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SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

Tyler Durden's picture





 

Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

Kenneth Lench, Chief of the SEC's Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."

The SEC alleges that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

The SEC's complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.'s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.

The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible for ABACUS 2007-AC1. Tourre structured the transaction, prepared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Co.'s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Co. invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Co.'s interests in the collateral selection process were closely aligned with ACA's interests. In reality, however, their interests were sharply conflicting.

According to the SEC's complaint, the deal closed on April 26, 2007, and Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded.

Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.

The SEC's complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.

# # #

For more information about this enforcement action, contact:

Lorin L. Reisner
Deputy Director, SEC Enforcement Division
(202) 551-4787

Kenneth R. Lench
Chief, Structured and New Products Unit, SEC Enforcement Division
(202) 551-4938

Reid A. Muoio
Deputy Chief, Structured and New Products Unit, SEC Enforcement Division
(202) 551-4488

Full Lawsuit:

 

SEC GOLDMAN

Fabrice Tourre's FINRA record:

 

Fabrice Tourre

 


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Fri, 04/16/2010 - 10:44 | Link to Comment Nolsgrad
Nolsgrad's picture

great post!

Fri, 04/16/2010 - 10:51 | Link to Comment El Hosel
El Hosel's picture

Does this mean we ( the US Gov ) are going to re-criminalize fraud on a wide scale?

Fri, 04/16/2010 - 11:19 | Link to Comment -1Delta
-1Delta's picture

WHO CARES THE SPX IS FINALLY F****** DOWN!!!!!!!!!!

Fri, 04/16/2010 - 21:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Of course, this could all be made to disappear if a middle east shooting war were to appear.

You don't think those news stories about an "imminent" war were just a coincidence, do you?

Fri, 04/16/2010 - 21:10 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

This story explains why Ambac (ABK) has been rocketing up for the last week -- insider trading at it's best. SEC will of course do nothing about such regular frauds.

Sat, 04/17/2010 - 03:38 | Link to Comment dumpster
dumpster's picture

more information ..

 

the forward sniffing stock market lol a

April 17 (Bloomberg) -- Goldman Sachs Group Inc., which fell 13 percent yesterday after U.S. regulators announced fraud accusations, didn’t disclose that it was warned nine months ago that investigators wanted to bring a case, people with direct knowledge of the talks said

Sat, 04/17/2010 - 06:35 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I was wondering about that. This fraud case is very simple and the suit tells a compelling story if the base facts are true: 10b-5 fraud, and it is a material amount, $1B.  (Anyone who says the case is weak has either not read the complaint, or has and is in GS's thrall.) The next step is that the possibility of suit and the strong probability of a recovery should have been disclosed by GS Inc. to all of the potential buyers and sellers of GS INc. stock.  This is a securities plaintiff's lawyer's wet dream case.  That part of this may serve to bring GS down. You heard it here first. 

Fri, 04/16/2010 - 11:24 | Link to Comment ArkansasAngie
ArkansasAngie's picture

NOpe they are asking for money not jail.

The money will come from Goldman's investors.

I'm good with a confiscation of personal property and clawback of all bonuses paid but ... I also would like to see jail.

 

 

Fri, 04/16/2010 - 11:45 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Jail is a requirement to keep the natives from becoming restless.

A list of fall guys is probably already compiled.

Fri, 04/16/2010 - 12:19 | Link to Comment WaterWings
WaterWings's picture

I wonder how many years this will take and if this is a diversion...

Sorry, ZH has allowed me to metamorphose into a 100% cynic. Nothing short of public executions will please me.

Fri, 04/16/2010 - 15:25 | Link to Comment Ripped Chunk
Ripped Chunk's picture

If I may: "The great mid-term elections ratings sweep must see TV spectacular"

 

 

Fri, 04/16/2010 - 22:32 | Link to Comment Clinteastwood
Clinteastwood's picture

Right. A veto-proof majority in both houses of Congress for the Rip-off Publicans, who would have to do the will of the people............or else they'd know we'll rip them.

Sat, 04/17/2010 - 00:43 | Link to Comment ZakuKommander
ZakuKommander's picture

"Would have to do the will of the people"??????

In what alternative universe would this happen?

Fri, 04/16/2010 - 18:53 | Link to Comment thegreatsatan
thegreatsatan's picture

nah, you're not cynical enough. any fines would be paid with money GS borrows from the Fed at 0%

Sat, 04/17/2010 - 03:43 | Link to Comment dumpster
dumpster's picture

Sorry, ZH has allowed me to metamorphose into

Franz Kafka .. become a beetle in the closet

Fri, 04/16/2010 - 12:28 | Link to Comment Miles Kendig
Miles Kendig's picture

How does one incarcerate a company?  This is the issue that renders the legal process of turning a corporation into a person false.

Fri, 04/16/2010 - 12:50 | Link to Comment Commander Cody
Commander Cody's picture

At the expense of being branded a lunatic, let's try to use logic here: Since a corporation has the rights of an individual, it also is liable as is an individual; therefore, everybody goes to jail.

Sat, 04/17/2010 - 01:36 | Link to Comment Wilderman
Wilderman's picture

At what point did we, as a society, conclude that violating moral code (our common belief of right vs. wrong) is was acceptable, when it did  not violate any legal statutes?

 

Most all of the business dealings I've had in the previous 10 years involved shadings or lobbying of the laws or rules, in attempts to save clients money, but, not once, did I shade or stretch rules in order to screw someone else.  You can break the rules all you want, but there better not be any aggrieved parties.  It there are, man, you are f*&ked.

 

Our legal system, our legal code, and the lawyers/lobbyists/politicians that clog it up have created a universe where dirty deeds are dirt cheap, and, not illegal. 

 

 

 

 

Sat, 04/17/2010 - 06:45 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Rule 10b-5 fraud is simple and elegant: the failure to disclose a material fact to an investor. Do you think it was material to disclose that Paulson hand picked the basket of CMBSs from which ACA would choose the reference securities, and that Paulson made known its intention to short the living  sh*t out of them? Would you want to know that GS made falso statements to ACA to the effect that Paulson would be long the "equity" tranche of the CDO issuance, to assuage their concerns about Paulson's involvement? I would have wanted to know that.

