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Behind The Scenes: Did A Goldmanite Lose Their Job Over The SEC Investigation? And Just How/Why Did Goldman Purchase C-BASS For Pennies On The Dollar?

Tyler Durden's picture





 

Some terrific investigative reporting by Matt Goldstein at Reuters discloses that while Lloyd Blankfein is aggressively defending Tourre, claiming the Frenchman did nothing wrong despite earlier reports that he was deregistered by the FSA, and the Telegraph now chiming in he has now in fact been barred in a major setback for Goldman's defense, another Goldman employee who was part of the 18-month SEC investigation, mysteriously departed in June of 2009. The person in question: Gail Kreitman, a 1991 Wharton grad, who had previously worked at Merrill (1997-2003) and Lehman (2003-2006) according to her Finra records, before finally landing at Goldman for a three year stint as a "GS&Co. Sales Rep." Gail had been identified previously in the initial Goldman Wells response, and was named as a person whose sworn testimony may have been the catalyst for the SEC's case against Goldman Sachs. Where the plot really thickens is a cursory glance at the bio of her husband, Jeffrey Toll, who according to Bloomberg is a Co-Founder of now-defunct C-BASS (Credit-Based Asset Servicing and Securitization) a company formed with initial funding by mortgage insurers MTIG and Radian. For those unfamiliar, "C-BASS was a leading issuer, servicer, and investor specializing in credit-sensitive residential mortgage assets. These assets included performing subprime and Alt A, nonperforming, reperforming, second lien and small commercial loans, as well as subordinated and mezzanine RMBS with prime, subprime, Alt A and high LTV collateral" and that "It currently is liquidating its existing portfolio and returning the cash proceeds received to its lenders and investors." One wonders just what Ms. Kreitman did to merit the severance of her ties with Goldman, and whether C-BASS was in any way involved, or whether it had any dealings with Goldman's now infamous mortgage group, ala ACA?

Goldstein reports:

Gail Kreitman, the former Goldman bond saleswoman, is not named as a defendant in the Securities and Exchange Commission's lawsuit against Goldman and another of the investment firm's bond salesmen, Fabrice Tourre. Kreitman is not even identified by name in the complaint.

But Kreitman, who left Goldman in June 2009, was interviewed by securities regulators during the course of their 18-month investigation, and some of her email communications are cited by the SEC in the 22-page complaint.

The SEC points to some of Kreitman's emails as part of its claim that Goldman and Tourre misled ACA Capital Management, the outside manager tapped to oversee the transaction, about hedge fund giant Paulson & Co's economic interest in the deal.

Kreitman is not identified by name in the emails cited in the complaint. The SEC refers to her simply as a "GS&Co. sales representative."

But in a lengthy legal filing submitted to the SEC last September, lawyers for Goldman Sachs try to explain away the emails between Kreitman and ACA executive Laura Schwartz. Goldman's attorneys contend that Kreitman did not intend to give ACA officials the impression that the hedge fund was either an equity investor or "long" on the deal.

"The fact that Ms. Kreitman did not correct Ms. Schwartz's statements that Paulson was an equity investor does not indicate that she attempted to conceal the truth from ACA," said lawyers from the New York firm Sullivan & Cromwell, Goldman's outside counsel.

Goldman's outside lawyers in the filing downplayed Kreitman's role in engineering the so-called synthetic collateralized debt obligation called Abacus 2007-AC1. The lawyers said Kreitman was merely an "intermediary" whose main job was to "manage the relationship for ACA."

The Goldman lawyers even suggest Kreitman, who previously worked at Lehman Brothers and Merrill Lynch before coming to Goldman in 2006, may not have "understood the significance of Ms. Schwartz's statements suggesting she believed Paulson to be an equity investor."

What again is most notable about this situation is that Ms. Kreitman, who currently lives in Livingston, NJ (we attempted to reach her listed phone number but got only voicemail) left Goldman in the middle of last year: hardly a time when one departs a company especially without some like replacement - no additional record of her being employed currently is indicated by Bloomberg.

Yet, as pointed out, a glance at her husband's bio via Bloomberg led to some surprises:

Here is some additional color on what precisely Kreitman did at Goldman according to the initial Wells Response:

The record shows that Ms. Kreitman, who provided sales coverage on ACA, acted as an “intermediary between the [various] trading desk[s] and clients.” (Kreitman Tr. 11.). Ms. Kreitman?s role in 2007-AC1 was to “manage the relationship for ACA,” meaning that she “acted as an intermediary between the trading desk and [ACA] facilitating meetings and phone calls.” (Id. at 27-28.) She did not “attend or participate [in the meetings she arranged]” relating to the 2007-AC1 transaction, nor was she “involved in” the creation of the 2007-AC1 CDO. (Id. at 31-33.) Nothing in the record suggests that Ms. Kreitman understood the significance of Ms. Schwartz?s statements suggesting that she believed Paulson to be an equity investor, much less that Ms. Kreitman acted with scienter or departed from the standard of ordinary care by not correcting them.

