Blog on the Run: Reloaded

Tuesday, June 7, 2011 7:47 pm

This is not difficult

Goldman Sachs CEO Lloyd Blankfein has broken the law and should go to prison for five years.

I don’t mean in terms of conspiring to commit fraud or other complicated areas, although I personally believe he has broken the law there, too. I mean he has done the same simple, stupid thing that got former baseball star Roger Clemens indicted: He lied to Congress.

Matt Taibbi helpfully explains:

Though many legal experts agree there is a powerful argument that the Levin report [a report stemming from an investigation led by Sen. Carl Levin — Lex] supports a criminal charge of fraud, this stuff can keep the lawyers tied up for years. So let’s move on to something much simpler. In the spring of 2010, about a year into his investigation, Sen. Levin hauled all of the principals from these rotten Goldman deals to Washington, made them put their hands on the Bible and take oaths just like normal people, and demanded that they explain themselves. The legal definition of financial fraud may be murky and complex, but everybody knows you can’t lie to Congress.

“Article 18 of the United States Code, Section 1001,” says Loyola University law professor Michael Kaufman. “There are statutes that prohibit perjury and obstruction of justice, but this is the federal statute that explicitly prohibits lying to Congress.”

The law is simple: You’re guilty if you “knowingly and willfully” make a “materially false, fictitious or fraudulent statement or representation.” The punishment is up to five years in federal prison.

When Roger Clemens went to Washington and denied taking a shot of steroids in his ass, the feds indicted him — relying not on a year’s worth of graphically self-incriminating e-mails, but chiefly on the testimony of a single individual who had been given a deal by the government. Yet the Justice Department has shown no such prosecutorial zeal since April 27th of last year, when the Goldman executives who oversaw the Timberwolf, Hudson and Abacus deals arrived on the Hill and one by one — each seemingly wearing the same mask of faint boredom and irritated condescension — sat before Levin’s committee and dodged volleys of questions. …

Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn’t make a massive short bet and didn’t bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a “big short” and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?

In fairness to both Taibbi and Sen. Levin and his investigators, there appears to be ample proof on the record that Goldman as a corporation and its individual officers committed a multitude of crimes — enough that any sane state would give Goldman the death penalty and lock the officers up for the rest of their natural lives. But those are, to a greater or lesser degree, complicated charges, challenging to prove. Lying to Congress? No-brainer.

They got Al Capone not for murder but for tax evasion. Lloyd Blankfein doing five years for lying to Congress wouldn’t be justice, but it would be a start.

One other question, perhaps more difficult: Why is it that you, I, Carl Levin and some scruffy reporter for Rolling Stone can see this but the Attorney General of the United States cannot? Are we just smarter, or what?

UPDATE: Apparently we’re smarter than the Attorney General on the John Ensign case, too.

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Wednesday, January 13, 2010 7:16 pm

Odds and ends for 1/13

Espwa: Our church supports an orphanage in Haiti, Espwa (which means “hope”). The orphanage has a blog. The residents and staff, through (literally) shaken by the earthquake, escaped injury, although several lost loved ones elsewhere in the country. Moreover, the orphanage gets all its food and supplies overland from Port-au-Prince, and it’s not clear right now whether the roads are passable, let alone what shape the city’s shipping infrastructure is in. You can contribute online here.

Goldman Sachs CEO admits under oath to fraud, walks free anyway. No, that’s pretty much what happened. (UPDATE: But Jack Welch calls this “uneventful,” which tells you all you need to know about Jack Welch.)

Jackasses: The SEC, which ought to be clearing up the mysteries around AIG’s use of taxpayer money, instead is trying to bury them. And make no mistake: This would not be happening without the knowledge and approval of Barack Obama. Memo to the Democrats: One real good way to lose Congress is to let hosers like Rep. Darrell Issa play the good guy.

Steepening curve … and not in a a good way: A month ago, the Mortgage Brokers Association was predicting that its members would originate 24% less in mortgages in 2010 than 2009. Now, they’re saying that figure will drop 40%, from $2.11 trillion in 2009 to $1.28 trillion in 2010. That’s the lowest level since $1.14 trillion in 2000.

A clawback, but not for the taxpayers: A large pension fund has sued Goldman Sachs over its bonus policy, asking that money that would be going to Goldman employees go instead to it. Where that budgeted $22 billion in bonus money really needs to be going is the taxpayers, inasmuch as fully two-thirds of Goldman’s 2009 revenues were more or less directly attributable to taxpayers. But I suppose the retirement savings of cops and firefighters is a more productive place for it than Goldman execs’ pockets. And that is where the money (much of it, at least) will go, because Goldman will settle this toot de suite. It does not want its folks answering questions under oath.

