Hahahahahaha. How wonderful! Good on Levin, and good on you, too, David, for letting us know.

Goldman is getting KILLED in this hearing. – DDAY

Their lackeys will be out in full force this evening, defending these misunderstood Captains, who should be thanked for rescuing the Murkan economy. Cue Kudlow !

Nice job on Sen. McCaskill’s part; she very nearly had them bite on the concept of synthetic instruments as a “bet”.

She’s still working it on Timberwolf now — why would any one push it, unless they have established odds staked on which they are trying to win.

She gets them to bite, we’re no longer trading or market makers, we’re gambling.

Goldman is getting KILLED in this hearing. Wow.

Woot!!!

I have to say, DDay, I’m finding myself actually WATCHING this hearing because it is so damn engaging. I was completely shocked that even Sen Tom Coburn had some good questions.

And now, Sen Claire McCaskill is whooping ass.

I have to say that I did not envision this hearing would go anything even close to this, and I’m fascinated.

I’m totally with you on that whole ‘GS is getting KILLED in this hearing.’ And GS can’t just blame it on this group of witnesses.

This committee staff must have really done their jobs because I sure have the sense that most of these Senators — especially Levin and Kaufman and McCaskill, but even Collins (!) — are extremely well prepared for this hearing.

Ohhhhhhhhhh!!!

McCaskill: “Why was Paulson even in the room?!! Was IKB there?! … Who put Paulson in the room?!!”

That’s some serious whoopass ;-)))

McCaskill: What was Paulson doing in the room helping to pick the securities for the Abacus deals?

Did you tell the other parties he was in the room?

Tourre — no, I didn’t tell the two banks that Paulson was doing this.

[The guy just made the SEC case, on the record, under oath. GS attorneys must be shooting themselves.]

This should be the main descriptor of financial services as in that “really big shitty bank”, or “shitty Goldman Sacks”. The possibilities are endless.

I gotta say, this is high drama.
You can sure see that McCaskill has a background as a prosecutor.

I’m starting to chuckle and chortle…

McCaskill: “You put ACA in there as some kind of fig leaf. … you know who Greywolf is? It’s all your alumni!”

God, this is fun………!!

there was a shot of them just frozen like dogs waiting for a cookie while McCaskill is calling them out.

Jeez, I am sitting here just chuckling.

I never expected this hearing to be nearly this good.
GS is getting killed.

McCaskill — we’re trying to figure out why some many people in my state are unemployed.

She’s killing GS.

omg, she said “shitty”!

I’m thinking many lay people can relate to the bookie analogy.

She got Fabulous Fab to admit he did NOT let IKB know that Paulsen (the originator of the bet) was in the room with ACA picking the bet. Failure to disclose…fully disclose.

Mccaskill has been excellent. This kind of thing is in her wheelhouse.

Their lackeys will be out in full force this evening,

Disagree. They’re going to be getting very, very drunk. And they’re going to be hiding ;-))))

And if they do show up, reporters are going to be asking about Timberwolf, and Greywolf, and ACA_FigLeaves. And the reporters are going to try to keep straight faces, before they collapse in hysterics over these MOTFU.

Those are damn thick binders they have!

ooh, swenson in a sweat. sounds nice, looks pissed!

Scarecrow, in case some casual reader missed your point — which I personally hope you turn into a Seminal Diary:

McCaskill: What was Paulson doing in the room helping to pick the securities for the Abacus deals?

Did you tell the other parties he was in the room?

Tourre — no, I didn’t tell the two banks that Paulson was doing this.

They guy just made the SEC case, on the record, under oath. Boom.

Cue up the soundtrack.
Heh.

So what we have:

1. GS understood liars loans; it knew most the securities it was creating were based 90% on these liars loans;

2. It therefore should have known that the rating agencies were assigning AAA ratings to bonds based on fraudulent loans.

3. it still packaged CDOs based on this fraudulent lending and rating foundation.

4. It structured the CDOs using someone who wanted to bet against them because he knew the loan foundations were shitty.

5. It didn’t tell investors what it had done.

6. And the manager we hired to put this together was not independent; it was composed of GS “alumni.”

You’re assuming they have some shame to hide … *g*

Shitty is no longer virginal. Levin used it ten times, by reading a GS e-mail describing the underlying bonds used for Abacus as “shitty.” Shitty is GS’ word and now it’s their reputation.

GS had motivation to get this shit off its own books. playing in its own market.

Who bought Timberwolf Hedgefunds insurance companies, rich people? If we can show the rich and the investors they got screwed and Goldman was laughing at them we might get some GOP support.
Nobody likes being played lets make their names public how many investors like to invest with experts or insurance companies, hedgefunds etc that got taken.
We release the names we destroy some investors careers we take out some GOP contributers.

LOL, thanks. I missed the beginning and joined the discussion at the very end of Collins’ Qs.

Exactly.

It’s OK to burn the unwashed, but when you burn your own country club crowd, there’s hell to pay.

“It stinks – I don’t want it in my books.”
- stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall – - stall –
“There didn’t seem to be a great deal of confidence in the long side of this particular instrument ” “You’re playing in the market and you’re mucking it up.”

“You know this doesn’t make common sense.”

