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Vote To Prosecute Goldman Was Split 3-2 Along Party Lines

Tyler Durden's picture




 

It appears the Democrats at the SEC were hell bent on going after Goldman, even as the Republicans votes against action, in a close 3-2 vote. Some say this is the reason for the most recent surge in the market. As this event has already passed and at this point it will either be settlement (which Goldman has made clear it does not care about) or an actual jury trial, how this disclosure is in any way relevant to move the market is once again beyond us.

As Bloomberg reports:

he U.S. Securities and Exchange Commission split 3-2 along party lines to approve an enforcement case against Goldman Sachs Group Inc., according to two people with knowledge of the vote.

SEC Chairman Mary Schapiro sided with Democrats Luis Aguilar and Elisse Walter to approve the case, said the people, who declined to be identified because the vote wasn’t public. Republican commissioners Kathleen Casey and Troy Paredes voted against suing, the person said.

The SEC on April 16 accused Goldman Sachs, the most profitable company in Wall Street history, of creating and selling collateralized debt obligations in 2007 tied to subprime mortgages without disclosing that hedge fund Paulson & Co. helped pick the underlying securities. Goldman Sachs also didn’t disclose to investors that Paulson was betting against the securities, the SEC said.

 

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Mon, 04/19/2010 - 15:01 | 308377 HarryWanger
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Goldman came roaring back from its lows. Positive on the day. That coupled with Britain lifting the flight ban has sparked the markets. 

Mon, 04/19/2010 - 19:06 | 308605 Tart
Tart's picture

Hairy Wanker strikes again! Junked x's 15 scumbag. Take dat crap back to Market Watch before we kick that smile in.

 

Mon, 04/19/2010 - 15:02 | 308381 Orly
Orly's picture

I do wish these people would stop callig themselves Republicans.  I stopped calling myself that a couple of years ago.

God, this is embarrassing beyond belief!

Mon, 04/19/2010 - 15:32 | 308429 fsudirectory
fsudirectory's picture

It doesn't matter what you or they call themselves if the same group of people perform the same actions.

Could call yourselves SuperTeaPartyicans, but, if you don't support dismantling or restricting bank actions, its the same shit.

Mon, 04/19/2010 - 15:50 | 308472 Missing_Link
Missing_Link's picture

God, this is embarrassing beyond belief!

Amen to that.  I don't see how anyone can oppose this lawsuit and still call himself a Republican.

Mon, 04/19/2010 - 16:01 | 308498 RonnieHonduras
RonnieHonduras's picture

Time to burn your team jersey and cease being a homer. Both teams are criminal.   Get over it.

Mon, 04/19/2010 - 16:28 | 308563 Orly
Orly's picture

Cool thing was I got my ZeroHedge hat in the mail the same day Goldman got sued. That was nifty.

Looks good, too.  You should all get one.

Mon, 04/19/2010 - 16:31 | 308570 Alienated Serf
Alienated Serf's picture

I don't know man, GS/Citi goons might rough me up on the street.

Mon, 04/19/2010 - 15:09 | 308389 rubearish10
rubearish10's picture

Case must be pretty weak if this BS can move things so much. How does one prosecute bearishness if just a few words or counter remarks can just make a case go away?  It's been this way the entire rally since 3/09. 

Mon, 04/19/2010 - 15:19 | 308411 brooklynlou
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The BS ain't moving the market. All the financials were slowly moved up from 2:00 to 3:00 on light volume. This isn't how a normal market behaves.

Mon, 04/19/2010 - 15:27 | 308421 rubearish10
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It hasn't been normal for quite some time. You must go along, hold your nose or just watch.

Mon, 04/19/2010 - 15:39 | 308443 Alienated Serf
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i'm sittin on the sidelines watching in disgust

Mon, 04/19/2010 - 15:48 | 308465 rubearish10
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Just hope to be a significantly "short ready" when the time comes. 

Mon, 04/19/2010 - 16:07 | 308514 Cursive
Cursive's picture

This isn't how a normal market behaves.

Who loves ya baby?  LOL.  I know, but the lesson for the lemmings over the last 13 months has been just the opposite.  Imagine when the bagholders press on their dispenser for more food and nothing comes out?

Tue, 04/20/2010 - 00:59 | 309013 tomdub_1024
tomdub_1024's picture

" Imagine when the bagholders press on their dispenser for more food and nothing comes out?"