And just as ACA ended up being allegedly on the wrong side of the Paulson trade, we wonder whether Ms. Kreitman's coverage list also included C-BASS, as well as potentially MTIG and Radian. Was she also responsible for selling structured products or investment ideas to a firm in which her husband was the co-founder? If so, is there any incremental liability involved over and above what happened in terms of Goldman disclosure with ACA, which is as the heart of the SEC case, and in which Ms. Kreitman, it appears, was instrumental in providing information to the SEC, which may or may not have been the key info on which the SEC's entire case rests?

Was Ms. Kreitman fired in retribution for inappropriate disclosure to the SEC? Was she fired in fear of what else could be uncovered should someone dig deeper? Is she now a cooperating witness with the SEC? Is her husband's role at C-BASS being used as leverage, especially if indeed there were any relations between Goldman and the bankrupt firm? Was C-BASS used, knowingly, as a comparable patsy to ACA? Did MTIG and Radian shareholders lose all, if indeed Goldman was selling them securities of the same type as Abacus with the witting knowledge of people on both sides of the transaction? Or did she just leave voluntarily on amicable terms in the middle of the worst year for Wall Street employment in history?

Zero Hedge will continue to pursue these questions over the next few days.

What we do know is that at the end of the day, the remains of C-BASS were sold off to the Archon Group umbrella, owned by... Goldman Sachs.

You do the math.

We also certainly will dig into the other people who provided sworn SEC tetimony: Melanie Herald-Granoff, Michael Nartey, and David Gerst (in addition to Fab Fab of course).

 


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Tue, 04/20/2010 - 18:23 | Link to Comment Rainman
Rainman's picture

Lloyd's gonna' bring a circus midget to his hearings. That should loosen up the crowd. 

Tue, 04/20/2010 - 19:39 | Link to Comment Problem Is
Problem Is's picture

"Lloyd's gonna' bring a circus midget to his hearings."

Neel "Down Bitch" Kashkari is going to reprise his Mini-me role?

I can't wait... "Dennis K., bitch alert, Hearing Room 1..."

Tue, 04/20/2010 - 22:07 | Link to Comment DaddyWarbucks
DaddyWarbucks's picture

You crack me up?

Tue, 04/20/2010 - 18:24 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

That's interesting. Not sure if this is related, but MTG announced today that they are going to try to raise $1B: $300M in convertible debt, $700M in equity. This is a company that isn't expected to turn a profit until 2012 (and hasn't had a quarterly profit since 2007). Apparently the equity offering isn't going so well (what a surprise).

The sole bookrunner?

Do I really need to tell you?

Tue, 04/20/2010 - 18:33 | Link to Comment doggis
doggis's picture

yes please - do TELL!!!! i gotta know!! someone in my office just yelled out it was cameron diaz.......yeesh!

Tue, 04/20/2010 - 20:46 | Link to Comment ZeroPower
ZeroPower's picture

Wow. Sole bookrunner too.

I noticed in Canada most offerings roughly >$500MM always have at least 1 lead and a few juniors assisting with the deals. Of cours when its GS i understand theyre only good enough to be the one and only on any and all issues!!

Tue, 04/20/2010 - 18:28 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

You have to know one thing [this might not sound sophisticated but it will hold truth]

Despite all their rhetoric all these firms operate on the same principles as does the Russian mob. You are allowed to do anything you want as long as it benefits The Firms bottom line. You will be well paid; you will be taken care of with all sorts of benefits and luxuries; all provided by The Firm. But if/when you get caught in doing something The Firm knew you were doing all the time and supported you in that pursuit, The Firm will pretend not to know you, what you have been up to, why were you doing something when the laws clearly state that you can not do it. Then if you try to save your own skin via cooperating with proper authorities/agencies The Firm will do anything in its power to intimidate you in order for your cooperation to stop. If it does not intimidate you, The Firm will kill you via methods which will never indicate any foul play happened and that you just killed yourself by shooting yourself six time in the face with a double barrel shotgun. If you decide to take your own life The Firm will take care of your family by paying it annuities from your pension fund/life insurance. The Firm never loses. The Firm doesn't even exist.

Tue, 04/20/2010 - 18:35 | Link to Comment doggis
doggis's picture

gives one a 'warm and fuzzy' feeling all over.......

Tue, 04/20/2010 - 18:36 | Link to Comment williambanzai7
williambanzai7's picture

Yakuzas with blackberries!