I just turned over to the hearings on CNBC.

Fabulous Fab is talking but spouting nothing but total gibberish and doing it poorly at that.

Sheesh

Well it’s clear that the FAb Fab (Fab-Squared)has his GS lawyer fed talking points memorized…he doesn’t even answer the remaining McCaskill questions. Common sense…uh say uhh wah …huh?

Noonan must be on the couch, fainted away

What’s happening to GS stock? Wall Street/Banks stocks in general?

Whoa:

McCaskell: Were you approached by Greywolf, or were you approached by a client?… You were helping them be part of the house.[recall that Greywolf is a group of GS alumni]

Sparks: I’d like to avoid the betting analogy…

McCaskell: Who is it that picked ACA?

Tourre: A combination of GS and Goldman.

McCaskell: Paulson wanted you to make a synthetic that he could bet on. Typically, do you let [the better] help make up the [synthetic that is going to be shopped to unwitting buyers]?

Wow.

Now Pryor: do you have a responsibility to disclose to a client when you have an adverse interest?

Sparks dodges, then says they have no responsibility (as ‘Market Makers’) to tell ‘the counterparties’.
Man. Slits. Own. Throat. In. Public.

The rating agencies were the absolutely essential component that enabled this whole thing. And, I notice, that is the component the media is engaging the least. There’s got to be a reason for that, perhaps, just perhaps, that the corporate media’s own corporate bonds are rated by the same rating agencies? This con can’t work unless the “ref,” i.e., the supposedly knowledgeable and honest appraiser, is corrupt. The rating agencies are the key to getting the pension funds to invest, they must have AAA ratings on everything they buy. That’s how you get the suckers money (suckers=the honest working class).

I applaud CM for wielding her laser like response to his BS.

I love how all these guys sort of sigh and repeat their lines as though people just. don’t. understand. We’re supposed to cheat and that’s ok.

Please make that a diary!!

You’ve synthesized it perfectly.

It seems to me there ought to be some criminal charges brought, and the corporation revoked.

Love that imagery ;).

Sparks is dodging. If GS was short and it is selling a long position, it needs to disclose that to the client. It is a material fact. Failure to disclose is fraud.

She did a great job.

What was that? Shock? Mental scrambling? Cockroach or rube? I’m surprised the Wall St Mob are not literally killing each other and eating hearts.

Despite all I’ve learned in the last 6 months, I see these young lordlings and I think, “This is the first generation which grew up in the cold ocean of Wall St supremacy. They actually have no clue that there is such a thing as ethics. They’ve been taught what to do, and have been carefully groomed to excel without limits or legalities ever being mentioned. The Pure Shark has come of age.”.

If this was the “alumni’s” retirement plan, what could these guys possibly have planned for their juniors to accomplish on their behalf? I’m astounded.

Yep. He’s pretty good at it. Very congenial demeanor esp in contrast to the others.

ooooh, the “ethics” word. (eyeroll) probably more jarring to the ears than “shitty”.

What Sparks is admitting is that his market maker business was inherently fraudulent.

Precisely!
Heh.

Yeah, they are not even aware that this is wrong. It literally does not compute in their MS Excel brains.

LOL, the senator has to explain what ethical standards are.

I don’t think that knowledge of the position of their counter party has to be disclosed. We are market makers.

Isn’t it true that you’re a placement agent and that it’s your duty to give full disclosure?

“In those situations, disclosure rules are meant to provide an investor with what they need to make their decision …”

So these guys get to gamble at the casino they own and manage?

The real fallout here is how this is going to affect Goldman’s current and future clients. That is how can any client know that they are not being set up by Goldman.

Yup!

It’s not so much as market making it’s market manipulating.

Precisely! Is this just excellent kabuki because the citizenry despises the bankers so much or are the senators truly pissed to the point that they are purposely jeopardizing GS future business?

bwahahaaha, sparks totally BSing his answer about ethics.

ridiculous.

[The guy just made the SEC case, on the record, under oath. GS attorneys must be shooting themselves.]

Good, fewer maggots and root weevils to prosecute.

Actually, a recent Vanity Fair has some great articles on the remake of the movie “Wall Street: Money Never Sleeps” and quotes Oliver Stone saying that he’s been completely shocked at how young financial sector guys would come up to him and tell him that Gordon Gecko is/was their hero. Ditto Michael Douglas.

Asked about the ACA deal, Sparks hims and haws and then wanders off hoping nobody notices that he isn’t answering the question.

McCaskill used the classic, “When did you stop beating your wife?” routine on them.

Bwa-hahahahahah! The customized twist was, “When did you stop booking bets?”

Only once has there been pushback at the use of the term bets or betting.

Looks like Goldman has climbed back into positive for hte day (up $1.60 just flashed)

DOW is down 127 plus points

Not seeing anything for banking in general right at the moment

My guess is that the case will hinge on whether the squid knew that the ratings agencies rated the securities wrong and proceeded to sell them via ABACUS in a way the is provable fraud. If the members of ABACUS can be shown to have colluded with Paulson then that still opens the question as to whether or not the ratings agencies also were in on it. This will all break down to the appearance of various levels of incompetence which is probably why the folks talking to the Senate are looking flummoxed, because it is their intended defense.