Done, done, done from a 10b-5 perspective.  GS does not wiggle out from under this one.  It is not a witch hunt, or sort of shaky, or not quite right. The allegations are dead on, and no doubt easily proved.  That is the purpose of 10b-5: a demonstration of intent is not required, only a failure to disclose a material fact.  Read the complaint: GS hid the Paulson side of the equation from the mark, er ha, investor. GS took steps to make sure ACA stayed in the deal, knowing the mark was assured by the presence of an independent portfolio "expert" making the choices of reference securities.

Go ahead, don't be cynical: be outraged.

Sat, 04/17/2010 - 07:41 | Link to Comment parallaxview
parallaxview's picture

we are a nation of laws, not a nation of ethics.

Fri, 04/16/2010 - 17:55 | Link to Comment abalone
abalone's picture

So true Miles

'Corporations have neither bodies to be punished nor souls to be damnned'

Fri, 04/16/2010 - 20:33 | Link to Comment damage
damage's picture

Miles, so then I assume you are okay with politicians who are already in power, enforcing laws which limit the speech of non-profit political corporations?  Your statement is unebelievably ignorant. The corporation only derives its rights from the people who created it. Part of the rights of the individual is to group together and pool resources with other individuals, this is all a corporation is. To deny any corporation its right to free speech is denying the individuals who form the corporation's right to free speech AND their right to free association, and without corporate personage you wouldn't even be able to sue a corporation at all.

The issue you should be looking at is how individuals use corporations as legal shields against their own misdeeds. This is what needs to be changed. Go fucking read a book for once please.

Fri, 04/16/2010 - 21:05 | Link to Comment NP40
NP40's picture

Ever hear of a PAC ? It allows "individuals" within the corporation to pool their "own" money to voice political speech. They were never denied free speech. The case before the SCOTUS was very limited and was ruled on correctly, namely, their freedom of speech had been violated. The SCOTUS should have simply struck down the law that banned corporate speech within a certain time frame before an election. However, the SCOTUS has now ruled that corporations are entitled to use the entire company treasury to influence elections of all stripe. Congressional races, judegeships, etc.

This ruling has effectively crippled the free speech of the "individual." We, individually stand no chance of being heard among the corporate wheelbarrows of cash being driven around. One of the most horrendous rulings ever supplied by the SCOTUS.

A corporation is not person. If so, what language do they speak in ? English ? French ? Portugese ? When a corporation writes, what hand do they use ? The left or right ?

A corporation does not derive rights from those that created it. It's only an operating charter. Individuals within the corporation have the freedom of speech but a corporation itself has no rights except those entitled by contract or law.

 

Fri, 04/16/2010 - 22:36 | Link to Comment Clinteastwood
Clinteastwood's picture

SCOTUS is encouraging the well-educated US population to vote such that money doesn't buy elections.   Until our country gets this idea and gets it good, we'll never have free speech, or fair elections.  C'mon people, get with the program.

Fri, 04/16/2010 - 23:14 | Link to Comment damage
damage's picture

Exactly, the law prevented nothing, and only served to act as a protection mechanism for incumbents. Politicians were still bought out, with or without campaign finance reform.

Fri, 04/16/2010 - 23:24 | Link to Comment damage
damage's picture

Are you sure? I thought they kept the "soft money" bans in place. and only Thomas' partial dissent removed those bans. But I agree with Thomas. All "campaign finance reform" does is stack the deck against new blood in favor of the incumbents. It allows those already in power to limit their opposition's funding while still taking all the bribes they want since they run the system.

However, I think you are wrong that it removed the "soft money" bans (even if I agree they should be removed too)... you've just been taken by the MSM or idiots down at HuffPo or something...

 

Edit: I should also add the media had special exemptions for themselves carved out, which is exactly why the media bashed this decision so hard, because they would still be unrestricted either way. (media corporations)

Sat, 04/17/2010 - 21:53 | Link to Comment Miles Kendig
Miles Kendig's picture

damage, you know that what I am saying is how can a corporation enjoy disparate treatment under the law with respect to loss of freedom through incarceration, with all of the rights that are limited for those that are, including speech and still claim equality under the law. Can you explain this one to me without moving the subject from violations under the law and their punishments to enjoyment of speech?  

Fri, 04/16/2010 - 22:55 | Link to Comment Dburn
Dburn's picture

Good point. Good time to test the Corporate Personhood theory. Here's one for the legal guys here. If they are still a regulated bank they really can't file a Chapter 11. That would be my choice of actions if the lawsuits mounted. Call it the great final rape pillage and plunder as they toss back their bank status ( Hey , we just don't need it anymore thanks) , file an eleven and the managing directors lay in one huge priority claim on unpaid wages as their brand new supersonic jets rev up outside the courtroom to whisk them the fuck out of there .

Criminal Charges would have to be filed then or would they still get away with it. I know I'll really be pissed if they get the office furniture too. How about last minute sex change operations. It's in each Managing directors health insurance policy. How long do those take? Sounds like they'll need them, Jail or otherwise.

Mon, 04/19/2010 - 23:17 | Link to Comment hbjork1
hbjork1's picture

It is a civil suit.  There can be recovery of losses and damages. GM and Ford were sued by enterprising car owners for decades.  Toyota is currently being sued in CA.

Individuals are found guilty of fraud and sent to jail.

Kinda hard to put a company in jail.

 

Sat, 04/17/2010 - 08:28 | Link to Comment Richard Weed
Richard Weed's picture

Love you to death, Chunk, but it's "restive" not "restless"... as in, "the natives are restive"...

I know... I know... I am a Dick Weed.

Fri, 04/16/2010 - 16:09 | Link to Comment Thurifer
Thurifer's picture

The reason the Goldmanites aren't scared is because they think that the populist threat to them comes from the pacifist girly men on the left. But as a resident of rural Alabama I can tell them that there are many, many heavily armed men here who are walking breathing definitions of the term "beefsteak nazi". Be afraid GS, be very afraid. s

Fri, 04/16/2010 - 22:57 | Link to Comment Dburn
Dburn's picture

It's Deliverance time

Cue Dueling Banjos. Lloyd gets to play Ned Beatty. He always wanted to be a star.