Tue, 04/20/2010 - 20:03 | Link to Comment Roscoe
Roscoe's picture

So... If I'm reading you right, Lloyd and the pope and the Russian godfather(Putin?) hold similar positions. And, if the church, the mob and GS merged, they could save a ton by cutting redundant back office staff, and the whole deal would be immediately acretive. Viola! The Holy Goldman Empire & Collection Services, Inc. Oh, and the church would bring sovereign immunity to the company, so no more pesky legal problems, simply quiet reassignments and sealed settlements, or termination via the popular Anton Kalashnikov clause 47.

Tue, 04/20/2010 - 22:24 | Link to Comment knukles
knukles's picture

Lloyd and Vlad are pedeophiles, too?  When did this come out?  Hah haha hah ha

Tue, 04/20/2010 - 22:45 | Link to Comment Orly
Orly's picture

I can only shake my head in shame, having once been many of these things- but I know it is true.

(And none of them is pedophile.)

Wed, 04/21/2010 - 03:03 | Link to Comment Mentaliusanything
Mentaliusanything's picture

And pedophilia IS permitted ( the screams OH lord OH Lordy are heard muffling real pain)

And the rest they say is History - who pays? just your ass while the "big Boys" get paid there stipend (notice end)  

Wed, 04/21/2010 - 03:38 | Link to Comment Jefferson
Jefferson's picture

Just like the Clinton family.

Wed, 04/21/2010 - 09:38 | Link to Comment SWRichmond
SWRichmond's picture

Spot on, CB.

Tue, 04/20/2010 - 18:38 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Lloyd B on witness stand under direct questioning and burring up


http://s2.wp.com/wp-content/themes/pub/journalist/images/quote.gif); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; min-height: 50px; background-position: 0% 0%; background-repeat: no-repeat no-repeat; margin: 0px;">

“You want the truth?  You can’t handle the truth.  Son, we live in a country with an investment gap.  And that gap needs to be filled by men with money.  Who’s gonna do it?  You?  You, Middle Class Consumer?  Goldman Sachs has a greater responsibility than you can possibly fathom.  You weep for Lehman and you curse derivatives.  You have that luxury.  You have the luxury of not knowing what we know: that Lehman’s death, while tragic, probably saved the financial system.  And that Goldman’s existence, while grotesque and incomprehensible to you, saves pension funds.  You don’t want the truth.  Because deep down, in places you don’t talk about at parties, you want us to fill that investment gap.  You need us to fill that gap.

“We use words like credit default swaps, collateralized debt obligation, and securitization…  We use these words as the backbone of a life spent investing in something.  You use ‘em as a punchline.  We have neither the time nor the inclination to explain ourselves to a commoner who rises and sleeps under the blanket of the very credit we provide, and then questions the manner in which we provide it!  We’d rather you just said thank you and paid your taxes on time.  Otherwise, we suggest you get an account and start trading.  Either way, we don’t give a damn what you think you’re entitled to!”

Bwahahahahaha

From an excellent blog @     

http://baselinescenario.com/2010/04/19/discount-rate-mismatch/#more-7226

 

 

Tue, 04/20/2010 - 19:01 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

I salute you and your genius dear sir/madame 

Outfuckingstanding comment.

+ the notional value of all financial derivatives 

Tue, 04/20/2010 - 19:40 | Link to Comment VegasBD
VegasBD's picture

Now THAT is classic...

Tue, 04/20/2010 - 19:53 | Link to Comment Missing_Link
Missing_Link's picture

Genius!

+1000 for James Kwak

Tue, 04/20/2010 - 23:43 | Link to Comment MsCreant
MsCreant's picture

Jack Nicholson is too good, too male, to play Lloyd. 

Who do we put in the role?

Wed, 04/21/2010 - 00:06 | Link to Comment Howard_Beale
Howard_Beale's picture

I think Stanley Tucci could pull it off brilliantly.

Wed, 04/21/2010 - 02:53 | Link to Comment Rick64
Rick64's picture

Ben Kingsley

Wed, 04/21/2010 - 04:28 | Link to Comment chindit13
chindit13's picture

Paul Reubens or Boy George

Wed, 04/21/2010 - 08:25 | Link to Comment Miss Expectations
Miss Expectations's picture

Elmer Fudd

Wed, 04/21/2010 - 10:35 | Link to Comment gmrpeabody
gmrpeabody's picture

Beakker

Tue, 04/20/2010 - 18:49 | Link to Comment cougar_w
cougar_w's picture

That's a lot of "ifs" ya got there Sparky, that woud be best wired up by some 'splain'n from Frau Kreitman ...

... whom we can assume knows how stay out from under a bus?

I'd suggest a vacation in Switzerland, in fact. Just leave your travel plan with the DoJ so they can catch up with you in about 3 months.