Since Paulson, who was the big winner, didn’t talk directly to the ratings agencies but simply selected things that he felt they were wrong about, there are a bunch of ways to show that this is just a variation on the way lots of Wall Street deals get done. The optimal outcome is probably that the SEC will be able to open up other civil and criminal court cases using this one to explore other deals done by the squid.

If Goldman has ethics as Sparks has claimed, they are the most piss poor enforced ethics I’ve ever seen or heard of from a group

What Sparks is saying is that it wasn’t important that the buyers knew about Paulson’s involvement. It was all about the assets and how the deal worked. But of course how could they know how the “real” deal worked absent knowing about Paulson’s involvement.

He He

4 minutes ago;

Google :shitty Goldman Sachs

Results 1-8 are all concerning today’s testimony.

345,000 total results for shitty Goldman Sachs.

Sparks: We made mistakes but we did nothing wrong.

Boy, I’m really sorry but it’s not my fault.

*bullshitblowjobbiiteme*

Sparks: No regrets because regret implies he did something wrong, And he doesn’t think he did. He allows that “mistakes were made.”

He never thought about Goldman Sachs’ role in the “downturn” !!?!

Citizen Scarecrow:

This is the turning point that I have been waitin for to get to the money, “Honey”! In the crash of 1929 it took 3 more years to get most of the “players” broke and jumpin outta windows…this time Goldman Sachs thought they had bailed themselves out with the “rescue” funds from the Treasury and had insulated their winnings by buyin’ up just enough of the Senate. Now we have all the consolidated profits of this laceny in one spot and if the SEC and the Justice Department take ‘em down hard, all that money can flood back into the market or at least the “to big to fail” giant will be an anthropological artifact. This may also mean that there won’t be any of the bailout money left to buy the November election.

Great catch Brother Scarecrow!

But Goldman Sachs and Firedoglake were on the same team in their support of Barack Obama for Presisdent – Goldman Sachs was his largest private contributor – so does that mean Goldman Sachs are ‘progressives’ or does it mean ‘progressives’ were swooning over a suave candidate who would serve Wall Street’s oligarchic interests?

Sparks takes responsibility for his actions. Of course he just said that he doesn’t think he did anything wrong.

Credit got too loose, risk not respected, blah, blah, blah.

Susan Collins, following up, could not get a straight answer from Sparks

I wonder if this might convince her to vote with the Dems to allow debate on the financial services bill that she and the other Repubs blocked yesterday?

Ah the “credit standards are too loose”

[self moderating my true feelings of these swine to avoid making extra work for the Mods]

Votes for biggest tool on the panel?

“I am sad and humbled by…” …getting caught.

My understanding is the SEC case does not rely on the fraudulent foundations; that’s more for Congress to think about. SEC’s case rests mostly on the argument that Paulson’s role in recommending securities for that particular Abacus syn-CDO was material and thus should have been disclosed, and the factual claim that it wasn’t disclosed (and GS may even has misled on that point).

The rest of the pervasive fraud should inform Congress on how much has to be fixed and how badly regulation (and the industry) failed all along the chain.

I have written that the first rule of the con is to never admit to the con, ever. We are seeing an illustration of that right now. We had the biggest crash since the Great Depression (and it could become the worst), the Goldman boys were the smartest guys in the room, yet somehow it wasn’t their responsibility, it wasn’t their fault. So which is it? Were they dopes and didn’t see it coming or crooks and made the most of it on both the up and down sides?

Sparks hedges again on the Question: Do/Did your actions contribute to the downturn in 2008?(on do they think they helped or hurt market)…specific as did GS contribute to the downturn.

Sparks:answer(I immediately start going into Sinatra’s MY Way Here song) Regrets I have a few, but then again, too few to mention. Sparks has no regrets…made mistakes and poor business decisions but no regrets . Some sympathy but does not feel regret. Industry got loose.

Birnbaum: Possible GS did something to contribute but all the major bankers did it too. Birnbaum ditto Sparks..many people suffered (he doesn’t know anyone though personally-of course he doesn’t his friends are all sitting next to him here).

Swenson: Reservations here on contributed versus cause of problem(Says GS did not cause it- specifically to the mortgage issue). He says’ “I do not think they did anything wrong” Things in hindsight do better yes…but did nothing wrong.

FAb Squared:-Full responsibility for his actions but he’s Saddened by what happened to the markets and the excess credit magnified the crisis, GS was involved in some of the problems but only as a result of credit extension (not responsible for that though)

Wow … Ensign & Pryor teaming up to slag the GS Team.

Votes for biggest tool on the panel?

Ensign – softballs and fishing now credit rating agencies

I’m impressed with Ensign’s opening remarks!

Citizen sporkovat:

Ok back under the rock citizen, there’s too much logic and reason around here today, it will fry up your last few brain cells.

Votes for biggest tool on the panel?

That’s a tough one. Tourre is the biggest bleater. Impossible to believe that GOldman would let someone so callow be in charge of anything. Sparks I have heard the most of (I came late). A classic blatherer.

I’m happy about the concept of “gambling” taking hold, even if it was an awkward metaphor.