That there is just funny...thanks! That is my new email sig tomorow....:)

Mon, 04/19/2010 - 17:06 | 308622 kennard
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The SEC's case is weak for 10(b)(5): an exempt transaction with an accredited investor. Now we know that this weak case is political as well. The two (-2-) free market proponents voted to save the hides of all those Democrat contributers who populate Goldman Sachs. If that's not standing on principle, I don't know what is.

Mon, 04/19/2010 - 15:10 | 308393 Alienated Serf
Alienated Serf's picture

ooh, nice move by the dems.  great spin into the "reform" bill vote.  "Repubs voted for goldman!!"  so a little bit of a clue on the timing.

Mon, 04/19/2010 - 15:17 | 308406 SWRichmond
SWRichmond's picture

Yep.  The problem is, now we're gonna get dem-style "reform" and "regulation", which I fear means takeover and not transparancy.

Mon, 04/19/2010 - 15:26 | 308418 Alienated Serf
Alienated Serf's picture

its already taken over! 

Mon, 04/19/2010 - 15:27 | 308420 pan-the-ist
pan-the-ist's picture

Is this based on recent history?  Are you suggesting the healthcare bill, for example, was a takeover? Hardly.  This will result in lip service and harsh words and no reform.  I think you need to get with the times.  We have coke and pepsi leading the country and they are both socialist.

Mon, 04/19/2010 - 15:49 | 308468 Alienated Serf
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or fascist, or corporatist or anything that ends up favoring top 1%, the people on welfare and totally fux middle class and small biz.  peronists?

Mon, 04/19/2010 - 16:24 | 308555 BobPaulson
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Which actually means "not socialist", since most self-proclaimed socialists aren't socialist. Ditto communists.

Mon, 04/19/2010 - 16:30 | 308567 Orly
Orly's picture

I think we should start throwing around the dreaded word, "Nazi," as and end-game metaphor.  If everyone is using that word, more and more people are sure to ask why.

Mon, 04/19/2010 - 16:33 | 308575 Alienated Serf
Alienated Serf's picture

Ha, National Socialism isn;t too far off rom what we have now, but the word Nazi is too charged, I'm all for callign them National Socialists though.

Mon, 04/19/2010 - 17:07 | 308627 Orly
Orly's picture

The point being, we need a "charged" word to get the plebes, noobs and morts aboard.  When they find out their government is nazi, they won't be too happy about it.

Mon, 04/19/2010 - 15:59 | 308488 perchprism
perchprism's picture

Google "Goldman SEC" and the second paid for link is to www.BarackObama.com with the tag line "It's Time for Financial Reform that Protects Main Street. Act Now!"  I think there is little chance that the government/SEC actions against Goldman Sachs were politically motivated and/or timed to coincide with Obama's Reform.

Mon, 04/19/2010 - 16:03 | 308503 RonnieHonduras
RonnieHonduras's picture

More favoritism and mal-regulation that kills free markets, in both financial and health sectors.

Mon, 04/19/2010 - 15:15 | 308400 Aknownymouse
Aknownymouse's picture

I think Obama should return the million $ he received from GS.  When will he do that? 

Mon, 04/19/2010 - 15:15 | 308402 rubearish10
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3 to 2 is still a pass to prosecute right? So, what makes this any less likely  enforceable regardless of timing theory. It's still a case and must have merit given the fragility of the SEC reputation etc.....

Mon, 04/19/2010 - 15:27 | 308419 Alienated Serf
Alienated Serf's picture

no effect at all on the proceeding.  just good political move by the dems.

Mon, 04/19/2010 - 15:16 | 308404 LongShortSally
LongShortSally's picture

Can't anyone vote objectively?  Does everything have to be a political game?  Sigh.

Mon, 04/19/2010 - 15:17 | 308405 anony
anony's picture

This was just a boob tube trailer for Lord Blankfein's selection as the next, "Undercover Boss", CEO. He and Dickie Fuld were among the finalists. 

The Semi-finalists included Ken Lewis, Stan O'neal, and John Mack.

Lord Blankfein will now work in various departments of GS among the shredder staff, the Burundi traders desk and the international bonus committee to see how things are really done at the firm and to hear employees' gripes about the switch to single ply toilet paper, Quarterly bonus payments instead of hourly ones, and finding the culprit who continually sabotages the toitie roll, from 'top over' to 'bottom under' positions.   

He has stated he will not appear unless he personally picks the sponsors for this episode to include, Digital Equipment Corporation, Polaroid Corporation, Florsheim Shoes Corporation and The Enron Company. These firms have all hired Goldamn Sucks for their financial advice.

The medium is the message. 

