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GS, the SEC and Timing
It is possible that the SEC investigation into the bad acts of Goldman
Sachs evolved over a period of time and the decision to announces formal
charges just happened to take place on Friday. I doubt that very much.
A few thoughts:
-This investigation has been ongoing for a long time. At some point we
will know when it was initiated and when Goldie became aware of it.
Reuters has a report quoting an unnamed source that the Wells Notice
relating to the SEC inquiry was delivered six months ago. My own
instincts on this are that is was even longer than that. This could
easily have been going on for a year.
-Mary Schapiro (head of SEC) does not go to the bathroom without first
checking with Rahm Emanuel. To say that this is a high profile case is a
silly understatement. This is THE case of the century. The decision to
go forward with a public complaint last Friday was done with the
President’s knowledge and approval.
-Everyone in D.C. has been pointing to the financial markets as a
measure of the “success” of their policies. They point to DOW 11,000,
they point to narrowing credit spreads, and they look at wealth creation
as the “report card” which validates their actions. I don’t believe
these folks are stupid at all. They knew full well that the initial
reaction of the markets would be very broadly negative. They must have
considered that the SEC action could have lasting consequences to the
capital markets. They knew that they had spent a kings ransom to bring
the banks back to life, they must also know that this step could have
the effect of undermining all of that.
Given the foregoing I have to assume that at some point the SEC sat down
with Blankfein and said, “Do you want to pay a big fine, not admit
any guilt and agree to be good boys in the future?” Again a guess:
If on Friday the announcement had been that GS had agreed to a $3b fine
and the case was closed GS’s stock would have risen and the broad market
would not be worrying about how sloppy things are going to be in the
next few weeks. I think Blankfein would have written a very big check to
avoid the headlines we are seeing today.
So for me a central question is, “Why last Friday?” Possibly we
will never know the answer to that. But I have my own suspicions. This
step was made at this time to influence the outcome of the financial
regulation that is now being discussed and drafted. What better reason
to implement big reforms than a big splashy case in the papers that all
but proves that our big banks are crooks and they need to be regulated
into oblivion.
So far this weekend I have received three mass email messages from the
President. None have connected the dots directly to the SEC case with
Goldman. But the hints are obvious:
bruce --
It has now been well over a year since the near collapse of our entire
financial system that cost the nation more than 8 million jobs. But the
flaws in our financial system that led to this crisis remain
unresolved.
Wall Street titans still recklessly speculate with borrowed money.We cannot delay action any longer. It is time to hold the big banks
accountable. Arm-twisting lobbyists are already storming Capitol Hill,
seeking to undermine the strong bipartisan foundation of reform with
loopholes and exemptions for the most egregious abusers of consumers.
It's a fight worth having, and it is a fight we can win -- if we
stand up and speak out together. So far, all 41 Republican senators have
signed a letter opposing reform -- but there is still time for
individual senators to do the right thing.Thank you,
President Barack Obama
Millions of these emails have gone out in the last 24 hours. I can
imagine that a lot of people who get this message are saying to
themselves this morning, “The President is right! The SOB’s at GS are
a bunch of crooks, we should shutter the bastards!”
At some point we will know what motivated the SEC to move last Friday.
Should it be determined that the timing was driven to influence the
outcome of pending legislation it will be a very sad day for America.
George Bush used fear to get us into a war. Obama seems to be
orchestrating “fear of financials” to achieve his objectives. Bush’s war
has proved to be a disaster; I doubt that the effort to rein in the
financials will have a better outcome.
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I stopped voting for major party candidates a long time ago.
i stopped voting a long time ago
+1000
I think you are exactly right and that for the sake of a small political victory a great risk is being run.
GS + JPM = the bad bank that will soon vaporize - along with all the problems (or so is the plan, hope, dream, fantasy ...)
The people at the very top know what's happening. But they can't tell their people. Sort of like The ULTRA machine developed by British intelligence during WWII. They couldn't protect the people of Coventry.
Had a similar question on my mind. However I think the major motives are treasury auctions and inability to do anything about high unemployment. In addition an attempt to pass a "financial reform" hence the need for GS to reduce their lobbying efforts , might be part of the equation as well.
Not just friday. Options expiration friday.
I know...that was the kicker. Expiration Friday. I'm still sick over having missed the pop on the 165 April puts. Went from .02 to $10 in minutes...that's a gain of 49,900% in a matter of minutes. How often do you get a chance to see 2K turn into 1 mil in a few minutes?
I gotta puke now.
Unbelievably sorry for you
Just think if you were on the other side, and to save a few bucks on commissions, you decide not to close them out but let them expire worthless at the close. Ouch!!