I expected this grilled squid to taste better.

John Ensign wants to ask whether “market makers” = market manipulators.

What about the rating agencies. Did GS try to influence how the tranches were rated?

Sparks: we worked with raters to let them understand the securities they were rating.

Ensign: how do you get poorly rated products to get better ratings?

Tourre: The models do that; it’s in the modeling assumptions

[note, the rating agencies made their models and assumptions public (available to Wall Street) to allow them to understand how ratings would be created.]

nice summary.

My vote for biggest tool is split between Swenson and Birnbaum for these cringeworthy answers. At least Sparks and Fab attempted to kiss public butt a little.

Birnbaum doesn’t deign to know anyone so losery as to get stung big time by their actions. So my bad.

Swenson is just plain pissed off at being pants during this hearing and can’t hide it anymore. I think he’s going to explode fairly soon.

They forgot to remove the ‘mud vein’ while cleaning prior to the grilling

Oh stop. Like FDL had any control over corporate donations to ANY candidate, ever.

Don’t conflate Goldman Sachs’ ass-covering campaign donation moves with what this site does. You’ve already made a huge and incorrect assumption that this site is a monolith which universally went for Obama, don’t make it worse with additional conflation.

bipartisanshitty goodness!

Fb squared “The assumption made sense”

And we all know what happens when we assume…

it needs to be ‘tenderized’ before grilling :D

Tourre doesn’t know squat about the ratings process but tries to answer anyway. Sparks starts up with his classic blather, as in deal correlation had less effect among themselves.

They are all dancing around the fact that no matter what the ratings agencies did these instruments started out as crap and nothing they did could change them.

Ah Sparks chimes in to say the Ensign is correct on his hitting the ratins agencies.

So now it is the ratings agencies fault (which it probably is partly but it still goes to the Squid folks not being willing to accept any blame for their actions whatsoever)

The “mud vein” must control the sense of morality.

Leaving it in was probably part of the compromise between the prep cooks on the panel and yon squid itself.

Yep I’ve read that but the problem is that Paulson, while rich, is not provably the master of all things with respect to CDOs. If he went to ABACUS and said, I can prove these things are bad then that would still not necessarily suggest that ABACUS should have treated him any different than any other guy who thinks he’s smarter than the rest of the guys in the room. If ABACUS could be shown to have been certain, on their own, that they were defrauding their investors then the case seems a bit stronger. If ABACUS simply look like a bunch of chumps and GS does not appear to have been directly involved in talking to the investors then the defense gets to pull out due diligence.

I’d be happy if this thing would focus on why Paulson appears to be so much smarter than the rating agencies.

LOL … for those without video, Ensign said that Las Vegas would take offence to being lumped with GS, since what GS did Goldman was far, far worse than anything LV Casinos would do.

Actually, that’s where the real interesting debate should be. Paulson was a nobody in those days, so it can plausibly be argued that his involvement was not “material.” Of greater import is whether GS fully disclosed it’s own short-side thoughts on the deal, since their reputation and judgment were considered to be infinitely more important and trustworthy than the unknown nobody Paulson.

Ensign doesn’t realize that in packaging good with bad assets, GS would already have known the likely result of the rater’s models — how the “average” would have been derived, so they would have known how many lousy assets they could put in the mix with “better” assets to get a good rating. The problem was in the models and assumptions themselves, which seriously underestimated the risks of collapse, even as it was happening.

The ratings piece by then should have been understood as just a formal game they had to go through, but the underlying assumption behind the Abacus deals, and other syn-CDOs, was that the “market maker” no longer believe what the ratings models were telling the market about risks. They believed the ratings were wrong, but the rules said: go get a rating from this model and everyone will pretend it means something. It was a massive, collective winking exercise — enough wind to supply the electricity through a depression.

And exactly nothing of substance will come of it.

Ensign: Incredibly complex

Untrue. The basics were extremely simple. It was all the added on razzle dazzle that makes them look complicated. But the essence was selling shit as if it were gold.

The latter. We all know it now, and most of us are honest enough to admit it. Unlike righties ever would.

Pays to note that the tarditional Wall St party was the Rethgs, and they have now returned to that role, now getting TWICE as much money as Dems (see post). So, hard to find any good news for the right wing in any of this.

Well Sen Ensign, when you brought Fannie/Freddie into the mix, you just destroyed any good will you might have accrued in the short term

Ensign, let’s not rush into anything here

Ensign: “Do you think GS influenced the ratings agencies?”

GS: “No Sir”

Ensign: “Thank You for that, I Think it’s important for that to be on the record”

Self-identification with the predator seems an indication of anti-social psychosis to me, but I’m no expert. Wonder if this is another manifestation of the same tendencies which drive the eternally military set?

Gee, 63% of our GDP, and allegedly a good portion of our legislative branch, are controlled by sociopaths. Gives one pause…

Agreed, I’m not caring for the smugness and cockiness of Birnbaum and Swenson…it’s like they’re laughing under their breath the whole time….frat boy style.
The other two seem more personable im, Sparks is definitely good at hedging and stalling, looking concerned at times/ reflective.. but saying nothing and eating up time while doing it… FabSquared seems a bit too over the top smooth to me….but you’re right to note those are both trying to kiss butt here, it’s so apparent.