A nation of pants-wetters, or, that high-pitched whine you hear is Ben Franklin (“He who would give up liberty for safety deserves neither … and shall have it”) spinning in his grave fast enough to light up Pittsburgh: A majority of Americans want to give up civil liberties to make themselves safer. Cheese and crackers, people, what are all the GUNS for … to HIDE BEHIND? MAN. UP. Or else the terrorists really do win.

Memo to aides to Massachusetts Dem Senate candidate Martha Coakley: I realize that losing Ted Kennedy’s Senate seat to a guy who posed nude for Cosmo might make one’s candidate a bit, um, testy, but still, don’t shove reporters. Or move to China if you want to do that stuff.

Jan. 23 is National Pie Day. I think I may head over to K&W and have some of the chocolate-creme to celebrate.

From Facebook’s Overheard in the Newsroom: Design Editor: “I want the font that makes people addicted to reading newspapers again.” Commenter Bruce Reuben: “The font would have to be made of crack.” Lex: “The font that looks like kick-ass, take-names accountability journalism. Yeah. That. Also.”

Harold Ford: Strikingly un-self-aware. I’m not a huge fan of Sen. Kristen Gillebrand, but having lived in NY I think she’s far more in tune with people than Ford is. As someone else put it, there’s a reason Alabama doesn’t send gun-confiscating atheists to the Senate.

Nobody does human like Tolstoy, as Ishinoy reminds us.

Tucker Carlson won’t tell you, so I (and Crooks & Liars) will: His new site, The Daily Caller, will have a whole section devoted to “environmental scepticism” [sic]. His primary funder — $3M in the first year alone — is a huge global-warming denier.

Now it’s up to Harry Reid … and Barack Obama: Arlen Specter says he’ll back Dawn Johnsen to head Justice’s Office of Legal Counsel. So that’s 60 votes. Let the flushing of the Aegean stables begin.

Somali pirates have scared off shipping … including the illegal trawlers that had depleted fisheries, so that legit fisherpeople are having a great year. Hey, you take your good news where you can find it.

Shorter WSJ: Watching TV will kill you dead. (I was never allowed to summarize medical research like this when I was a professional medical writer. I must say, this is fun.)

Bitters shortage: Does anyone who is not either a watcher of or a character on the AMC series “Mad Men” even drink Manhattans? And if so, why?

It’s over: Dan Rather’s lawsuit against CBS has been tossed, probably for good. In effect, the state court system’s Appeals Division identified problems in his case, then refused to allow any depositions or discovery, which could have, as the lawyers say, cured those deficiencies. Oh, well. Sucks to be him. That said, regardless of Rather’s error in relying on documents whose provenance he couldn’t/didn’t verify, other evidence indicates quite clearly that Bush was, in fact, AWOL.

What I’ve learned from reading about “Game Over” (besides the fact that I don’t want to read the whole book): You can make a lot of money publishing anonymous, 2-year-old gossip. And in real life, people who are dying of cancer and whose spouses are cheating on them don’t always behave as nicely as their Movie of the Week counterparts. OK, I already knew that last one.

I think this comment from liveblogger Teddy Partridge tells you all you need to know about the competence of counsel for the bigots defense in the California gay-marriage trial: “Sorry, this lawyer is asking really long questions and requiring YES or NO answers which makes liveblogging almost impossible”

Busted: The American insurance industry, while publicly claiming it favored health-care reform, was giving money to the Chamber of Commerce to produce and air anti-reform TV commercials. I am shocked, shocked, etc. Someone explain to me again why it’s a good idea to point a gun to American taxpayers’ heads and make them give these companies money. Someone else explain to me why the Chamber and the insurance trade group should get to keep their tax exemptions, kthxbai.

Speaking of health care, there’s this notion floating around that taxing health benefits will lead employers to give more to employees in the form of wages. However, this notion is not true.

Quote of the day, from Sen. Harry Reid: “I have no regret over calling [former Fed chairman Alan] Greenspan a political hack. Because he was. The things you heard me say about George Bush? You never heard me apologize about any of them. Because he was. What was I supposed to say? I called him a liar twice. Because he lied to me twice.” Cue Republican efforts to frame this comment as a “gaffe” in 3 … 2 …

This thing where Giuliani said there were no terrorist attacks on the U.S. under Bush? That was no one-time bit of misspeaking. That was an emerging Republican meme. Guys, Goebbels was a cautionary tale, not an exemplar.

