It's on!!! Senate hearing happening right now...
The hearing is getting under way.
Blankfein is expected to be humble but to defend his actions.
Levin is speaking as I write.
Feel free to share your thoughts as they come.
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http://www.c-span.org/Watch/C-SPAN3_wm.aspx
for anyone interested to watch how boring congress is.
I expect that this is not going to go well for Goldman. GS might be a king on wall street, but this is school yard politics, and these guys are pros. I think the Senate is going to rake these guys over the coals for their own political gain. Remember this is an election year, and everything is political.
boring? huh? sarcasm or for real?
Levin's going on and on about the fact that the firm made money by shorting the mortgage market, while also selling MBS to clients. Correct me if I am wrong, but wouldn't these shorts be made by a prop desk or a trading desk whereas the origination of products are done by a banking/securitized products group. If so, are these groups even allowed to communicate.
To me this is somewhat the antithesis of the Research/Banking issue. Back then, congress wanted (and got, I believe) a "Chinese Wall" between research and banking. Now, isn't Levin arguing for the opposite.
Oh and the woman who just came on is ridiculous... her voice is annoying, her message is tainted, and she is butt ugly.
KevinCashMoney,
Remember, this is not about law or legislation, this is about politics.
Haha good point.
Senator Collins voice is soooo annoying "Darkest Corners of the financial world" -cmon, this isn't a poen.
Do you see the size of those binders lol? It's like the book of transgressions after you die.
Holy s***... this is ownage right here.
Short GS right now.
Rare chance to see MD's squirming.
Haha what did you expect a kumbaya?
for those interested: gs was as high as ~156 earlier this morning (half hour ago)
now it's ~152.3
"boy that timber wolf was one shitty deal!!!"
would this be recorded somewhere? hard to watch it now
dan sparks looks confused as fuck!!!
Levin's is taking everything out of context. He's on a mad power trip. So funny to see the MD eat it up though - no doubt very far from the treatment he was accustomed to on the Street.
Someone put a bag over that bitches head.
Wow Collin's voice is annoying.
The reputation of Goldman Sachs will go down the drain if enough people watch this...
Collins clearly does not understand the basic principles of market making
It's 2am here and I was planning to go to sleep but this is too entertaining. Will it be saved somewhere?
Serious question... does Collins have Parkinson's? Is it me or is she shaking
@2226416: aussie?
@2226416 and beatallica: the congressional hearing in jan with the bank ceos was transcribed, so i'm guessing this will be as well.
"timber wolf was one shitty deal" should be enshrined in history forever
Yeah I am an Aussie. Yourself?
Also, Birnbaum seems to be doing quite well. Definitely gave that lesbian some crack to put in her pipe.
Some of the questions are VERY b/s.
"Do you act in your client's best interests?" Collins doesnt understand what a market maker is...
Senator Collins might seriously have Parkinson's. Why does her voice quiver so much?
Why do all senators look like they need to be wearing adult diapers? Fucking octagenarians.
Also, how many of these senators have worked in high finance? Through their questioning, I'd assume the percentage is ~0%.
Whilst some of their questions are poignant, most are completely off-base. I guess it's hard to stay on-point when you're worried about the weather, your bridge club, and kids on your front lawn all at the same time.
Does anyone know when Blankfein get questioned?
gs is now down from yesterday's close it's less than 152
Kaufman is pretty sharp.
If anyone is going to fuckout it will be Swenson lol
I am a college freshman looking to go into I-banking so excuse me if I am clueless here, but isn't the main issue behind this debate about how a company like Goldman can't faithfully be both a sell-side firm as well as a market-maker? And if this is the case, shouldn't every trade Goldman makes currently be under investigation as being both a market-maker and being a sell-side firm are directly opposed to each other? It would be like a pawn shop trying to offer advice on what to buy within the shop but also trying to sell as much product as possible; you can't do both faithfully, you can only do one or the other. Now, I guess if currently relegations force these divisions to be completely separated from one another, then it may be possible for them to both act faithfully. But it appears from this hearing (which I realize is for political show) that the politicians are acting as if the sell-side part of the firm and market-making side of the firm have to somehow act together even though this would be impossible. Am I wrong in thinking this would be impossible, and that every sell-side and market-making firm would have to be investigated under the precedent the SEC has sent with this investigation of Goldman?