Senate. Now we have all the consolidated profits of this laceny in one spot and if the SEC and the Justice Department take ‘em down hard, all that money can flood back into the market or at least the “to big to fail” giant will be an anthropological artifact.

More the latter, I should think. The “money” we’re talking about is based on so much so much deceit and craziness that it’s hard to think of it as real. I wonder if anyone has done a study of how much of the last decade’s economic growth has been due to these nonsensical deals. The conclusions are likely to be disturbing.

GS already screwed up its future business on its own.
The Dems are only acknowledging that bitter fact of life.

and Ensign knows all about ethical behavior

Paulson was a somebody. GOldman wouldn’t have let him cherrypick the dreck for the CDO so he could bet against it.

I don’t know if it was awkward, per se, or a deliberate effort on the part of an experienced prosecutor to encourage a slip acknowledging this is not a legitimate investment.

Gambling is a game of chance with risk that can’t be fully controlled without tangible collateral, while investment is assumption of a quantified or limited risk related to a tangible collateral. The quantification/limitation is based on knowledge and skill, where gambling does not require any skill. (This is an argument against mega-compensation, too, as gamblers don’t require payment to participate in a game of chance.)

There can’t be a market maker defense in a casino game, which I think is where McCaskill was driving. In other words, McCaskill tried to say that citizens were exposed to risk in a game they did not willingly participate, while the bookies bet against them using collateral which wasn’t theirs to begin with. She just didn’t do a very tidy job of it.

Since Reagan and Iran-Contra, SOP for all caught bad guys is the “I was not a crook, just an idiot” defense.

Precisely.

No doubt the SEC is listening.

I love it when the lawyer behind one of the GS guys bites his nails.
Heh.

Sparks sucking in his face inside his head having to answer question about (gasp!) bonuses.

Fab Fab always echoing everybody else like the glorified gofer he is.

Lots of different folks who were supposed to be watching this system turned a blind eye. The SEC, the ratings agencies, the press – all bear some responsibility, because they didn’t do what they were supposed to do. Doesn’t excuse what GS and their ilk did one bit, IMHO. Still, if we’re really going to fix this system, we need to accept that this is a fact, and that it matters.

Yeah, argue semantics, that will gain adherents

That’s how you earn you’re exit bonus when you’re a person of Ensign’s high moral standard.

ROFLMAO! How did I miss that irony? hahahaha!

Birnbaum: Disingenuous, contemptuous little prick

Someone needs to spank him (and not to produce pleasure)

“I just want to understand the question”

Birnbaum is just playing word games. It goes to show how arrogant the panel is wrt the atmospherics of their testimony. They simply don’t care how they look. Birnbaum has effectively so far derailed Tester.

True but Goldman folks seem to be spending a lot of time talking about how and why others are at fault and they were just basically innocent players and victims of the others (even though they were paying the others for the crap ratings and such)

The rating agencies were a necessary accomplice, they were the “beard.” Don’t underestimate their guilt. And their AAA ratings, i.e., the Goodhousekeeping Seal of Approval, was required for many institutional investors to put ANY money up (think pension funds!!).

The largest RICO ever brought?

Tester is a singularly ineffective questioner.

who’s the guy off Sparks’ left shoulder? lawyer?

agreed. even ensign is better.

Shorter Goldman Sachs: “What is this word ‘wrong’ you keep using?”

Shortest Goldman: “we were only doing what the customers wanted.”

I wonder if Mommy ever bought that line from Danny Boy ?

LOL!

Part of the act is to never be at fault for anything besides bad judgement. We saw it in the Enron testimony, where Skilling’s basic plaint was that he didn’t know what his employees were doing to him. Mr. “My Way Or The Highway” couldn’t be bothered, one would guess from his testimony, with finding out if his employees were doing what he ordered them to do.

LOL. Never admit the con.

sheesh, tester is totally draining this hearing of all the righteous angry energy it had previously. zzzzzzz.

Shortest Goldman: “we were only doing what the customers wanted.”

And apparently the customers wanted to lose their shirts.

of course FDL went heavily for Obama, that is not a conflation.

it is not “ass covering campaign donations” that all corps do – GS was Obama’s largest private donor. Largest, numero uno, therefore, comment worthy and non routine.

and GS is also in the news as the Vampire Squid for all their malfeasance and fraud, very cathartically comment worthy apparently.

If firepups don’t like being called on the company they keep, don’t swoon for the kind of politician who would pick Joe Lieberman as his mentor in the Senate.

Montana (no offense to the Big Sky State) should be mighty proud

I take it back (sort of) Tester almost landed one on Sparks, Sparks stumbles, then Tester pulls the punch

Agree. That’s why I think Tester’s line of questioning about when they knew the mortgage market was heading south is a good line to follow. Clearly, the GS guys are refusing to follow that path because they know where it leads.

Tester: “What’s your definition of a synthetic CDO.”

Sparks: “A CDO where there’s no cash reference… it’s done by shorting in some other derivative…”

Tester: “When was this synthetic CDO idea thought up?”

