Blog on the Run: Reloaded

Friday, April 16, 2010 8:35 pm

It looks like a penis law enforcement …


… only smaller:

Goldman Sachs Group Inc. was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The firm’s shares tumbled 13 percent and financial stocks slumped.

Goldman Sachs created and sold CDOs tied to subprime mortgages in early 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles, the Securities and Exchange Commission said today. Billionaire John Paulson’s firm earned $1 billion on the trade and wasn’t accused of wrongdoing. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president who helped create the CDOs, known as Abacus.

“The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said. “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.”

So: Who shorted Goldman Sachs before today?

Also: I’m going to hit the Eternal Snooze button here by asking to be awakened when, and only when, criminal trials of individual, high-ranking Goldman Sachs executives begin. This is all for show, just like the “finance reform” Congress is playing at. If it goes anywhere, it’ll be settled for a few lousy million without any individual or corporate admission of wrongdoing.

If Matt Taibbi, the Rolling Stone writer, were U.S. attorney for the Southern District of New York, he could’ve gotten two dozen Goldman execs indicted by now. And if Eliot Spitzer, instead of becoming governor and purchasing hookers by the litter, were still New York State AG, he’d already have done it.

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