Mon, 04/19/2010 - 15:18 | 308407 HEHEHE
HEHEHE's picture

It doesn't matter who was for it or against it as they've filed the complaint.  Anybody who thinks this does anything to the case is nuts.  Its not even admissable at trial. 

Mon, 04/19/2010 - 15:19 | 308408 Pladizow
Pladizow's picture

This recent hoo-raa with Goldman and the SEC is likely not much more than classic problem, reaction, solution.

The Gov trying to pass new regulatory reform and put more control in the hands of the FED.

I dont think timing is a coincidence and I'm sure Goldman okayed the tempoary heat to put more long term control of the market in the hands of their buddies - the FED.

Mon, 04/19/2010 - 15:21 | 308414 buzzsaw99
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The market just called BS on the SEC.

Mon, 04/19/2010 - 15:27 | 308423 HarryWanger
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They sure did! I think had C earnings and LEI been worse, the market would have been flat but C beat and LEI were much stronger than anticipated. It all came together to take the focus off GS and back onto the economy.

Mon, 04/19/2010 - 15:31 | 308428 Aknownymouse
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too bad all the banks so far have been making their money trading though ... I mean take off the prop trading and watch their earnings plumet... how sustaianle is this?  I call smoke & mirror in the markets.

Mon, 04/19/2010 - 15:37 | 308439 HarryWanger
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Could be smoke and mirrors but it continues to go up. At some point, as the cycle gains strength, the banks will be showing stronger lending. It's the cycle the Fed set out to achieve with QE. If that takes hold, as I think is happening, the banks become stronger.

Mon, 04/19/2010 - 16:37 | 308582 Cynical Esquire
Cynical Esquire's picture

i love this site but sometimes the analysis is very topline and devoid of any acknowledgment of the suffering and carnage that is taking place all across this country as a result of the scam that is the "markets". we sit talking about miniscule moves in numbers on a tote board (GDP, NYSE, S&P, NAZ ad nauseum) as if they are real and meaningful to the average person in this country.

Things are brutal for tens of milions of americans who but for gubmint handouts would be starving to death right now. millions have ZERO hope of ANY gainful employment at a living wage. millions are days away from being homeless and losing all their wordly possessions.

all levels of government are insolvent and we "cheer" when a US based multi-national company blows out thousands of US workers in order to boost "profitability" as its' shareprice rises a couple of percent. we cheer when some alleged US based company beats "expectations" by selling product it made in ANOTHER country to cash strapped governments and households here in America.

i am personally doing okay at this moment but i am painfully aware of how fragile my success and stability is in reality. we talk here about the efficacy of made up numbers and percentages that signify NOTHING. the average hump in this country is nothing but a serf with some creature comforts. he has NO net worth and is likely awash in debt. he has minimal job security and lives in a system that guarantees inflation. he will likely work his WHOLE life with almost NOTHING to bequeath to his heirs and loved ones. what economic growth are we talking about here? for whom? for the benefit of whom? do people on this site talk to actual working stiffs? people are still being blown out or furloughed or are taking pay cuts or freezes if they are "lucky" to still be employed. what does it say when most WalMart employees are eligible for FOOD STAMPS because they are paid so little to work there?!! what dies it say when 40 million americans need food stamps to simply feed themselves on a regular basis? again, economic growth and recovery for whom exactly...

Mon, 04/19/2010 - 16:51 | 308607 Alienated Serf
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Umm, I think people on this site would like to see the corruption stop and things to be more fair for the "working stiff" or any other American. 

I don't know why you think no one cares here; personally I was unemployed for 6 weeks, got basically the same exact job back, paying 33% less, way less benefits and perks and twice the hours.  So I get it.  I'm going backwards, not fwds.

 

Mon, 04/19/2010 - 21:40 | 308889 Hulk
Hulk's picture

You pretty much pegged it, except the site does recognize the suffering and carnage. Not quite sure how you missed that....

Mon, 04/19/2010 - 15:29 | 308424 Lux Fiat
Lux Fiat's picture

That might be the case.  Part of me wonders if some folks just have the attention span of a gnat, and just happened to have their head down when the huge pendulum whooshed overhead, inches from their neck.  Now they have raised their heads going "What was that?".  Will their heads be up or down when the pendulum swings back through?

Mon, 04/19/2010 - 15:25 | 308417 Tart
Tart's picture

Just another something that moves the market 100 points higher that doesn't have any bearing or weight.

Mon, 04/19/2010 - 15:27 | 308422 -1Delta
-1Delta's picture

Vomiting now....