Mon, 04/19/2010 - 23:39 | Link to Comment hbjork1
hbjork1's picture

People with a foot in the South will know what you mean but, no matter how serious they are it will be better for them to stay in the world they know.

Back in the late 60's, there was a article (note) in Time (magazine) about two"boys" from what was apparently New Jersey syndicate that may have been sent down to "organize" the moonshine business in Northern Georgia. I no longer remember the details.  It is easy to get lost in those mountains.  It seems that they were found in a snake pit.  Died of snakebite.  Probably just got lost and fell in.

 

Fri, 04/16/2010 - 18:19 | Link to Comment Rip Toff
Rip Toff's picture

Maybe in honor of Arnie and CA IOUs, they can pay the fines in mark-to-fantasy paper!

Fri, 04/16/2010 - 12:16 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture

Imagine you and your friend sell baskets of apples.

Your friend purposely puts poison in some of the apples, while you (knowing of the poison) continue to sell those apples.  Additionally,  you tell your customers that these particular apples are the most delicious that you've ever had for sale. 

Then that same devious friend of yours buys life insurance contracts on those customers who ate the apples. Your customers die as expected, and your friend makes billions of dollars in profits off of those insurance contracts. 

Then everyone in the apple industry marvels at how smart the both of you are.  And you spend the next two years pretending that you're the Master of the Universe. 

Fri, 04/16/2010 - 14:46 | Link to Comment Whats that smell
Whats that smell's picture

Good one, best way I have heard it explained!

A village mayor grew tired of complaints about freight trains blocking the villages blocking the town's only crossing. Under a local law on the books he could ticket them and the fine was about $200.

People knew he wrote them at least one ticket a week, and the town collected the $200. Once they figured out how to give the RR the bill.

People said "I can't beleive they still block the crossing" It was  just like they alway s did before the tickets were issued.

Would you quit running stop signs if you were fined $.10?

Fri, 04/16/2010 - 16:55 | Link to Comment faustian bargain
faustian bargain's picture

I would quit running stop signs when I saw that there was traffic going the other way, regardless of the fine.

Fri, 04/16/2010 - 18:17 | Link to Comment Gold...Bitches
Gold...Bitches's picture

one flaw.  just because the apples are poisoned in no way automatically precludes it from being a delicious apple.  You just aint gonna make it long enough to have a second one...

Fri, 04/16/2010 - 11:50 | Link to Comment Mark McGoldrick
Mark McGoldrick's picture


Fri, 04/16/2010 - 12:17 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

No, not at all. The legalized Mark to Myth accounting fraud will continue along with innumerable other crimes, many of them even being committed by government agencies, that are being ignored and will almost certainly continue to be ignored.

Fri, 04/16/2010 - 14:01 | Link to Comment Gold...Bitches
Gold...Bitches's picture

First, if there is no jail time and its just a fine, then its a travesty.  Second, if this is the only one or one of just a few, then its a sham.  Third, if there is no action by the CFTC regarding JPM and the massive silver manipulation, then its a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham. 

 

Jail time, lots of jail time.  And not just a couple scapegoats.

Fri, 04/16/2010 - 18:21 | Link to Comment Vendetta
Vendetta's picture

Agree. The 'fines' the government has 'dished' are so measly that they've simply been categorized by these businesses as a cost of doing business.

Sat, 04/17/2010 - 02:22 | Link to Comment Wilderman
Wilderman's picture

Never like to piss on a candle, but civil actions carry no penal weight (kinda like most lawyers lol).  We need criminal prosecution by NYC, NJ, NY State, hell, even DOJ in order to see 'perp walks'.  Damned shame, there once was honor among men (no, really, I've read so many novels...).

 

 Circus won't be complete without some deserving sinners being tossed to the lions.

Sat, 04/17/2010 - 07:50 | Link to Comment cossack55
cossack55's picture

Are you saying 6 wrongs make a right? Or 8 wrongs make a -2 rights, or -6 rights make +12 wrongs?  Please elaborate?

Fri, 04/16/2010 - 14:47 | Link to Comment SayTabserb
SayTabserb's picture

Fried vampire calamari.  The appetizer or the whole meal?

Fri, 04/16/2010 - 14:57 | Link to Comment sgt_doom
sgt_doom's picture

Negative!  It means the 2010 elections are coming in November 2010, and the pols want to look like they are actually doing something???

Then, after the election, the case quietly, like all the others, evaporates.  (With the only people going to jail being Bradley Birkenfeld, the UBS banker who attempted to be a whistleblower on all those American tax evaders, including most of those politicians in Congress who call the shots on the SEC, et al., and the NSA wiretapping whistleblower, I think his name is Thomas Drake.)

Paulson & Co., isn't that Alan Greenspan's company???  Figures.....

Fri, 04/16/2010 - 22:40 | Link to Comment Clinteastwood
Clinteastwood's picture

You wouldn't have all this bullshit if you had a currency based on gold. No derivatives!  Gold bicheses!

Sat, 04/17/2010 - 09:38 | Link to Comment ToNYC
ToNYC's picture

There was not enough Gold to make a modern society currency in 1968 and 1971...without enriching the miners for no special reason. We don't need to be worshipping the basis of our currency..It is a tool to trade around between specialised labor-efforts, stored human work-energy. What we do need is a Congress that has a computer program to exercise its Constitutional function by making sure the fiat currency is tied to maybe 2% growth in real GNP. Gold is so Old Testament for currency, forget about Old School.

 

http://www.zerohedge.com/forum/golden-rule-superceded-government-alchemy

Sat, 04/17/2010 - 12:12 | Link to Comment tip e. canoe
tip e. canoe's picture

gold just wants to be free

Sat, 04/17/2010 - 22:51 | Link to Comment Clinteastwood
Clinteastwood's picture

You're full of it ToNYC, and so is your fiat currency.  Gold based currency prevents bubbles.   If the miners can't produce more, the world will just have to wait for free medical care as a human right.  And maybe the wait for all the wars, waste, bailouts, and nitwittery surrounding the "elasticity" fiat currency affords will lessen the world's suffering.  Screw change. 