Tue, 04/20/2010 - 19:00 | Link to Comment economists_do_i...
economists_do_it_with_models's picture

Wow.  Very interesting tidbits of informaton!

"There has to be a way to bring down this bank."  ~from "The International"

Tue, 04/20/2010 - 19:16 | Link to Comment DavosSherman
DavosSherman's picture

When I read the title my first question was: "Which government official got fired."

Tue, 04/20/2010 - 19:37 | Link to Comment williambanzai7
williambanzai7's picture

"It is always better to sacrifice your opponent's men."
Savielly Tartakower

Tue, 04/20/2010 - 19:19 | Link to Comment williambanzai7
williambanzai7's picture

"I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you Wall Street bankers do not. You move into an investment space and you multiply and multiply until every capital resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Wall Street bankers are a disease, a cancer of the global economy. You're a plague and we are the cure."

Agent Smith

 

Tue, 04/20/2010 - 19:25 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

I see a pattern developing here

Also, nice job.

 

Tue, 04/20/2010 - 19:41 | Link to Comment VegasBD
VegasBD's picture

Alas the copywriters of the world found ZH!

Love it!

Tue, 04/20/2010 - 19:37 | Link to Comment Rainman
Rainman's picture

    + 1,000

     Agent Smith

Tue, 04/20/2010 - 19:52 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

" Let me give you a little inside information about Warren Buffett. Warren Buffet likes to watch. He's a prankster. Think about it. He gives Goldman Sachs the capital it needs. He gives us this extraordinary gift, and then what does he do, I swear for his own amusement, his own private, market gag reel, He sets the competing trades in opposition to ours. It's the goof of all time. Trade but don't profit. Profit, but don't pay out bonuses. Pay out bonuses, but in deffered comp and stocks. AhahaHAHAHAHA. And while you're jumpin' from one foot to the next, what is he doing? He's laughin' His sick, fuckin' ass off! He's a tight-ass! He's a SADIST! He's an absentee landlord! Give a decent ROI to him? NEVER! "

Lloyd Blankfein, CEO of Goldman Sachs

Goldman Sachs 10-Q 1q10

Tue, 04/20/2010 - 20:00 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

"And as we're straddling from one deal to the next, who's got his eye on the planet, as the air thickens, the water sours, and even the bees' honey takes on the metallic taste of radioactivity? And it just keeps coming, faster and faster. There's no chance to think, to prepare; it's buy futures, sell futures, when there is no future. There is only Goldman Sachs"

Lucas van Praag, Head PR Department, Goldman Sachs in an address given to participants of the 2009 "Superiority of Goldman Sachs and Cockroachness of other humans" summer training camp.

Hampton, NJ.

Tue, 04/20/2010 - 19:24 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Down the rabbit hole we go, where it stops, nobody knows.

Tue, 04/20/2010 - 19:35 | Link to Comment Alienated Serf
Alienated Serf's picture

We know where it stops.  Hyperinflation, Trade Protectionism, Collapse of world trade, World War, new order. 

Tue, 04/20/2010 - 19:28 | Link to Comment Problem Is
Problem Is's picture

Tyler, I have a question:

2 weeks ago, it was announced every one's favorite AIG Insurance salesman Joe "What Me Worry" Cassano won't be charged with anything for anything...

in AIG's implosion and $180 billion tax payer bailout (that John Q. F. Public knows about)...

Hey, I guess Cassano was just trying to make a living and well maybe some bad judgement selling Goldman and JPM all that insurance his firm could not cover?

Two Weeks Ago, Cassano No Charges?

Would Cassano have been involved in writing all the swaps for Paulson and Lloyd B. God?

Is it possible to get that "Get Out of the SEC Free" card, Cassano answered SEC questions:

"God. John. Cohn. God. Viniar. John."

"Hey play it backwards and it's a Beatles album!... sorry."

"Cohn. God. John. Viniar. God..."

Just wondering...

Tue, 04/20/2010 - 19:30 | Link to Comment williambanzai7
williambanzai7's picture

I am not sure this was officially announced. It was reported by the press, but I saw no official statement. That means the investigation is continuing.

Tue, 04/20/2010 - 20:01 | Link to Comment Problem Is
Problem Is's picture

Thanks william. You are correct:

WSJ:

"Recently obtained evidence has prosecutors leaning against pursuing charges, though no final decision has been made by Justice Department prosecutors in Washington, these people said. A Justice Department spokeswoman declined to comment."

