 |
         
|
All three newscasts did their level best on Friday to explain the Securities & Exchange Commission's lawsuit against Goldman Sachs.
ABC's Bill Weir tried an automotive analogy. "Imagine that instead of investment vehicles, Goldman sold actual vehicles--like a big car lot. Now imagine they let a mechanic named John Paulson install faulty brakes in a few of those cars so he could take out insurance on the doomed vehicles and get rich when they crashed. Though Paulson's hedge fund made over $1bn betting against mortgage securities he allegedly helped design, he is not accused of any wrongdoing. Instead, the government is suing Goldman for misleading the pension funds and other investors who lost that bet so the bank could make $15m on transaction fees."
CBS' Anthony Mason picked on a flamboyant internal e-mail at the investment bank to dramatize the SEC case that Goldman Sachs knew its Abacus investment was a loser: "The whole building is about to collapse any time now. Only potential survivor, the Fabulous Fab." The e-mail's author was bank vice-president Fabrice Tourre and he was referring to his fabulous self.
NBC's Lisa Myers paraphrased the allegations thus: "Goldman Sachs was pulling together a bucket of subprime mortgages to sell to investors. It allowed the hedge fund to pick the worst mortgages to go into the bucket, which means the investment was likely to fail. Goldman Sachs then helped the hedge fund bet against the bucket. Goldman Sachs then labeled the bucket a good investment and sold the supposedly good investment to others, telling them the hedge fund also had invested. But Goldman Sachs did not tell other investors that the hedge fund helped pick the worst mortgages and was actually betting against the bucket. When the bucket failed, investors lost more than $1bn."
Now, after a weekend of damage control, ABC's David Muir reported on Goldman Sachs' response: "We believe that the firm's actions were entirely appropriate and will take all steps necessary to defend the firm." He quoted the bankers' belief that "Goldman is being made a scapegoat for the kind of product that was pushed by many of the big investment banks" and gave Goldman credit for "long, powerful tentacles" to defend itself.
CBS' Armen Keteyian had given us a heads-up on Goldman Sachs' political clout in his Investigation earlier this month. "To understand Goldman's outsized influence, take a look at the powerful jobs held by current and former employees. Three former Treasury Secretaries; two presidents and one chairman of the Federal Reserve Bank of New York; a White House Chief of Staff; the president of the World Bank; the former chairman of Wall Street's law enforcement arm in the Securities & Exchange Commission; the head of the New York Stock Exchange and the Banks of Canada and Italy; and even a Prime Minister of Italy...Goldman employs an army of lobbyists in Washington, 46 in all from 13 different firms, more than Bank of America and Morgan Stanley combined. Goldman employees also made campaign contributions to more than half of the members of the last Congress.
You must be logged in to this website to leave a comment. Please click here to log in so you can participate in the discussion.