Sat, 04/17/2010 - 08:11 | Link to Comment Richard Weed
Richard Weed's picture

Definition of Pure Evil: Cook the books for Greece and dupe the EU... cook the books for JP and dupe some German banks. Is this a way to earn money...?

This is not the behaviour of "a few rogue individuals"... this is the patent behaviour permeating throughout a well trained evil institution.

This evil must come to an end... GS must be taken out of its corrupt misery.

There are such things as "ethical" financial institutions, where money is earned in an honest manner... however, these institutions are smothered and cannot thrive as long as GS is around.

Do all you can to put a stop to this evil.

BTW, the SEC said that it was an ex-porfolio manager from JP's shop who dropped the "dime" on GS... anybody know who this whistle-blower might have been...?

Sat, 04/17/2010 - 08:21 | Link to Comment Richard Weed
Richard Weed's picture

Just as an aside, does anyone know what Fabrice Tourre made for total comp (salary + bonus) for 2005, 2006, 2007, 2008, 2009...?

I would like to know how much money is necessary to totally corrupt a person into pure evil.

Please do not guess if you do not know.

Fri, 04/16/2010 - 11:21 | Link to Comment Translational Lift
Translational Lift's picture

Goldman Sachs VP Fabrice Tourre gets thrown under the bus...GS pays a fine, no admission of guilt.........business as usual!!!

Fri, 04/16/2010 - 14:46 | Link to Comment Anecdotal Economist
Anecdotal Economist's picture

You got that right, T-Lift.  GS will deliver a "burn notice" to Tourre, and spinmeister Lucas Van Praag will offer a comment about how Tourre "went rogue" and was acting on his own, etc. and GS will live to defraud another day.

Fri, 04/16/2010 - 15:42 | Link to Comment FEDbuster
FEDbuster's picture

Wonder if "Fabulous Fab" will be his prison nickname?  With a name like that and a French  accent you know he will have some quality shower time in the big house.

Cutting the squid down to size, one tentacle at a time.

Sat, 04/17/2010 - 09:51 | Link to Comment ToNYC
ToNYC's picture

Goldman has become the Drexel Burnham of the Age. Highly confident, inventors of "other than" investment grade" credit syndication but alas as humanly possible and perfect: absolute power still corrupts absolutely. Heads roll, les jeux son fait. The king is dead, long live the king.

Interesting that Cramer doth protest too much, and knew no one could see the "money"..like ever GS was going to cut him a physical check or bag of green on his linoleum floor, but rather his hedge fund stock-in-trade of hot tips from the inside where politicians devise and the M&A crowd come together so he can add value or "make an honest buck on Wall Street" by front-running the crowd soon driven by his crack rumor-mongering team of myrmidons breathlessly dispensing the holy host of true communication and inside dopes.

Fri, 04/16/2010 - 12:17 | Link to Comment Cistercian
Cistercian's picture

Epic ZH win!
WOOOO HOOOO!!!!!
I recommend a 1 trillion dollar fine, which while apropos is wishful thinking.
God, I LOVE ZEROHEDGE!!!!

Fri, 04/16/2010 - 16:58 | Link to Comment SilverIsKing
SilverIsKing's picture

Perhaps this is their way of taking out Paulson.  Start with a civil case against both, GS pays up, turns into criminal case against JP.  GS walks, JP perp walks.  Possible?

Fri, 04/16/2010 - 17:43 | Link to Comment Willzyx
Willzyx's picture

I don't really think Paulson did anything wrong here.  Goldman sold the securities.  It's their responsibility to disclose.  Definitely should have told AIG.  Unless they have serious dirt on Paulson?

 

 

Fri, 04/16/2010 - 18:08 | Link to Comment FEDbuster
FEDbuster's picture

It was reported on CNBS that one of Paulson's right hand men gave the SEC all the info they needed for this case.  I think Paulson & Co. will be just fine, except they won't be on Goldman's Christmas card list anymore.

Fri, 04/16/2010 - 22:44 | Link to Comment Clinteastwood
Clinteastwood's picture

Oh, Paulson did plenty wrong.  They set up the whole deal, profited the most.  C'mon, dozer, foller the money!  Paulson may be squealin' to get outta the way of this trainwreck.  

Sat, 04/17/2010 - 06:50 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Agreed he knew or should have known the entire trade was being set up in a way that would profit handsomely only if GS employed certain artifices to deceive the other side of his trade.  GS was Paulson's bitch on this one, but no sympathy here for GS.

Fri, 04/16/2010 - 18:49 | Link to Comment bruiserND
bruiserND's picture

I just don't get it.

ZH hasn't connected the dots.

This whole thing was a "prearranged trade" known as the Greenspan Put.The Greenspan put made millions homeless, destroyed retirements and sucked all the credit out of the system destroying the small businessman who creates 65% of the jobs in America. Who benefits? The Corporate ? Bankster Oligarchy.

Connect the God damn dots. W.T.F.

http://www.reuters.com/article/idUSWNAS648820080115

Fri, 04/16/2010 - 22:52 | Link to Comment Clinteastwood
Clinteastwood's picture

Right.  Wouldn't it be a hoot to make Alan Greenspan actually give a straight understandable answer to a question.........because if he didn't.......he'd be going straight to jail?  And then, once he made himself clearly understood......he'd be going straight to jail.

Sat, 04/17/2010 - 00:30 | Link to Comment YourAverageDebtSlave
YourAverageDebtSlave's picture

How's this play out?  GS takes a slap on the wrist and Dodd's financial bill pushes through.  The Fed gains control of this shit and it's business as usual.  In the meantime give the sheeple something to get all stirred up about.

Sat, 04/17/2010 - 00:56 | Link to Comment caconhma
caconhma's picture

Today SEC move against Goldman is very puzzling. Why? Well:

The WallStreet criminal syndicate is the major contributor to the both US major political parties. Goldman and others put Obama into the White House. The WallStreet mafia controls the FED, the Congress, and the majority of financial decision making activities in the Obama administration.

Just look at the proposed Congressional financial regulations supported by the White House. Their goal is to further solidify the WallStreet control of the US economy and financial institutions.

Consequently, the SEC decision to charge Goldman with fraud was personally approved by the President and the Congressional leaders. We can disagree about Obama actions but we do agree that Obama isn't an idiot to cut the feeding hand.