Look up the definition for a chinese firewall.
MaCaskill just got caught on incorrectly linking certain emails to Timberwolf deal... owned.
i love this line from an email fabrice sent to his girlfriend (from a cnn article):
"I managed to sell a few abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians adore synthetic abs cdo2," Tourre said.
this is more exciting than most live stuff on tv!!!
i'm about to log off, so i'll make a few observations
gs share price is up, now ~153.70
at this moment, the hearing has turned to one about ethics. not just the questions about whether the gs reps had a code of ethics. i mean, it strikes you when McCaskill asks about whether Paulson being there is 'weird' when the issue with the sec trial is whether they did anything ILLEGAL
i have to log out (and consequently stop watching the hearing)
i would just like to thank everyone who replied. i am especially heartened knowing that there people out there who are as interested as i am
i posted this topic almost as a social experiment, (and i know this is corny) to share my experience of watching something i really wanted to watch with people from the around the world i've never met :')
i really didn't know i could get so many replies in such a short amount of time
pls keeping 'em coming if you have something to say
Judging from the testimonies right now, I'd say it'd be hard to prove that Goldman is guilty of any LEGAL wrongdoing. They seem to be more or less insulated by their position as market-maker.
HOWEVER:
The problem is, as some of these internal memos and emails come out to public, I think we can all (those who are in finance and those who aren't) agree, that at the very least there was a severe deficiency of ethical guidance in some of these transactions. Essentially, as long as a quick buck was to be made... well, to hell with what's ethical or not.
Oh, and after today and for the near future at least, I don't think you'll hear anyone bragging about working at Goldman Sachs anymore.
what time does it end? what time lloyd's coming on? I need to log off for half hour, arrghh!
Levin is a total moron. The politicians don't even know what questions to ask, they do not understand anything.
In my opinion, Sparks didn't really answer why do you not disclose the desks position to clients correctly. The first thing that came to my mind was "because the clients and other participants will try to screw you!" Particularly in lower liquidity markets, when other market participants know how you are positioned, you can get completely run over.
http://www.hedgeweb.net/News-file-article-sid-909.html
"Peer Steinbrueck, former finance minister of Germany and a vocal proponent for tougher regulation of hedge funds, cannot explain what a hedge fund actually is or does."
"Peer Steinbrueck regularly attended G-7 meetings as head of the German delegation and met with colleagues and central bankers around the world. Tougher regulation of hedge funds was always high on his agenda."
despicable!!!
I don't understand the "raking over the coals" and "short GS stock" comments; you're fools. This is a mockery to anyone with any legitimate finance background. I firmly believe the one woman who talks like she is in the midst of having a stroke believes that GS = Charles Schwab. My favorite comment she made was something along the lines of "you don't earn big fees for providing liquidity / transaction closing capability." Once again, investment banking =/= investment advisor. Marketing a shitty transaction (half of Levin's initial comments) is not a crime and half the actual bankers on this forum including myself have participated in them in some function or another.
No I don't work at GS.
The SEC investigation and trial (if it ever even gets to that point) will be vastly more interesting than this political masturbation.
I can agree with this. I am actually thinking of going long of GS at this point. Ultimately it's based upon how serious one views these trials. My assumption is they will settle with the SEC and pay a hefty fine. GS was at 185 a week and a half ago. Now hovering at 150.
Levin is an idiot. This whole kangaroo court is a waste of tax payer money.
I think it's clear who are more qualified for their jobs from this hearing. Hint: It's not the Senators.