Sparks: “… early 2000s… (first in the corporate market)”

Tester: “You’re basically gambling… (the CDO in and of itself has no value, so the only thing you can do with it is use it as a gambling object)”… does anybody have obligation to let investors know what’s in that CDO?

Sparks: Yes…. and how the cash flows actually will work, because typically they’d be tranched (in risk layers).

Tester: Tell me how you got comfortable with sales… Hudson 2006-1 CDO… 18 months later (this AAA was downrated to junk)… Timberwolf 2007… downgraded to junk in less than a year… All of these (came after the 2006-2007 mortgage softening, yet you sold them)… I’m just askin’… Every one of these looks like a wreck waiting to happen.

Sparks: … we expected them… to not be downgraded to junk in such a short timeframe… these deals performed horribly.

Tester: Yeah, there’s a pattern of it.

Good lord, Birnbaum is extremely oily – he’s the smarmy kiss-ass/ass-covering liar we all hated in high school.

No, that’s not true. Paulson was allowed to be involved only because he was the customer instigating the transaction. He himself was not known then as anybody of import.

I recommend to everybody the CNBC morning show this morning from 7-8:30 AM, I’m sure it’s available on their website. They had some brilliant market people on, and a very good and candid discussion and analysis.

I was ESPECIALLY impressed with William Ackman, who just came out with a book–”Confidence Game.” He made a fortune shorting the rating agencies, and GAVE he money away so his views would be received without a presumption of bias. One of the few I’ve seen who is smart enough to deserve to make hundreds of millions a year. His story of the journey he took from then to now is amazing, and worht diamonds in educational value.

So if the deals performed horribly what does that say about how pathetic GOldman is as a market maker. Again were they crooks or stupid? And who would do business with them now either way?

Thanks to everyone for teaching me about the realities of this debacle. I really appreciate it.

Oh. tester might be succeeding at wheedling his way underneath Sparks’ position. Sparks is bothered.

Tester: “Who do you consider yourself working for?”

Great question.

Actually, Goldman was only doing what Goldman wanted.

Whose interests do you represent, the client or the firm? Long silence follows.

Unspoken answer: Our own !

[note, the rating agencies made their models and assumptions public (available to Wall Street) to allow them to understand how ratings would be created.]

Big. Smoking. Gun.

And now Tester pushes back at Spark’s blather about ‘having to manage risk or we won’t be able to serve future clients’ with: If it weren’t for the TARP bailout, GS wouldn’t still be here.

Woot.

GS do anything wrong with CDO?
Sparks-again nothing wrong…but some decisions bad, some deals wrong,but wrong means something inappropriate and they did nothing like that (of course NOT) HIs CDO -definition- eyes glazing over answer- dazzle us with jargon answer.

Q. Anyone have obligation to let people know what is in instrument and transaction. Sparks says yes. Follow up on Levin’s testimony to Sparks on specific CDO’s- How can GS set these aside in good faith-even after Birnbaum says saw housing market falling late 2006 These CDO’s came after that. (Birnbaum interrupts but I didn’t do it-He’s the Eddie Haskell type I see). Sparks-the deals were bad but but, we didn’t know they were gonna fail-honest injun…oh jeebus…it’s so transparent here.

Sparks-rating agencies did it..they’re to blame.

Oh yeah,and this bs market makers manage risks is the GS guys call playing in the markets or market manipulating and looking out for themselves first and not their clients.

Every single participant in the market system failed to do what they were supposed to do. No exceptions. Each bears his own responsibility and guilt. Except the naked shorts. They did what they were supposed to do, they sold a ridiculously overvalued and distorted housing market that was already like Wiley Coyote past the edge of the cliff.

Shorts get an undeserved bad rap. They are the essential price-adjusters, the reality-checkers, in any market.

heh, “made out like a bandit”

I had the same problem with Bush/Cheney.

Evil or stupid? or both?

I’m not minimizing the ratings agencies’ culpability at all.

But the Squids are trying to lay it ALL off on the ratings agencies and play like they were innocents caught by the actions of others

double heh heh.

Sparks big defense is two fold: We didn’t do anything wrong and I don’t work there anymore.

Goldman wasn’t saved by the TARP. That was frosting on the cake. It was saved first by being allowed to become a bankholding company (6 days after the meltdown of September 15, 2008) and gain access to government and Fed credit lines and later by collecting at 100% on the CDS through AIG (thanks again to the government).

You’ll know how good of a job she did by the number of “Serious” people who’ll murmur disapprovingly at how mean and unfair she was.

Shorter GS: It’s only wrong if we lose money …

Oh, but they are only Squid Kids. They’re only doing the bids of the Big Squid

Ratings agencies and Tourre are the scapegoats in this allegory.

Birnbaum: I didn’t do anything wrong. I didn’t work on that particular deal.

Holy shit, who knocked some sense into Ensign?!

AMEN to that, Hugh!

It is not in Goldman’s best interests not to let this happen again, Mr. Tester.

What’d he say ?

By the way, for you Twitterers, Lizz Winstead‘s come up with #shittydeal as the tag for this.

You can really see them squirm and grit their teeth when there is ANY suggestion of changing the rules in a way that might decrease their compensation by one thin dime.