Mon, 04/19/2010 - 15:30 | 308426 Alienated Serf
Alienated Serf's picture

some gold sent to me by a friend.  Hypocrisy, bitchez!

In October 1993, Schapiro gave a speech in Lugano, Switzerland, "The Derivatives Revolution and the World Financial System," concerning potential regulation of the unregulated derivatives market in which she cited "the benefits to financial innovation that may result from a more flexible regulatory paradigm," and stated that she was "not convinced that consolidated regulatory supervision of securities firms and their affiliates is necessary or appropriate at this time."[

Mon, 04/19/2010 - 15:34 | 308431 fsudirectory
fsudirectory's picture

Well, seems as if its the appropriate time now!

Mon, 04/19/2010 - 15:37 | 308438 ZakuKommander
ZakuKommander's picture

Mary MUST be a hypocrite, of course, because nothing that's happened in the last 17 years would give anyone any cause to reevaluate their views.  

Mon, 04/19/2010 - 15:44 | 308455 Alienated Serf
Alienated Serf's picture

ok ok, it was a cheap shot.  i personally think this was a brilliant political move.  bill clinton is refuting summers/rubin now as well, its all well coordinated. 

Mon, 04/19/2010 - 15:58 | 308487 ZakuKommander
ZakuKommander's picture

Do you mean that the Dem vote for the civil suit was morally unjustified but brilliant as a poitical move, and that the Repubs voting against were the erstwhile guardians of public virtue, sacrificing political capital to support good and true principles?  How exactly do you perceive the Republican vote from either a practical or moral -- or any -- standard?

Mon, 04/19/2010 - 16:25 | 308557 Alienated Serf
Alienated Serf's picture

ok, first off, both parties disgust me equally, and i do not identify with either, nor am i registered with one.  I see the vote as "morally justified," but more importantly, legally justified.  That does not mean it can not be a brilliant political move.  I would view the Repubs vote as a continuation of what has been going for years... "free market" or look the other way until they go bankrupt and then give the banks a trillion dollars.

Mon, 04/19/2010 - 16:52 | 308608 spekulatn
spekulatn's picture

bill clinton is refuting summers/rubin now as well, its all well coordinated. 


"One of the most effective things we did was to reform the regulations governing financial institutions under the 1977 Community Reinvestment act. The law required federally insured lenders to make an extra effort to give loans to low and modest income borrowers ... After the changes we made between 1993-2000, banks would offer more than $800 billion in [loans] to borrowers covered by the law. A staggering figure that amounted to well over 90% all loans made in the 23 years of [the act]."

Bill Clinton,  My Life

 

 

Job well done! <Snark>

Mon, 04/19/2010 - 16:57 | 308616 Alienated Serf
Alienated Serf's picture

 and phil graham (and his skummy wife) were right there too. oh wait, i'm just being a whiny american, the fundamentals of the economy are strong. 

fu slick willy.  fu you larry summers, fu alan greenspan, fu mr. & mrs. grahm, fu benny boy. f u all!!#@!#@

Mon, 04/19/2010 - 17:46 | 308436 carbonmutant
carbonmutant's picture

Is GS harvesting the shorts?

Mon, 04/19/2010 - 15:43 | 308444 anynonmous
anynonmous's picture

The Dems have outfoxed the Repubs big time - We have Obama and his adminstration who are the darlings of Wall Street (much more than the Repubs)  on the eve of putting through a Dem sponsored pro-Wall Street financial reform bill, making the Repubs look like the bad guys - sheeer frigging  genius - as a commenter said above it will be Republicans the party of Goldman Sachs even though the opposite is true (actually they are both the party of GS)

Mon, 04/19/2010 - 16:10 | 308522 Cursive
Cursive's picture

Democrats always do everything with more conviction than Republicans.  All politicians are the same at heart.  Outwardly, politicians who tend to be comfortable with themselves are primarily Democrats; those who are uncomfortable and realize that they are *acting* for an audience tend to be Republicans.

Mon, 04/19/2010 - 18:40 | 308737 Frankie Carbone
Frankie Carbone's picture

Put down that marijuana cigarette. 

Mon, 04/19/2010 - 16:19 | 308541 jkruffin
jkruffin's picture

Gee lets see how the vote breaks down in reality, and is has nothing to do with whether there is doubt of guilt,  the facts are too strong and too much documentation to say GS is innocent,  the vote went the way it did for 2 reasons:

 

Democrats love big government, hate big business

Republicans love big business, especially big bankers, hate big government

 

That sums up the entire process.  GS is guilty. JP Morgan guilty. Bend over America is guilty, Shittybank is guilty.