Tue, 04/20/2010 - 19:52 | Link to Comment buzzsaw99
buzzsaw99's picture

In keeping with the theme:

The path of the righteous man is beset on all sides by the allegations of the foolish and the self-righteous accusations of average men. Blessed is he, who in the name of greed and avarice, shepherds the bankers and politicians through the valley of darkness, for he is truly his brother's keeper and the finder of lost bonuses. And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my brothers. And you will know my name is the Lord Blankfein when I lay my vengeance upon thee.

Tue, 04/20/2010 - 20:16 | Link to Comment Problem Is
Problem Is's picture

"Let me tell you something, pendejo."

"You pull any of your crazy shit with us, you flash a piece out on the lane, I'll take it away from you, stick it up your ass and pull the fucking trigger until it goes click..."

"You said it, man."

"Nobody fucks with the Jesus."

Tue, 04/20/2010 - 19:47 | Link to Comment Gromit
Gromit's picture

IMHO the value of a mortgage insurance entity lies not in its earnings or equity but in the ability to control which claims are paid.

Tue, 04/20/2010 - 20:21 | Link to Comment Roscoe
Roscoe's picture

Hey! If any of you are looking for any last-minute gift ideas for me. I have one……..I’d like Lloyd Blankfein, my banker, right here tonight.

I want him brought from his happy holiday slumber over there on Maiden Lane with all the other rich banker fraudsters and I want him brought right here, with a big ribbon on his head, and I want to look him straight in the eye and I want to tell him what a cheap, lying, no-good, rotten, four-flushing' low-life, snake-licking, dirt-eating, inbred, overstuffed, ignorant, blood-sucking, dog-kissing, brainless, dickless, hopeless, heartless, fat-ass, bug-eyed, stiff-legged, spotty-lipped, worm-headed, sack of monkey shit HE IS!…

…..Hallelujah!  Holy shit!  Where’s the Tylenol?

- Clark W. Griswold, Non-Nutritive Cereal Varnish Inventor

 

Tue, 04/20/2010 - 20:28 | Link to Comment buzzsaw99
buzzsaw99's picture

excellent!

Tue, 04/20/2010 - 23:41 | Link to Comment Double down
Double down's picture

+10!

Tue, 04/20/2010 - 20:40 | Link to Comment RobotTrader
RobotTrader's picture

No. 1 Banner Ad on ZH today:

CougarLife.com

I clicked on it, and it said....

"Due to abnormally high server activity, we are unable to process your request at this time"

LOL....

Tue, 04/20/2010 - 22:20 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We were wondering why MB has not been posting.  Answer given!

Wed, 04/21/2010 - 00:12 | Link to Comment Howard_Beale
Howard_Beale's picture

Well he had to be somewhere! Now we know.

Tue, 04/20/2010 - 20:42 | Link to Comment williambanzai7
Tue, 04/20/2010 - 20:55 | Link to Comment Mitchman
Mitchman's picture

So now the boys have decided to let poor Fab Fab twist slowly in the wind and let it all play out as the actions of a rouge employee.  Lotsa luck.  As my Mother says: "the more you stir s**t, the more it smells" 

Tue, 04/20/2010 - 22:26 | Link to Comment milbank
milbank's picture

"The boys" are going to claim Fab wears rouge?

Tue, 04/20/2010 - 22:27 | Link to Comment Alienated Serf
Alienated Serf's picture

i just rofl'd

Tue, 04/20/2010 - 21:01 | Link to Comment ZeroPower
ZeroPower's picture

I wonder if 2 financiers marrying each other is such a good idea. 1 alpha male in the household is fine and, if anything, required.

When theres 2, and 1 of them doesnt have a pair of balls, i suspect there tends to be some conflict...

Any ZHers here have a spouse in the same field?

Tue, 04/20/2010 - 22:34 | Link to Comment milbank
milbank's picture

I have.  We're both hookers and you're right, it's not all that good for the marriage.

Tue, 04/20/2010 - 23:52 | Link to Comment MsCreant
MsCreant's picture

So how long have you and your wife been financiers?

Wed, 04/21/2010 - 00:38 | Link to Comment sweet ebony diamond
sweet ebony diamond's picture

obama says you are tone deaf

i think you are funny

Tue, 04/20/2010 - 21:08 | Link to Comment buzzsaw99
buzzsaw99's picture

You knew there was a reason they kept AIG alive:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9YrRPYMQyCs&pos=5

 

Tue, 04/20/2010 - 21:35 | Link to Comment BrianOFlanagan
BrianOFlanagan's picture

I wish I were shocked by that news, but now it makes perfect sense.  So the suits and fines will in essence be paid by AIG...and thus the U.S. taxpayer.  Makes perfect sense.

Tue, 04/20/2010 - 21:41 | Link to Comment Apocalypse Now
Apocalypse Now's picture

I asked this question the other day, and presumed it was AIG - thanks for confirming with the article.

Next question, what is the insurance policy coverage limit now that the world is going after GS?