Sparks: “Senator, I would just like to clarify, on the graph that was shown, I ran the mortgage dept and was responsible for risk – that doesn’t represent the risk that I managed. The revenue number was 20-25% more than the year before, that wasn’t that atypical. I had heard some numbers that I felt were inaccurate.”

Levin: “What are you selling to others? You’re selling junk. Ok? “AIB are too smart to buy this kind of junk.” That’s the junk that you’re selling, Mr. Sparks.”

He gently and sarcastically pretended to chide McCaskill for comparing GS’ operations to gambling, stating (correctly) that the finance industry was worse, because they manipulated the odds even after the bets were laid.

Levin is P*SS’D

What Levin is doing is good bringing up the evidence from the emails. They can blather on general questions but going against the evidence is perjury.

Goldman was the sole buyer of protection on the $2B assets.

Stall – stall – stall- stall- stall- stall- stall- stall- stall- stall- stall

Did you understand the one about junk? And how your own person said they were too smart to buy this kind of junk?

Yeah, you’re right. But Tester has an ag background, which means he surely knows commodities inside, outside, and upside down. And he totally gets that these guys were inventing ways to ‘bet on the weather’.

Now Levin.
“Who do you think’s betting against (what your own employee admits is junk), so you create a synthetic instrument to dump that risk off on your own clients.”

Levin: (to Sparks) “I’m not gonna waste any more time. Hudson Mezzanine…. did you understand the one about ‘junk’? And your own person said (the clients) are too smart to buy this junk’.

Sweeeeeeeeeeeet.

Sparks stalls and fumbles with the notebooks to gain time and derail the questioning.

Sparks: … we expected them… to not be downgraded to junk in such a short timeframe… these deals performed horribly.

I wonder how long they expected it to take….

Tester was talking about the amount of money that GS made while the economy was melting down and the government was bailing out GS, and Ensign interjected something about (pointing to these GS execs) “and the execs were making most of that money.”

I didn’t think Ensign would ever have a fine moment, but that was close.

Of course, trying to shift all blame to another is how the game gets played. But I know you’re smart enough to not be taken in by that. There’s so much guilt betw the two, it’s just hard to say which is more to blame.

Levin: “You’re going to make money if this syn CDO is sold, correct?”

Sparks: “I believe that at this time the firm was positioned very long…”

Levin: “The whole point of the syn CDO is that GS is the sole buyer of protection.”

stall – stall – stall – stall – stall – stall – stall – stall – stall

junk? I, smart person, didn’t believe this was junk! I didn’t invest in it myself, but I didn’t think it was junk!

Sparks: It wasn’t junk. Our sales person said it was junk.

And of course it was junk. Why did Sparks think, how could he possibly think it wasn’t junk? If it was so good why didn’t Goldman hold on to it?

Ah, that was Ensign’s second good moment today.

Since he’s electoral toast now, could this be his last hurrah?

Is Levin going after Fraud with Sparks now with the Hudson Deal?

(where the GS incentives really were and long vs short position wihtin GS)

Levin spanking Sparks but good.

Levin: “You’re telling people that you’re on the long side. That’s in the executive summary. You tell them in the fine print somewhere that you’re shifting the risk. [] To tell people that you’re investing on the long side when $2B in risk is being shifted…that’s the opposite of what you’re telling people. These syn CDOs that nobody can figure out.”

stall – stall – stall – stall – stall – stall – stall – stall – stall

He didn’t believe it was junk (even though the saleperson thought it was junk but not Sparks).So Sparks is taking the “He’s a fool” route in this line of questioning I see.

Sparks is sweating….sweating. “the incentives are aligned” they’re shifting risk not taking it on.

How proud is Marcy right now, of her Senator ?

Lemons! LMAO!

Shitty deals and lemons. ’bout says it all.

Sparks: “Was that in ’91 – lemonade?”

Levin: “No exhibit 91.” {you fuckin’ dweeb.)

Levin (to Sparks) “Right, your salesperson said it was junk. That’s who’s selling this stuff.”

Am I correct that what Levin is laying out here is that part of GS’s obfuscation and deceit was appearing to invest in these CDOs themselves with the clients. Total b.s.

“Two billion bucks of risk you’re shifting (to the unwitting buyers), yet you’re telling your buyers that you’re ‘aligned’.”

Whoa, Levin looks righteously pissed: “Shifting risk… making money when you go short… ‘they structured like mad’ to make some lemonade from some big old lemons”.

Gotta love the ol’ binder gambit. Next they’ll need to tie their shoes.

Levin: “You’ve got no regrets, but you ought to have them. Take a look at your own assessment of what you did. You had made a decision to shift direction from long to short, do you have this now Mr. Birmbaum?”

B: “I’m catching up to you.”

I was hoping someone would bring this up. After viewing the video, my conclusion was that Levin was a real clown.

First, he had a preconceived notion of what “shitty deal” meant. When Sparks tried to explain to him what it meant, Levin still didn’t get it, or didn’t want to get it, and plowed ahead.

On one hand, Levin is saying that GS execs were worried for their clients and proclaiming that the Timberwolf deal was very bad for clients. Shitty. Then, he is saying they didn’t care.