Someone might say: this is an election year and SEC has to do something. But, this SEC move can very well lead to very unexpected and unpredictable consequences. There are too much risks and unknowns involved.

It appears to me that this SEC move is telling us that the Obama administration and the FED are losing control over the events. It is obvious this step was forced on them. The times have changed from 2001 Internet an Biotech bubbles. The emerging anti-political establishment "Tee party" movement is also very unpredictable and can get easily out of control. So, why is Obama decided to take the risk?

Sat, 04/17/2010 - 06:51 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Or put another way, did Lloyd fail to return Rahm's call?

Sat, 04/17/2010 - 07:10 | Link to Comment Goods
Goods's picture

Are people already forgetting this?

[SEC Names Goldman’s Storch as Enforcement Unit Operations Chief ]
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6ItnK32Cl6Y

Sat, 04/17/2010 - 18:45 | Link to Comment Inspector Asset
Inspector Asset's picture

Has it ever occured to anyone that Paulson was acting on behalf of GS all along?  I mean first he is in the winners circle with Goldman with the subprime trade of a life time. Next, his in the winners circle again  betting against Greece!

Isn't it possible that Paulson was trading Goldman's money all along so that Goldman wouldn't have to disclose an obscence amount of profits betting against subprime.   They have Paulson make the trades on their behalf.  Much like Goldman unloading a bunch of AIG winnings to Deutch Bank and General Society months before the crisis, inorder to knock them down to number 3rd spot of AIG winnings, from the number one spot.

This has been brought up at www.WallStOnion.blogspot.com

and www.GolmanSachsExposed.blogspot.com months ago.

Food for thought.

 

Fri, 04/16/2010 - 10:44 | Link to Comment Arkons
Arkons's picture

Just saw this wow.  When did the SEC grow a pair?

Fri, 04/16/2010 - 10:46 | Link to Comment RockyRacoon
RockyRacoon's picture

That remains to be seen.  I'll believe it when GS pays a zillion in fines/penalties, or some GS high-level personality goes to jail.  Check back when either/both happens.

Fri, 04/16/2010 - 10:58 | Link to Comment dark pools of soros
dark pools of soros's picture

you mean the taxpayers pay the fines for them in another bailout??

Fri, 04/16/2010 - 12:15 | Link to Comment JR
JR's picture

Margulies’ cartoon this morning shows an IRS agent holding a taxpayer’s return and telling him on the phone:

“I’m sorry sir…but you can’t claim Citibank, Goldman Sachs, AIG, Bank of America, Wells Fargo, Fannie Mae, Freddie Mac, GM, and Chrysler as dependents…”

Fri, 04/16/2010 - 15:42 | Link to Comment WaterWings
Fri, 04/16/2010 - 11:01 | Link to Comment crosey
crosey's picture

+1.  I'll believe it when I see it.  This is all Obamastration smoke screen...giving the masses some fake blood.  GS will now issue a counterstatement.  Ultimately, it will all go away.

Are we to believe that after all of this, the SEC has "got religion" and some chutzpah?  Zebras changing stripes?

Fri, 04/16/2010 - 11:49 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Zigackly!!!

The masters of deception have a whole long list of convenient scapegoats.

Enron-onwards, so many suicidings, usually of a VP, incidentally, who was the recent Fannie Mae guy? ANd why always gunshots in a car? MAybe VP's watch too many MAfia movies. Sad!

Being a VP on WS is not a good thing, which is why they seem a little mad. Either claw their way up, or bust their way down and out. But get out of VP hood!

VP ship is a dangerous ship to be on.

Fri, 04/16/2010 - 16:21 | Link to Comment aheady
aheady's picture

Totally.

Fri, 04/16/2010 - 11:17 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

The buck stops at the top.

At least in a functioning society

Ah shit forget about it - it was probably some mid level functionary

Fri, 04/16/2010 - 11:30 | Link to Comment DaveyJones
DaveyJones's picture

the buck stops at the top

unless you're the pope

or anyone else doing God's work

Fri, 04/16/2010 - 12:23 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Oh I forgot about the CEO infallibility clause

But just in case watch out for the colour of smoke coming out of 200 west street.

Even better they could do us all a favour and release their mortal coil

Jump you fuckers jump.

 

Fri, 04/16/2010 - 15:21 | Link to Comment Rusty Shorts
Fri, 04/16/2010 - 11:18 | Link to Comment futureb
futureb's picture

why?  why does it even matter in the end?  goldman stock is down, their vast internal conflicts of interest will come out in public, and the market now knows that nobody is immune.  this is absolutely +1 for the obama administration and hopefully the beginning of a new era in securities regulation. 

Fri, 04/16/2010 - 15:27 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Very hopeful are thee.

Fri, 04/16/2010 - 16:49 | Link to Comment JW n FL
JW n FL's picture

Ok... shut down the site... this idiot says the problem is solved... Thank God! I mean Goldman... that everything will be ok now becuase of 1 court case that will never, ever fucking end.. and if it does.. it will be a fine, with no wrong doing admitted.. in civil court... score one Obama / Bush part duex Lobby lap dogs?

 

Really, seriously? hey! lets all hold hands and sing kumbaya http://s0.ilike.com/play#Peter%2C+Paul+%26+Mary:Kumbaya:81398:m123633 it over... the war is over let us all rejoice!

 

This is not even a real case. This is a look over there... while we fuck you over here case...

 

Wake the fuck up!

Sat, 04/17/2010 - 08:39 | Link to Comment Richard Weed
Richard Weed's picture

Well said, JW...!

(he is probably an infiltrator from the Squid)

Fri, 04/16/2010 - 23:06 | Link to Comment Clinteastwood
Clinteastwood's picture

Really funny JW in FL.     Wish I could junk you more than once, futurebs.

Fri, 04/16/2010 - 11:31 | Link to Comment Problem Is
Problem Is's picture

"That remains to be seen.  I'll believe it when GS pays a zillion in fines/penalties, or some GS high-level personality goes to jail."

Good point RR. Believe it when you see it... Jesse just made the same exact point.

SEC Formally Charges Goldman Sachs With Fraud In CDO Products with Paulson and Company

"This looks like a deft way of throwing some red meat to the angry mob, nail a specific individual at Goldman while limiting the damage to the company..."

