowing the whistle on Lehman and MBIA. Tue 27 Apr 2010 21:54:51 GMT+1 hms_shannon http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=13#comment11 Man o man,listening to the boss of Goldman,its like, holding a slippery eel in a high wind.Caveat emptor. Tue 27 Apr 2010 21:47:55 GMT+1 Dale Johnson http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=11#comment10 Has anyone ever heard the two sayings, "Fool me once, Shame on You. fool me twice, shame on Me!" and "Buyer Beware". These are two things that should always be thought of when you invest in anything. I have seen many people loose large amounts of money and every one of them have admited that they should have followed these two things I mentioned above.this "Witch Hunt" is a political grandstanding to try to improve their ratings before the elections. They also seem to be trying to circumvent the Constitution and take over provate companies. The Constitution does not allow the Government to "Nationalize" companies. The democrats seem to have forgotten this when they did this with the pharmacuticles, Auto and Banking industries. This is just like the judicial system of places like Cuba and Venezuala. this country is founded on a Constitual Republic and this is going against the Constitution and therefor against the majority of the people of this country. Mr. Levin and his cronies are trying to look good for the November elections. Lets get "Citizen Leglislaters" as the Constitution states and not the Professional Politicians that we have now. Tue 27 Apr 2010 21:25:15 GMT+1 lochraven http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=10#comment9 " But I also detected that they are frustrated by questions framed by amateurs who believe themselves well informed."Truer words were never said. Somebody is going to hang for this, it doesn't matter who, and it will look great for their reelection, will it not? Tue 27 Apr 2010 21:16:06 GMT+1 Barbara http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=9#comment8 Mark, get a grip. These greedy young bankers make millions. They think, eat, and sleep greed. They will retire at age 40, if not sooner. YOU don't need to defend them. They can take it. What's really funny is YOU siding with these b#%##%&. The very ones who most certainly contributed to the U.S. economy tanking and indirectly to the rest of the world.If you're going to get upset, try taking on the Euro story -- down 3% TODAY. Or the ever creeping contagion that will soon hit your bonnie country of England. Priorities, Mark, priorities. Tue 27 Apr 2010 21:04:37 GMT+1 Worldcitizen1 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=8#comment7 Mark, you wrote:"Senator Carl Levin, chairing the sub-committee, opened by saying that the company had stacked the decks against the buyers of a financial product. He said that Wall Street had turned bad mortgage loans into economy-wrecking financial instruments." Also:"The charge of fraud names just one individual, Fabrice Tourre.He has denied deceiving clients by designing a product that bundled together high-risk mortgages and was secretly designed to fail, benefiting a hedge fund. He denied it with anger in his voice but he hasn't been properly cross-examined as yet. The senators lecturing these would-be "masters of the universe" as if they were school boys caught with their fingers in the jam have warned them the hearing will continue until they get answers.""Stacking the decks" is a good way to describe the entire way of business for the Federal Reserve bank, in general. In order to pay back the Federal Reserve Bank on the interest that our Government has accrued, our Government has to buy more money to cover the interest on the existing purchase. There is NO way to ever pay back the Federal Reserve Bank and we are only getting ourselves deeper and deeper in debt by trying.It IS, by definition, a giant out-of-control PONZI scheme gone horribly wrong.To REALLY know what the Federal Reserve Bank is all about (keep in mind that Goldman Sachs is part owner of the Federal Reserve Bank), it is necessary for the readers to go to the following website:http://video.google.com/videoplay?docid=-7904108802539774428# Tue 27 Apr 2010 20:26:42 GMT+1 ghostofsichuan http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=7#comment6 Nothing more than political theater. The government knew what was going on and in fact were told of the potential harm and chose to do nothing. The bankers own the congress and participate with the "please don't throw me in the briar-patch cries", because they know any regulation will need to be approved by them or their handmaidens in Congress. It is all corrupt. This is a pretense to quell the anger of the public, a show trial that would be deemed worthy in China. The only decision is for you to decide which group is most dishonest. The greatest theft in history and no one is blamed. Tue 27 Apr 2010 20:26:38 GMT+1 David Sutton http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=5#comment5 I hear the company has been renamed 'Goldman Sucks', which seems to accurately reflect the opinion of the man in the street. Tue 27 Apr 2010 20:22:29 GMT+1 Joshua Porter http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=4#comment4 This post has been Removed Tue 27 Apr 2010 20:17:55 GMT+1 GH1618 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=3#comment3 "Some questions clearly make them uncomfortable, such as whether they have a duty to promote the interests of their clients." (from Mardell)The crux of the matter. Goldman Sachs CEO Blankfein stated that "we are not a fiduciary," meaning that they were not the managers of a client's portfolio, only the broker for products in it, and were responsible only for disclosure.There is plenty for the lawyers to argue about in this case, I expect. Tue 27 Apr 2010 20:11:58 GMT+1 PursuitOfLove http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=2#comment2 This post has been Removed Tue 27 Apr 2010 20:00:01 GMT+1 SaintDominick http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=1#comment1 What I am getting out of the hearings goes well beyond the short sale of "synthetic instruments". The senators are outlining the real reasons for the near collapse of the US financial system and the economic problems that still persist. Fascinating stuff! Tue 27 Apr 2010 19:57:12 GMT+1 dennisjunior1 http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/04/goldman_the_grilling_continues.html?page=0#comment0 Mark:Yes, Goldman Sachs Executives are being grilled because, they were involved in some not-so-good branding and developments of instructments that made the Housing and Other aspects of the Financial markets in the U.S. almost collapse..{nb: Goldman Sachs is presumed innocent of any charges and wrongdoing...}(Dennis Junior) Tue 27 Apr 2010 19:38:49 GMT+1