AIG stock should be tanking due to this exposure, instead it is increasing.  Either it is manipulation to make AIG look good, or the market doesn't understand insurance policies.

AIG will just keep bailing out connected companies.  The squid has many tentacles, but most people think a separate corporate name means a separate company.

The Fed, World Bank, IMF, Central Bank franchises in other countries, the TBTF banks, the DTC, and AIG are all linked by ownership and work in concert.  Protect capital, sacrifice pawns, load up bad debt and bad bets on companies that will bail out your other corporate subsidiaries.  With off balance sheet derivatives, they are simply writing whatever financial results they want.  Who understands this?

Right now individual investors are 9% owners of the stock market.  That means the "controlling interest" owns the rest.  In this situation, imagine you own the majority of all shares traded on exchanges and you own market makers.  Pensions and 401K's are captive buyers requiring yield, where else are they going to get their required 7-8% return to cover pension liabilities?  As the primary owners, why not let your investments grow to infinity since you have the only game in town?  The more you charge for the securities on the last trade of the day, the more your capital base grows since they are primary owners, and the more you can leverage it to buy even more assets?

That is why I have called it a takeover.

Wed, 04/21/2010 - 03:01 | Link to Comment Rick64
Rick64's picture

Nice post. Connecting the dots.

Tue, 04/20/2010 - 21:42 | Link to Comment RockyRacoon
RockyRacoon's picture

 

Nice.

AIG, the financial firm rescued by the U.S., is the lead insurer of Goldman Sachs Group Inc.’s board against shareholder lawsuits, said a person with knowledge of the policy.

So, now that the tax payers own 79.99999 percent of the company, WE are paying for their defense for crimes against us.  How juicy.

Tue, 04/20/2010 - 22:34 | Link to Comment knukles
knukles's picture

Lead Insurer?

AIG is just about the absolute LAST insurer of corporate boards anymore.  The business became toxic (OMG, how prophetic) many years ago. 

Reading their policies is a nightmare.  The "not withstanding anything to the foregoings" are endless.  Sure you get insured, but under which conditions there'll be payment are few.

But then again, as luck would have it, GS on the othe rside of the policy negociations?  Bet they just bought more CDS on AIG.  Hah ha ha 

Another chapter in the endless saga of the buttfucking of the AmeriKan taxpayer by the Power Elite.

Tue, 04/20/2010 - 22:42 | Link to Comment Joe Davola
Joe Davola's picture

If this were a crime novel, I'd put it down right now because the amount of "coincidences" would seem too farfetched.

Wed, 04/21/2010 - 10:47 | Link to Comment gmrpeabody
gmrpeabody's picture

And just too unbelievable..... maybe if it were a sci-fi.

Tue, 04/20/2010 - 21:43 | Link to Comment Artful Dodger
Artful Dodger's picture

Surely this "Fab"ulous quote needs to go viral:

SEC investigators point to an email where Tourre tells a friend "More and more leverage in the system, The whole building is about to collapse anytime now...Only potential survivor, the fabulous Fab[rice Tourre]...standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!" (source http://www.marketwatch.com/story/why-goldman-will-beat-the-sec-2010-04-2...)

There you have it: a VP of one of the most "important" corporations in the world confirms every bloody thing Zero Hedge and its clientele have ever written. Why would anyone do business with these people? Did this guy finish high school? Words fail me. A public lynching wouldn't.

Wed, 04/21/2010 - 04:32 | Link to Comment chindit13
chindit13's picture

My guess is that it is this quote that will get Fab fired.  At GS, pretension is a 24 hour job.

Wed, 04/21/2010 - 10:51 | Link to Comment gmrpeabody
gmrpeabody's picture

Most of the folks doing business with GS will never read that quote, and even if they did, would they understand what it implies?

Tue, 04/20/2010 - 22:47 | Link to Comment Kina
Kina's picture

hope the fbi is crawling through GS and others like fire-ants

Wed, 04/21/2010 - 09:53 | Link to Comment SWRichmond
SWRichmond's picture

There is a significant opportunity here for national-level LE to actually serve the public rather than the oligarchy.  Will they step up?  Stop pointing your damned fusion center crap at me and start investigating the people who are pissing me off by robbing me blind and destroying the nation in the process.

Wed, 04/21/2010 - 10:52 | Link to Comment gmrpeabody
gmrpeabody's picture

They will not rise to the occasion, our future looks bleak.

Wed, 04/21/2010 - 12:03 | Link to Comment SWRichmond
SWRichmond's picture

I don't wanna believe that, but I need evidence to support my wishful thinking.