Lloyd Blank-dick-fein agreeing to throw a VP to the wolves... I also like Jesse's:

"Last week the White House asked Jamie Dimon and Lloyd Blankfein to 'cool it' on their intense lobbying efforts against derivatives and financial reform.

Fri, 04/16/2010 - 11:01 | Link to Comment dpbnyc
dpbnyc's picture

Not quite. The lawsuit is a civil charge of fraud, not a criminal charge. So Goldman settles, pays a huge fine, and then mums up. 

Fri, 04/16/2010 - 15:01 | Link to Comment sgt_doom
sgt_doom's picture

Please see my previous comment at #304476.

Don't get too excited yet....

Fri, 04/16/2010 - 10:44 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

+1

Fri, 04/16/2010 - 10:45 | Link to Comment MsCreant
MsCreant's picture

Clawback baby. If folks won't buy treasuries, we gotta claw it all back.

Fri, 04/16/2010 - 10:56 | Link to Comment IE
IE's picture

Absolutely. 

Where are the charges against Paulson as well.  Every cent of that profit should be clawed back, plus a punative penalty. 

This isn't investing or investment banking - it is fraud... a con... a scam.

Fri, 04/16/2010 - 18:29 | Link to Comment Mercury
Mercury's picture

I don't know guys...I don't claim to have all the details here but how isn't the disclosure onus solely on Goldman when Goldman sells a Goldman product to Goldman clients? Remember, this was an environment where Paulson was just some crazy shlub flapping his arms about a real estate bubble when everyone just KNEW the market was going to go up forever. Goldman ultimately got their ass handed to them by being too levered to subprime real estate so they certainly weren't net aligned with Paulson's strategy (with the firm's capital.) Paulson was one of the few who called a fucked-up market right. And there wasn't any easy, direct way to "short" residential real estate. Something like this almost had to be created for him to put on that position. I do think it wrong of Goldman not to have advertised that the package was custom designed by a short seller and I will admit to hoping that Paulson will ultimately prove to be as blameless as I think he is now given the known facts.

Fri, 04/16/2010 - 23:10 | Link to Comment Clinteastwood
Clinteastwood's picture

Mercury, you do not have all the details.

Sat, 04/17/2010 - 06:46 | Link to Comment Mercury
Mercury's picture

Well if you do this would be a great forum in which to lay them out. Paulson hasn't actually been charged with anything so far...we have that detail.

Sat, 04/17/2010 - 06:58 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

The details are in the 22 page, double spaced complaint, that takes 5 minutes to read and is not at all difficult to understand. The allegations against this idiot Fab and his masters at GS are not technical, or shaky, or weak.  See my post above. Rule 10b-5 civil fraud plain and simple. GS pays $1B + to end this. But they also failed to disclose the potential for this suit in their own stock disclosures.  All those who lost 13% yesterday on GS stokc now have a lawsuit for 10b-5 fraud in GS stock itself. Look for class action lawsuit by securities plaintiffs attorneys filed in SDNY by Monday at the latest.

Sat, 04/17/2010 - 11:15 | Link to Comment Mercury
Mercury's picture

I'm not defending Goldman.  I'm just not convinced Paulson is at fault here (although I may be proved wrong if new facts come to light.)  If betting against toxic RMBS was such a goddamned layup why was he practically the the only one trying to make that trade? There were no certain outcomes here, the RMBS bubble could have gone on for another three years and Paulson could have been hosed.

If clever, all-knowing Goldman knew that Paulson's hand picked portfolio contained a bunch of sure-fire defaults why did they then proceed to sell him CDSs on it?

Fri, 04/16/2010 - 12:20 | Link to Comment Dry Drunk
Dry Drunk's picture

I won't buy treasuries either. Can I sign up for a clawback baby?

I have a bet with my brother that Henk Paulson will have his head on a spike, like that orc in the Lord of the Rings -- yeah, with his tongue hanging out. So this guy in this frst scandal has the last name and he works at GS. Aren't the thieves fighting agmonst themselves? These prepetrators of bold crimes must be worried. Maybe Henk will come clean and confess, to save his head.

 

Fri, 04/16/2010 - 18:42 | Link to Comment bigkahuna
bigkahuna's picture

The SEC will not bring any of this down. We all know they are inept and/or impotent at their job. Thats why no one is investing anymore outside of the strange auto-trading that is going on. You hit the nail on the head though--when the crows truly come home to roost, it won't be any federal joke of an organization that causes it--it will be infighting between these insatiable thieves.. 

Fri, 04/16/2010 - 12:37 | Link to Comment Miles Kendig
Miles Kendig's picture

And reintroduce the concept of work that contributes to rather than destroys society.  For the moment I would like to see the perps dressed out in jumpsuits, reflective vests, goggles, hard hat, gloves & boots while working as societies pooper scooper's.  No hiding in prison for 'em.  Make them live, work and do everything else within society dressed out in their uniform at all times.  Perhaps there is still a reason for the Cabrini Green's to exist after all.

Fri, 04/16/2010 - 10:45 | Link to Comment Racer
Racer's picture

Maybe their IS some justice after all?

Fri, 04/16/2010 - 16:47 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

You're funny.

Fri, 04/16/2010 - 16:47 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

You're funny.

Fri, 04/16/2010 - 10:46 | Link to Comment sheeple
sheeple's picture

N. Muntz: HA HA

Fri, 04/16/2010 - 10:46 | Link to Comment Goods
Goods's picture

Lip service.

Fri, 04/16/2010 - 10:48 | Link to Comment RockyRacoon
RockyRacoon's picture

All sorts of sordid comments come to mind, but I'll remain civil until more facts emerge.

Fri, 04/16/2010 - 10:49 | Link to Comment GS is short Gold
GS is short Gold's picture

+1.  GS will pay a fine without admitting any wrongdoing. nothing to see here, move along.

Fri, 04/16/2010 - 10:48 | Link to Comment docj
docj's picture

Sweet - but I'm curbing my enthusiasm until I see suits being led-out of 200 West Street in leg-irons.

Fri, 04/16/2010 - 17:19 | Link to Comment dumpster
dumpster's picture

the problem on that one .. is every one wearing suits are up to their eyebrows in muck.