It's like listening to blind people talk about art
Dealbreaker is doing this great: http://dealbreaker.com/2010/04/live-blogging-the-goldman-flogging-there…
levin is the smallest idiot....in fact he grilled them good... its the others that dont get it... they still deserve to get grilled
Levin said that he though that investment bankers should only be able to bring risk-free investment vehicles to market. He doesn't get shit.
There are way to many people here posting about how the senators do not get or understand what they are talking about. That is not the point. The American public do not understand what happens on wall street either. This is political theater, it is about the public flogging, it is about creating the proper 30 second sound bite for the network news.
the GS guys are getting rolled up because they went down to the Capital and thought that they would be able to control the situation. This is a political house, not a bank. Being the smartest guy in the room does not count, it only matters if you are the craftiest.
You don't get it, B-School Bound, Goldman knew what they were walking into. They obviously weren't going to have many friends on the committee. Goldman's people have been on their game, though, and haven't really given anything that would improve the SEC's case. They made Levin, McCaskill, et al, look like clowns to any real investors who were watching, and prevented shareholder value from being damaged more than it already has been. There haven't been any smackdowns or quality soundbytes, just the Senators looking like clowns. Today was actually a winning day for Goldman's shareholders, maybe because of the wide belief that Goldman is strongly short European gov't bonds.
Goldman's people have all done very well, especially Tourre, given his position.
LOL Levin is looking like complete idiot arguing with Blankfein right now. He has no idea what he is talking about.
What is wrong with McCain? For real, one word a second?
These people run our country.
God help us.
Levin and McCain are blithering idiots
.....
Why do so many of you guys carry water for Goldman? They're fucking scum-bags, not all of them, probably not the M&A guys, but the mortgage guys and all their bosses all the way up to Blankfein who knowingly created shit, made the ratings agencies* give it a AAA rating, and pawned it off on investors are fucking scumbags.
What people don't get about all this is that EVERYTHING was driven by this demand. The WaMu's of the world were only making no doc loans because they knew that GS and others would buy them. And it's not that they didn't mind if the loans were shitty, they WANTED the loans to be shitty. The better to bet against.
Remember, it's easy to make a law against breaking into someone's house and taking their stuff. Because it's pretty clear that society wouldn't function too well if that were allowed. The reason this stuff isn't technically illegal is because there aren't enough hours in the day to come up with all the fucked up shit that GS and others might do to scam people. Just because there isn't an explicit law against it doesn't mean that it's A-fucking-OK. But looks like they did break some laws because they marketed and sold something to investors knowing full well it was shit. Not just risky, but pure shit.
Laws against making loans just to sell them will happen. Laws against cash settled CDS will happen. Laws against shorting your own products will happen. And they all should.
It's depressing that so many of you college kids are still sufficiently dazzled by Goldman's glitter not to realize that it was mostly a fucking scam. I guess you don't pay enough taxes yet to mind that they straight stole your money.
*not saying the ratings agencies are blameless, far from it, maybe even worse than goldman
I could be totally wrong about this so you can correct me, but weren't they forced to take the money?
Who was forced to take whose money?
When GS man Paulson bailed out AIG, all that money went straight to GS in the form of settling on the CDS. Were they forced to take that money?
Jhoratio do you get all of your financial industry viewpoints from Rolling Stone? The players in the big MBS machine have already got their comeuppance in the form of massive writedowns.
As for them all being scumbags, I take it you were 100% confident in 2006 that the whole system was going to collapse? As Blankfein himself said, if the firm was in agreement that the housing market was headed for a crash they'd have taken out all the shorts they possibly could. Anyone still banging on about the AIG "bailout-by-proxy" doesn't know what they're talking about.