Tue, 04/20/2010 - 23:32 | Link to Comment Oh regional Indian
Oh regional Indian's picture

So we see the first real signs of crock-up and boom? I really wonder. Such little time, so much mal-feces-ance. So many roaches (cockless), all lost to their bodies and slaves to their minds.

Amerika always loved their assholes (He's such an awesome asshole). (God the guy is a real asshole, but he  makes shit-loads of money).

See the verbal thread there? Asshole makes shit-loads.

Of course it stinks! Words are powerful, assholes!!!

What does anyone expect? It all started with the WORD remember? And no, I'm not getting Christian on you. The WORD is pretty much universal.

And it sure was not ASSHOLE!

The tragi-comic ugly-beautitude  of all this glee is that most if not all of the folks here (me included, I interviewed and was thankfully rejected at McKinsey and co, the other great evil empire, only they prostitute something even more volatile and formless, ideas, at least GS has the balls to screw around with money), would at some point in their career have given anything to be a part of the squid that we are all now glorifying in the potential demise of.

Sentence structure too twisted? Sorry, we are following a twisted story-line here, so it helps to be able to wrap your mind around a long tentacle of thought.

So, that is the ultimate irony. Even today, if these law-suits got dropped over a technicality and the squid went back to business as usual and say, just for arguements sake that the world went back to normal for a year of two before the REAL crack up and boom, most here would leap at a six figure offer from the sqid. Seriously, go stand in front of the mirror and ask yourself that question and see if you could honestly say back to their feces: Sorry, I have a problem with your ethics and so will have to refuse this 600,000 dollar a year job.

 

Doubt it. Would I? 

 

Hmmmmmmmmmm........

Such a bunch of hippo-crates we are, ne? 

Tue, 04/20/2010 - 23:37 | Link to Comment Double down
Double down's picture

Asshole makes shit-loads.

 

Priceless

Wed, 04/21/2010 - 01:41 | Link to Comment Fraud-Esq
Fraud-Esq's picture

I'm an asshole. We need to give assholes like me a profit incentive to go after assholes like them. That's just the way our system balances. At this moment in time, it is out of balance. The assholes who help you while you sleep by fighting the other assholes have been hamstrung by rule changes and legislative protections. The first thing they did was distort the value of a jury by making it hard to get one. The second thing they did was try to federalize as much of fraud as possible. Then, finally, they distorted the value of money at the FED. All these distortions have created a perfect storm of a society deeply out of balance. It's why everyone is so mad, but there seems to be no real fulsome "redress" of grievances. This is the opposite of what the Founders intended. They made that very clear in the bill of rights. 

Wed, 04/21/2010 - 10:56 | Link to Comment gmrpeabody
gmrpeabody's picture

+1000

Wed, 04/21/2010 - 01:58 | Link to Comment Fraud-Esq
Fraud-Esq's picture

Oh, I forgot the other thing they did. Read SCOTUS' "Stoneridge". This set the stage, 5-4. If you only aided and abetted a fraud, even though it was knowingly, you were not liable to the victim. This is known as the getaway car theory or what became known as "oh, outsource that shit. we can't do that HERE!". There became the bank. See Stoneridge and the Enron banks case. By making third party aiding and abetting frauds not liable to first party fraud victims, SCOTUS flipped tort law on its head. Boy, was it good timing too, right as the Enron banks case sat on their docket. No one wanted that decision to called "Enron". People would have protested in the streets knowing those fraud banks got off for advising Enron how to defraud their shareholders. Enron was broke and the banks had the money. SCOTUS ruled, you can't touch the bank money. They are immune. It was listlessly called the "Stoneridge" case. Huh? what's that? Yes, exactly.

I believe that case and the 5-4 fraud immunity it created set the stage for this crisis, where there was ample advisory but knowing and deliberate fraud. Dodd gave a speech about overturning that decision, because it was based on a misinterpretation of statutory intent. He could have done it too. But, low and behold, the speech was given and the case was left standing, an edifice of immorality in our modern history. It unleashed bold action immediately after Enron, when everyone thought SarOx would handle it. How did SarOx restrain the BANKS?! It didn't. The great irony of this crisis is that it didn't revolve around the corporations as the last crisis, but instead, it revolved around the banks that advised the corporations in the last crisis who became expert and got immunity for it. However, the irony is even that couldn't stop them from focusing their fraud outward in an advisory capacity...they just had to bring it all in house to the point that they drove past their Stoneridge immunities and ignored SarbaneOx in its entirety. When that got dicey, they didn't need SCOTUS, the needed Congress to put a gun to FASB's head and grant disclosure immunities too. Welcome to 2010. 

Wed, 04/21/2010 - 09:52 | Link to Comment SWRichmond
SWRichmond's picture

If true, then Paulson is untouchable, no?