'so a suit has to rat on a suit,

.  some one wearing a suit at the top has to lead the suit people to the calaboose ,,, fat chance , every one would be in jail 

the leg irons will be continually worn by the citizens

Fri, 04/16/2010 - 10:49 | Link to Comment john_connor
john_connor's picture

They'll pay like a $100 million fine, admit no wrongdoing, and be done with it after booking billions on the scheme.  Wash, rinse, repeat.

Fri, 04/16/2010 - 11:04 | Link to Comment Hansel
Hansel's picture

I was thinking it would be closer to $1 million without admitting or denying culpability.  The suit is good for a headline today, but tomorrow it will be out of the news.  GS will get off because the SEC knows its master.

Fri, 04/16/2010 - 11:40 | Link to Comment buzzsaw99
buzzsaw99's picture

exactly. they are connected. they are a gubbermint guaranteed bank holding company with zero deposits and 100% control of the gubmint. The SEC will be disbanded before the squid goes down. Steal a hundred billion, pay a million dollar fine.

Fri, 04/16/2010 - 10:48 | Link to Comment Edna R. Rider
Edna R. Rider's picture

GS defense lawyer:  "No we didn't."

SEC lawyer:  "Oh, OK, our bad."

Fri, 04/16/2010 - 11:53 | Link to Comment Oh regional Indian
Oh regional Indian's picture

:-)

:-)

:-) That was funny!

Fri, 04/16/2010 - 12:42 | Link to Comment Miles Kendig
Miles Kendig's picture

Edna, you forgot the judge that will say; "I must defer to the SEC as the courts have no desire or willpower to exercise oversight of this part of society".  See the Rykoff decision in SEC v Bank of America for a recent example of this process of judicial exclusion is action wherein the victims get to pay the perps fine.

Fri, 04/16/2010 - 13:41 | Link to Comment Oh regional Indian
Oh regional Indian's picture

:-) Funny! Brevity is indeed the soul of humor!

Fri, 04/16/2010 - 17:08 | Link to Comment Alienated Serf
Alienated Serf's picture

you forgot-

sec lawyer- "ok tell ya what, we'll keep lookin around anyway so you can run up some serious bills.  then when this is over, you hire me as partner"

GS- "Deal!"

Fri, 04/16/2010 - 10:48 | Link to Comment Fidel Sarcastro
Fidel Sarcastro's picture

The SEC won't do a fucking thing!  A small fine - period to keep the surfs from an uprising.

Fri, 04/16/2010 - 10:49 | Link to Comment RockyRacoon
RockyRacoon's picture
Breaking News Alert
The New York Times
Fri, April 16, 2010 -- 10:39 AM ET
-----

S.E.C. Accuses Goldman Sachs of Fraud on Mortgage Deals

Goldman Sachs, which emerged relatively unscathed from the
financial crisis, was accused of securities fraud in a civil
suit filed Friday by the Securities and Exchange Commission,
which claims the bank created and sold a mortgage investment
that was secretly devised to fail.

The move marks the first time that regulators have taken
action against a deal that helped investors capitalize on
collapse of the housing market. Goldman itself profited by
betting against the very mortgage investments that it sold to
its customers.

Read More:
http://www.nytimes.com?emc=na
Fri, 04/16/2010 - 10:49 | Link to Comment reading
reading's picture

I actually don't care what the outcome is at this moment -- I am just happy to see SEC, GS and fraud in the same headline for once.

 

 

Fri, 04/16/2010 - 11:32 | Link to Comment RockyRacoon
RockyRacoon's picture

That's what they're hoping for. A large storm cloud but no rain, no lightning. The average person will say, "Great, they're all guilty just as we thought." Then the cloud passes and GS goes back to business as usual. The sun rises and all is well with the world. Why do you think this came out on Friday?

Fri, 04/16/2010 - 12:31 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Exactly.

Just as Obama was billed as "change you can believe in" this lawsuit will be trumpeted as "change you can believe in". The sad part is that the average Joe (and I suspect some ZH family members) has been so starved for justice that any bloody body thrown to the lions in the coliseum will be deemed a "good start" and the pressure valve will be released.

WE ARE BEING PLAYED AGAIN FOLKS. Keep your focus on the prize, not on the smoke and mirrors on display today. Don't let up and "hope" things have turned. They have not.

Fri, 04/16/2010 - 22:51 | Link to Comment Howard_Beale
Howard_Beale's picture

I totally disagree CD. And Bob Dylan supports me on this, because the times, they are a changing. Mark my words. This is the beginning of something big and no printing press in the world will fix it. It's going to snowball as big as an Iceland Volcano--just might take a little longer.

Sat, 04/17/2010 - 10:32 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

HB

I was simply trying to say that this lawsuit in and of itself will go nowhere if people relax and wait for the system to "change" by itself. The SEC, if it really is serious about prosecuting fraud, must have the popular support of the masses in order to move forward. If most people now go back to sleep assuming the cops are coming, the political will to follow through on this lawsuit will evaporate. This is why I ended my comment by saying everyone must not relax.

Sun, 04/18/2010 - 16:13 | Link to Comment Problem Is
Problem Is's picture

I agree with CD.
This has all the potential of Kabuli theater and guess who the bitches are?

If we get another SEC v BofA, $33 million fine and no admission of wrong doing then guess what?

We been had...

If the SEC blows this case...
Civil fraud charges are likely done for Wall Street let alone any criminal fraud.

As I Said in a Previous Post:
Worst of all, betting on the SEC to win is like betting on the Skipper and Gilligan to get that coconut powered radio working...

Fri, 04/16/2010 - 23:47 | Link to Comment Clinteastwood
Clinteastwood's picture

I think something else is going on, and it's much more cynical.  GS and Paulson knew that Congress and Bush had no idea about finance, that the Community Reinvestment Act was the worst piece of legislation to come down since the Great Depression.  All those nincompoops owing a mortgage.......???????? you gotta be kiddin' me. How else you gonna get the word to those Barney Frank Chris Dodd nitwits in Congress drunk half the time that:

 

You can't have 50% of the people on the dole just so you can get votes.  You can't have an sustainable economy that returns interest at greater than 3-5%.  You can't buy votes by creating money outta thin air.