Quite frankly for the SEC to finish off an 18 month investigation with a civil suit on behalf of institutional investors (whihc they couldn't even agree on) is embarrassing. The senate should have focused on the rights and wrongs of widespread mortgage-backed syndication and reckless lending (the real crime in the financial meltdown, and one facilitated by their own misguided actions) rather than the blathering on about the shorting of securities, which is a complete non-issue and which they clearly do not understand.
Fuck. When does Blankfein get a bathroom break? I've pissed twice since he's been on.
By the way, the Levin back and forth was atrocious. Levin simply didn't understand that his question was getting answered.
Also, I think McCain is still in the next room trying to figure out where he is, and what year it is.
I have a lot of respect for Josh Birnbaum. He was so calm under fire and he totally made the Senators look like tools. Plus, he looks like a hard mother fucker. That's baller gents.
damn straight!!! I too enjoyed the MM vs prop debate... my personal favorite, was the M to M of the AIG deal confusion...one idiot though the when the swap was unwound that it would all be considered as revenue...which it could if the swap was bullet, but the guy clearly said it was M to M
He was referring to TARP and yes, every bank was forced to take TARP. They made everyone take TARP because they feared there would be a run on certain banks if some took it and others did not.
jhoratio is right. some of you would suck off Goldman even if it killed your mother. Get off it
I loved Lloyd Blankfein's "Royal First-person" comment at the end.
I thought Levin was losing his mind for a second there when he kept going on and on with the "I said 'I' not 'we'" debate he had with himself outloud for about 3 minutes.
Ha yeah, that was a highlight. Also quite enjoyable was the awkward silence after Lloyd finally found page 55b in that hellish 3-ring binder.
Anyone know any sites with some good video clips? (politicians looking like idiots) lol
The whole thing is in CNBC's video section last I checked. It's the whole thing though, not highlights iirc.
Yeah some of the binder stuff was golden, especially when Blankfein couldn't find something, would stall, finally find it, and then he'd give that weird half squint look with his eyes, I can't explain it.
It was also really awkward every time Blankfein referred to Levin as "sir"
AfricanPropTrader,
I don't need inside industry knowledge to know that most of the structured mortgage business was willful bullshit. I don't know all the rules, and I don't know exactly what happened, but I do know that GS and the rest of them knew exactly what they were doing. You can go on carrying water and believing that the assholes who did this are blameless, but the reality is that they fucked us all. There's a lot of blame to go around and it will eventually get around to everyone (here's hoping the ratings agencies get the same level of scrutiny), but this week it's Goldman's turn.
By the way, #7 in global market share usually means you're pretty big. And no they weren't the biggest. Probably a major reason why they're still around! And since they're around, they get targeted. After all, you can't bring Lehman Bros. employees before Congress because Lehman Bros doesn't have any employees!
Basically, the main takeaway from all this is that cash settled CDS should be straight up illegal. In no other arena in America is it legal to insure a risk you don't bear. It's not allowed because of the moral hazard it creates. So it should be with CDS. If they didn't exist, then you simply couldn't have done about 95% of the bullshit that went on in the structured finance markets.
Do you even know why the CDS market was invented? Let me give you a simple analogy that will hopefully get your mind around it. If you are a creditor of a government with a non-marketable instrument, say Greece owes you money, say Greece has promised to fund your projects. You don't own a Greek bond. You can't market that IOU (no liquidity), but you have economic risk. Your project may be imperiled if Greece cannot fund it as promised. The only way you can hedge that off is through the CDS market.
So that's exactly why the CDS market was invented. Not just to hedge sovereign debt instruments, because you can simply sell those instruments if you're bearish! It's actually to hedge off non-marketable instrument risk.
CDS 101. Now shut your ignorant ass up.
I think Goldman won what you think ?
WIth people that stupid in positions of authority, I think we all lost.
HAHA Couldn't have said it any better myself.
mccain showed up late and made a total nipple of himself...
does anybody know much about this Birbaum guy? seems like a total baller. why did him and sparks leave GS years ago?