Mon, 04/19/2010 - 16:29 | 308566 Alienated Serf
Alienated Serf's picture

Do you think we could have ever ended up as bad as we are doing right now if there had  actually been truly independent oversight?  Political appointments are just where you put your hack contributors and look out for your buddies.  The facts don't matter.

Mon, 04/19/2010 - 16:39 | 308588 brooklynlou
brooklynlou's picture

Another way to look at this is the reason they disagreed on Party lines is that maybe Goldman was the weakest if the cases they could have brought up. The Dems get huge amounts of cash from wall st. So by bringing the weakest case first, GS takes a PR hit for the team, but once they get their wrist slapped, it creates a precedent and process for the other cases that will follow .

Mon, 04/19/2010 - 17:11 | 308633 M.B. Drapier
M.B. Drapier's picture

As this event has already passed and at this point it will either be settlement (which Goldman has made clear it does not care about) or an actual jury trial, how this disclosure is in any way relevant to move the market is once again beyond us.

Presumably it encourages the hope that if Goldman can drag out the litigation until a Republican takes the Presidency, then a new Republican majority in the SEC can be counted on to drop the case in time-honoured fashion.

Mon, 04/19/2010 - 17:20 | 308644 TooBearish
TooBearish's picture

Where are the other indictments against C, BAC, Wells, etc - if they were this close on GS perhaps this is it.....

Mon, 04/19/2010 - 17:34 | 308662 naiverealist
naiverealist's picture

Let me get this straight. . . . They have to vote to prosecute fraud? 

Can anybody else see anything wrong about this?

Mon, 04/19/2010 - 18:42 | 308740 Frankie Carbone
Frankie Carbone's picture

But the democrats did it with sincerity. 

Mon, 04/19/2010 - 17:52 | 308678 carbonmutant
carbonmutant's picture

 No doubt the GOP will be getting a little more financial support come November...

This of course will be coupled with the fact that the Supreme Court is going to allow GS to run their own political ads.

Mon, 04/19/2010 - 17:52 | 308679 Ripped Chunk
Ripped Chunk's picture

This finding, if true, illustrates how totally fucked we are and will continue to be until we have a viable third party in this country.

Let's do it through political process, ok??  The alternative is not fun to think about.

 

Mon, 04/19/2010 - 18:23 | 308714 Poofter Priest
Poofter Priest's picture

As much as we would like to see this be a watershed moment, it will not be so.

 

The change that will come from this will be of the 'just enough' variety.

Things will be changed 'just enough' to deal with the immediate issue. And probably something else favorable to the banks will be added in while the other loopholes are closed.

Much like what will happen with the metals market.

 

Get use to it.

 

Sorry.

Mon, 04/19/2010 - 19:21 | 308792 wallstreetnobody
wallstreetnobody's picture

We've all read the complaint, and it has been pretty much unanimous amongst posters here on ZH and elsewhere that there is a good case against Goldman and that they did engage in fraud.  So how would voting IN FAVOR of charging them for fraud be politicizing the issue?  If you believe the case is valid, then only voting AGAINST charging Goldman would be politicizing the issue.  The Repubs voted AGAINST going after Goldman for a pretty obvious reason - they don't want any reform on Wall Street and on top of that why make the SEC look good now after it proved to be a complete failure under Republican Christopher Cox who literally wanted to dismantle it in favor of Wall Street "self-regulating" itself.

Mon, 04/19/2010 - 19:36 | 308804 caconhma
caconhma's picture

Republican party is intellectually bankrupt. This is all.

As for the majority of American people, they are just stupid fools who, after all, trust to their politicians and their promises.

Mon, 04/19/2010 - 23:10 | 308954 the grateful un...
the grateful unemployed's picture

wait a minute, Goldman gave twice as much money to Obama as they gave McCain. What did they get for that money? Obviously they didn't buy the White House, but maybe they have a lease, and the lease is about to run out? Now with the midterm elections coming up, the question the party in power has raised, is what have you done for me lately? You gave Meg Whitman a lot of money to run for governor of CA (as a gosh darn (Arnolds 3rd term) Republican), she's on TV ten times an hour. I know its so tough to figure out who is going to win the election, will the dirty sell outs sell you out?? hahaha. 

In the end the Goldman payola will be exposed, but so what? the music goes on.. Now Obama owns you. Sweet.

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