 

So...............if you want to bring some reality into the system, what do you do?  

 

You take all their money.

 

You know the system is unsustainable, so you intentionally set up multiple (not just this measley SEC example, multiple, many times over) CDOs that are DOOMED............. and you buy the CDSs that will make you rich when the whole thing goes to hell in a handbasket.

 

There's nothing to see here, investors should know the risks.  If they don't, tough.  If the SEC doesn't like it, tough.....Goldman Sachs is too big to fail.

 

But look at this:  What's the net result?  GS may have accomplished it's purpose.  No longer are there unsustainable home mortgage loans (you gotta admit, that's a thing of the past).  No longer are there a bunch of nitwits out there creating a bunch of mortgages that cannot be repaid.  No longer are there mortgage backed securities to defraud investors.  No longer are there unsustainable stock prices because of cheap second mortgages.

 

What this country has needed is a wake-up call from cheap credit.  GS has done its part by creating the catastrophe.   Long live GS.  After all, that's what capitalism is all about, right?  Boom and bust.  Caveat emptor.  Come on Zerohedgers........it's high time the baby boomers weren't babies anymore.

Sat, 04/17/2010 - 08:01 | Link to Comment cossack55
cossack55's picture

So then, Can we count on the CFTC indicting all owners of physical PMs as counterrevolutionaries or would that come form the JD or DHS?

Sat, 04/17/2010 - 09:57 | Link to Comment ToNYC
ToNYC's picture

Not this time. Death by a thousand pricks...still the best way to draw blood and bust a balloon. Lloyd Blankfein meets Michael Milken.

Fri, 04/16/2010 - 12:13 | Link to Comment Won_Over
Won_Over's picture

I'm with you. Happy for now, while at the same time I know its a joke until someone sees jail for minimum 10 years.

Fri, 04/16/2010 - 10:50 | Link to Comment thewhigs
thewhigs's picture

Don't worry, the meltup will continue unabated...

Fri, 04/16/2010 - 10:50 | Link to Comment percolator
percolator's picture

Whoop de do!  GS will get a small fine without admitting wrong doing.

Fri, 04/16/2010 - 10:50 | Link to Comment Hugh Janus
Hugh Janus's picture

news should be positive for the market, next stop 36,000.

Fri, 04/16/2010 - 22:53 | Link to Comment Howard_Beale
Howard_Beale's picture

Right, green shoots and Dow 36000....so last week.

Sat, 04/17/2010 - 13:45 | Link to Comment ToNYC
ToNYC's picture

pardon duplicate

Sat, 04/17/2010 - 13:47 | Link to Comment ToNYC
ToNYC's picture

Dow 36000..no worries. Keep your eyes closed again, and do 3:1 reverse split of the Dow. "Numbers on paper"...mose allison's finest.

Fri, 04/16/2010 - 10:51 | Link to Comment Advocatus
Advocatus's picture

Lol, it's true. Look at NYT.

Fri, 04/16/2010 - 10:51 | Link to Comment Ragnarok
Ragnarok's picture

Purely political, WH needs a victory and congress wants to pass the financial"reform" bill.  WH thinks Americans (anyone not on the far left) will rally around this cause.  It's an election year don't cha know.

Fri, 04/16/2010 - 11:03 | Link to Comment Carl Spackler
Carl Spackler's picture

Winner, winner...chicken dinner!

Fri, 04/16/2010 - 11:08 | Link to Comment IE
IE's picture

That's what I'm thinking too. 

I wonder how much damage GS would consider doing to the market "in protest"?  How much *could* they do, if they didn't have cooperation from JPM et al?

Fri, 04/16/2010 - 11:14 | Link to Comment Ragnarok
Ragnarok's picture

1. Scores political points

2. Gets the rest of the PDs in line

3. Ensures sucessful bond auctions

 

One problem though is that public confidence is tied to equties, you wouldn't want to crash those before an election. I thought they would wait until after the election, I think the WH is in a gambling mood.

Fri, 04/16/2010 - 11:35 | Link to Comment IE
IE's picture

They're kind of stuck, right?  Need to pass Fin reform & feed the angry mob before the election. 

My guess is they'll allow the market to tank *a bit* if necessary to get these things done... and then announce QE2.0 in a few months to float things again.  They're going to need to prop up housing more anyway - so they might as well get something out of it (the 3 things you mentioned).

Fri, 04/16/2010 - 11:22 | Link to Comment Tethys
Tethys's picture

I would guess GS was given warning of when the announcement would be made and an opportunity to short their own stock (down 10% so far today).  The media will hype this as and administration victory and to appease the masses, GS will profit on their shorts and use the proceeds to pay the fines, no one will go to jail.

There is no way the administration would truly go after such a high-level contributer without forewarning.

http://www.opensecrets.org/parties/contrib.php?cycle=2008&cmte=DNC

 

Fri, 04/16/2010 - 12:35 | Link to Comment holdinmyown
holdinmyown's picture

+1

Fri, 04/16/2010 - 12:42 | Link to Comment tip e. canoe
tip e. canoe's picture

now that's thinking like a Rahm.

Fri, 04/16/2010 - 15:50 | Link to Comment WaterWings
WaterWings's picture

Heh. Oh, and for the RNC, hedging?

Goldman Sachs
$221,115

JP Morgan Chase & Co contributed to both as well! LOL! More to the Repubs. LOL!

LOL!

We're so freaking dooOOoomed!

 

Fri, 04/16/2010 - 10:53 | Link to Comment Justin Credible
Justin Credible's picture

GS lawyers will *crush* anything the SEC can bring.

GS will pay a small 'handslap' fee and all will be forgotten

by dow 15K during June.

I just hope the ZH servers will be able to handle the traffic spike after this news release.

Fri, 04/16/2010 - 11:02 | Link to Comment IE
IE's picture

GS lawyers will *crush* anything the SEC can bring.

GS will pay a small 'handslap' fee and all will be forgotten

Not if the administration needs a very big sacrifice to the political gods. 

Fri, 04/16/2010 - 11:10 | Link to Comment Ragnarok
Ragnarok's picture

+1

Do NOT follow this link or you will be banned from the site!