"Josh Birnbaum, one of the traders who led the push by Goldman Sachs into bets against subprime-mortgage bonds, has left the world's biggest securities firm and plans to form a $1bn hedge fund."
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2788346…
Watching from the start right now and so far the only Senator that seems to be able to ask somewhat reasonable questions and actually has a basic understanding of Financial Intermediaries is Dr. Coburn . . . Looking forward to hearing more though . . .
Let's clear a few things up here.
Firstly, Birnbaum is a bit of a badass. All of the others giving testimony aren't particularly impressive.
Secondly, Jhoratio isn't miles from the truth, but I think his knowledge of the situation is probably not f
As it turns out, John Paulson himself held an investor conference call about Abacus last week. Neither Goldman nor Paulson are going to get in any trouble from this, and here's why:
Abacus is comprised of synthetic CDO's. Synthetic CDO's are basically a gambling instrument, and wouldn't exist if there weren't two sides to the transaction. That can be said of all trades, but it's especially true in this case, and the parties involved definitely know that. Regardless of how the product was packaged, Goldman is going to be able to argue that it wouldn't make sense to explain to its clients that someone is selling the product that they are buying. Of course that's the case; if it weren't, there would be no market whatsoever. Moreover, Goldman was acting as market-maker in this capacity. To prove that Goldman's actions were fraudulent, the SEC is going to have to show that Goldman KNEW it was pushing poo. Even with the suspect e-mails unveiled today in the senatorial hearings, Goldman didn't do anything illegal, just unethical.
Speaking of ethics, though, would it have been ethical to disclose Paulson's strategy to every investor in Abacus? Isn't Paulson a client too? I have spent some time on hedge fund sales, and I can assure you that you're not supposed to tell one client what another is doing. Further, Goldman can make the point that whilst Paulson consulted on the list of securities to be included in Abacus, they didn't have the final say. Instead, the securities were picked and evaluated by an (allegedly) independent rating agency, so the goverment needs to show that Goldman, Paulson, and the rating agency were all in cahoots with one another, and trying to screw everyone else. Even if that's true, the evidence they have gathered is largely circumstantial, and not strong enough to convict anyone of fraud.
Now, the SEC can levy a fine on the dealers or the institution without taking legal action, and that's probably what should happen. Why? Because no one wins by taking Goldman to court. It is economically inefficient to do so for the American public. The value to the US populace is in knowing that Goldman is involved in some spurious business, not in trying to gouge a few billion dollars out of one of our hallmark institutions. In the end, Goldman has a lot more to lose than the US government has to gain, so guess who's going to spend more on lawyers? Can the US taxpayer out-spend GS? Sure, but is it worth it? Not really. In the end, we're going to be paying for guys from the Justice Department to dance with Wachtell's best-and-brightest. That's a sucker's bet. From a trader's perspective, it's bad risk-reward.
And finally, even if the government can make some legitimate arguments, Goldman is going to be able to win its case with a simple analogy. Goldman is a supermarket. They sell loads of products. Some of the products are of higher quality than others. Some have health benefits, others a totally devoid of nutritional value. In the end, though, no matter how fat or stupid you are, you can buy whatever the fuck you want from any supermarket in America. Is it the grocery store's job to explain to the obese that they shouldn't have a dozen Snicker's bars per day? Is it the grocery store's job to deny them service because they clearly lack the market knowledge to select a sustainable, healthy portfolio of foodstuffs?
Financial markets are supposed to be different? They are supposed to have informed participants. I feel like the post-MBS debacle is exactly the same as (or worse than) a chain-smoker suing tabacco companies for getting lung cancer or a fat-ass suing Krispy Kreme for feeling bloated. It's ridiculous, and (at best) frivolous. And whilst those cases were popular 20 years ago, the American legal system has evolved to look unfavorably upon them, so Goldman is going to be able to cite more recent precedent than the prosecution in making its defense.
You're welcome, bitches.
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