Some judges just need impeachin‘, starting with Warren Wilbert, the Kansas judge in the murder trial of Scott Roeder, who assassinated* abortion doctor George Tiller. Wilbert will let Roeder argue that his killing of Tiller actually was voluntary manslaughter because, in some parallel universe, Roeder wordlessly put the barrel of a .22 to Tiller’s head and pulled the trigger because Tiller was doing something besides providing a legal and needed medical service. I hope I’m wrong, but I fear Wilbert just declared open season on abortion providers.

*He has signed a statement admitting to the shooting.

How Lucky could save the planet!


Thursday, June 18, 2009 9:14 pm

“First of all, generally speaking, when one apologizes for having done a bad thing (like for instance destroying the world economy), it is good form to wait at least until the end of the sentence to start bragging again.”

Filed under: I want my money back. — Lex @ 9:14 pm
Tags: , ,

Goldman Sachs CEO Lloyd Blankfein is really, really sorry that his company just somehow got swept up in the events that led to the current economic crisis. Really:

While we regret that we participated in the market euphoria and failed to raise a responsible voice, we are proud of the way our firm managed the risk it assumed on behalf of our clients before and during the financial crisis.

Tell it to my 401k, you schmuck.

Matt Taibbi brazenly dares to point out that Goldman’s role was actually, well, a little more involved than that:

Really, Lloyd? You “participated” in the market euphoria? You didn’t, I don’t know, cause the market euphoria? By almost any measurement, Goldman was a central, leading player in the subprime housing bubble story. Just yesterday I was talking to Guy Cecala at Inside Mortgage Finance, the trade publication that tracks statistics in the mortgage lending industry. He said that at the height of the boom, in 2006, Goldman Sachs underwrote $76.5 billion in mortgage-backed securities, or 7% of the entire market. Of that $76.5 billion, $29.3 billion was subprime, which is bad enough — but another $29.8 billion was what’s called “Alt-A” paper. Alt-A mortgages are characterized, mainly, by crappy documentation and lack of equity: no income verification, no asset verification, little-to-no cash down. So while “only” 38% of the mortgage-backed securities Goldman underwrote were subprime, more than three-fourths of their securities were what is called “non-prime,” i.e., either subprime or Alt-A. …

These [lousy] mortgages … would never have been possible had not someone devised a method for selling them off to secondary buyers. No local bank is going to keep millions of dollars worth of Alt-A mortgages on its books, because no sensible company lends out money to very risky customers and actually keeps those loans on its balance sheet.

So this system depended almost entirely on banks like Goldman finding ways to … chop the mortgages up into little bits, repackage them as mortgage-backed securities … and sell them to unsuspecting customers on the secondary market. … Next thing you know, a bunch of teachers in Holland are betting their retirement nest eggs on a bunch of meth-addicted “homeowners” in Texas and Arizona.

This isn’t really commerce, but much more like organized crime: it was a gigantic fraud perpetrated on the economy that wouldn’t have been possible without accomplices in the ratings agencies and regulators willing to turn a blind eye. …

I’ve been saying that last bit for some time. Glad to know that someone who knows significantly more about this than I do agrees with me.

But wait! There’s more!

Second of all, what is particularly obnoxious about this phrase is that Goldman is bragging about the fact that it actually made money while it was pumping the economy full of explosive leverage. … Goldman’s continual bragging about its mortgage hedges is one of the more obnoxious phenomena in the recent history of Wall Street, given that it was selling this [garbage] by the ton during that same period.

And it wasn’t just selling lousy mortgage-backed securities, either. It also was killing other companies and putting a screwing for the ages on the American taxpayer in the process:

AIG’s death spiral was triggered not so much by its bets going sour, but by companies like Goldman that demanded that AIG put up cash to show its ability to pay. These collateral calls were what killed AIG last September, and Goldman was one of those creditors pulling the trigger: what makes this fact even more obnoxious is that ex-Goldmanite Henry Paulson then stepped in and green-lighted an $80 billion taxpayer bailout. Ultimately another ex-Goldmanite named Ed Liddy was put in charge of AIG, and Goldman ended up getting paid 100 cents on the dollar for its AIG debt. So basically Goldman helped kill AIG, necessitating a federal bailout, after which time it got paid off handsomely for bets that it certainly would not have been paid off completely for had AIG simply been liquidated.

Go read the whole thing, not-safe-for-work language and all. And the Blankfeins of the world wonders why there’s still a small but persistent segment out there calling for the whole freakin’ finance industry to be nationalized….

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