Wed, 04/21/2010 - 11:08 | Link to Comment gmrpeabody
gmrpeabody's picture

Outfu_kinstanding!

+1000

Some of the dots are coming together, even among the many dead brain cells. Thank you.

Wed, 04/21/2010 - 01:34 | Link to Comment Fraud-Esq
Fraud-Esq's picture

CLAW BACK the naked swap profits. Does this sound fair, fellow ZH'ers?

Many people are going about saying we need to raise taxes on the rich. I say not so fast. Why? There's a huge difference between a rich productive guy and a banker. I've come to believe bankers love the "raise the taxes on the rich" to make up for the hole they created, because it sure beats clawing back their money specifically. What's a few percent in taxes spread around to support your sovereign solvency "game" when you just stole 1b, 38B, 121B, etc... Raising everyone's taxes for your mistakes while you chill with 2B sounds good to them. 

naked swaps are unproductive, malinvestment and opportunity lost. They're purely an animal of ZIRP and the Fed-banking oligopoly, leverage, etc... It's part of the game that wouldn't exist BUT/FOR U.S. legislation and taxpayer creation of the federal reserve, excess speculative money, right? So, if the FED makes the same mistake it did in 2002-2006 and again now, with low rates, we'll just be all over that speculation profit making it almost not worth doing next time around. Then, they'll have to actually invest in something that creates more than paper and zero sum yachts for them and losses elsewhere. 

I want 85% of that naked swap money back (keep 15% and break a leg) on a regulated market with more market makers. I want 100% back if in the commission of a crime or swapping a product designed to fail (since that might not be a crime by modern standards, we have to be specific in the tax code). Without evidence of a crime but resulting in the insolvency of any such insurer, we get 100% but we'll refund the premiums to the buyers. This is punishment for not doing your DD on the insurance provider or not spreading your swap risk around, like Goldman didn't with AIG. That fact always concerned me. A small group of people could highjack a unit within an insurer and write lots of bad policies for their friends, get fired, and share in the loot. Seems like something we should guard against and not leave up to internal corporate control. 

 

Wed, 04/21/2010 - 04:15 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

EURO continues to get a lot of support ...

But USD index weekly chart continues to give bullish warnings.

Euro chart:

http://www.zerohedge.com/forum/latest-market-outlook-0

Wed, 04/21/2010 - 04:42 | Link to Comment chindit13
chindit13's picture

Synthetic CDO's seem little different than naked shorting.  As for economic value, there is none, and it is not like the real mortgage/securitization market wasn't already big enough.  At least in a zero sum game futures contract, there is the pretense of increased liquidity that allows producers or users to hedge.  Though I do not profess to be a fixed income type, I cannot see any value synthetic CDO's add to society that could not be provided better and with less damage than a straight up MBS.  It matters because if the underlying instrument has no social utility, it is foolish to bail out firms who nearly (should have) died from their association, even peripherally, with the synthetic CDO (AIG).

Wed, 04/21/2010 - 04:44 | Link to Comment nathan1234
nathan1234's picture

Blankfein is doing the Devil's work

Now clarified that he is just a blankety blank

Wed, 04/21/2010 - 06:05 | Link to Comment fUny1
fUny1's picture

We know ABACUS is just the tip of the iceberg but there’s nothing wrong with what Goldman did according to their CFR slave apologist’s op-ed in the Buffet controlled Washington Post.

http://funy1.blogspot.com/2010/04/aigs-maurice-greenberg-warrent-buffet.html

 

 

Wed, 04/21/2010 - 06:55 | Link to Comment Liberdadedescolha
Liberdadedescolha's picture

The 11.000 level on Dow Jones is of major importance. My bet is that will be a major break soon, maybe today, maybo tomorrow, but shorting @ these levels seems a great risK/reward. We are almost there... :)

http://midasfinancialmarkets.blogspot.com/2010/04/dow-jones-update.html

Wed, 04/21/2010 - 08:53 | Link to Comment HEHEHE
HEHEHE's picture

Hmm, Serge gets promoted and she leaves?  Sounds like Serge's story was one GS could liked and her's wasn't.

Wed, 04/21/2010 - 09:37 | Link to Comment ella
ella's picture

SHOCKED! Has anyone told Steve Liesman?  He who has found information in the governmennt's case that might contradict the government's case?  All of which he dutifully reported this AM on CNBC.  Mission accomplished GS trading up after the report.

There are very few legal cases without contradicatory evidence.  Of course Steve does not bother to read Zerohedge.

Do you think he owns any GS stock?  Just wondering?

Wed, 04/21/2010 - 11:12 | Link to Comment gmrpeabody
gmrpeabody's picture

He read it so frikkin fast, that I could barely understand him. He was just reading what he was handed, but took credit for breaking the story. What a laugh!

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