Far more logical is that the guy above Sparks was commenting upon Sparks’s performance and the fees lost on the deal, not the how good it was or was not for customers.

Meaning, shitty for GS, not shitty for the customers. Now, it may very well have been a shitty deal for the customers, but the boss was not commenting on that.

Levin would not let Sparks explain.

And, Sparks even tried to explain that the pricing reflected the buyers and sellers opinion of the product.

Listen, there are a lot of stocks that any one person could say are shitty. But, people buy them everyday. And sometimes, those shitty stocks turn into big money makers–ask Warren Buffett who, though not often, buys stuff that others think is no good, only to later see, Buffett knows his stuff.

So, one guys opinion that a security is shitty (even if you take the Levin meaning) doesn’t mean shit, if you know what I mean.

This is how your imbeciles in government operate. No wonder the country is so fucked up. (might as well continue in the same vulgar vein)

I didn’t know ideas could be “socialized”. I’ve learned something. Wall Street speak for “running it up the flagpole” is “socializing” an idea. OK.

Bingo…my thoughts exactly stupid dweeb, and Levin not liking the being taken for as a chump by this “market maker”

Sparks is looking like very guilty guilty school boy and Levin is now playing disgusted school master role here and wants him to read word for word the text “macro trading” line.

Re: Goldman lemons

Lots of squeezing and puckering going on .

Thanks – I was interrupted during that exchange. Too funny.

Hello?!? If Levin wasn’t giving him enough time to explain, then why is Sparks wasting so much time stalling? And not just with Levin?

Levin: “You wanted to avoid group think so you went to see if anyone could poke holes in the plan. You socialized with Sparks and you implemented the plan (going short) by Feb. a very profitable year was underway. You made a lot of money monetizing that: over $1B in one month. This is what you reported to the SEC: 10/4/7 letter from GS to SEC ‘it is important to note that we are active traders in mortgage security and loans and we may choose to take a directional view.’

stall – stall – stall – stall – stall – stall – stall – stall – stall

Yup 8^}

Thank god for courts.

At least GS can get a day in court where real evidence and real experts can testify. Not the bozo know-nothings in Congress.

Fortunately, Marcy is never insufferable.
But wow, I hope that she is busting with pride.

And we should also acknowledge some damn fine staff work.
Someone organized those exhibits pretty well, it appears.

Levin is immaculately prepared – and pretty much spitting out each word of his questions.

GS guys are *acting* like they’ve not read any of this stuff before….

Shitty deal for Goldman? Let’s see. The deal blew up their clients. Goldman execs got fat bonuses. You have a very odd definition of shitty. Or just a very poor understanding of events.

Whaddaya know, you’re right on this single and very limited point. Who could have anticipated . . . lol.

As Scarecrow said near the start of this thread:

So what we have:

1. GS understood liars loans; it knew most the securities it was creating were based 90% on these liars loans;

2. It therefore should have known that the rating agencies were assigning AAA ratings to bonds based on fraudulent loans.

3. it still packaged CDOs based on this fraudulent lending and rating foundation.

4. It structured the CDOs using someone who wanted to bet against them because he knew the loan foundations were shitty.

5. It didn’t tell investors what it had done.

6. And the manager we hired to put this together was not independent; it was composed of GS “alumni.”

And here:

McCaskill: What was Paulson doing in the room helping to pick the securities for the Abacus deals?

Did you tell the other parties he was in the room?

Tourre — no, I didn’t tell the two banks that Paulson was doing this.

[The guy just made the SEC case, on the record, under oath. GS attorneys must be shooting themselves.]

Re: Staff work…I was thinking the same thing.

What say you to this?

Oh, and still waiting for you to explain how Levin wasn’t giving Sparks enough time to respond when most of the time Sparks has been wasting time by stalling.

Birnbaum: I know notzing!

YOu must have watched a different video than me. I saw that every time Sparks tried to explain, Levin cut him off in about 1.5 seconds.

Levin had his own idea and he didn’t want to listen to anything Sparks said. Unless it helped him score some points.

It is highly unlikely that an upper exec would have been commenting on how good a deal was for a customer. Far more likely is that he would have commented on how good the deal was for GS.

In this case, he didn’t think it was a very good deal for GS.

That’s the real world. But, the clown Levin (actually, he probably does know that is how the comment was meant) plows ahead.

Oddly, I see so many people here firmly convinced that GS didn’t care for it’s customers who are just willing to suspend belief to think the exec was commenting on the benefit for the customer. Only because it jives with a preconceived idea.

When it doesn’t so jive, they will be back to disbelieving GS cared about customers.

They’re all sweating now…HA.

Eddie Haskell aka Birnbaum ..but-my review is my review..my review, my review!!

birnbaum pulls an Abu!

There is a universe where all their noses are getting longer and longer and longer each time they open their mouths

Either you have not been watching, or you are astigmatic.
Even Tom Coburn and Susan Collins are asking good questions today.

And I think after the past 18 months of news headlines, the quick ‘shitty’ video is going to resonate. Levin knows what he’s talking about, and the GS MOTFU look like schoolboys caught peeing on the veggie garden.

Does Birnbaum not realize he’s drawing a target on himself or doesn’t he care?

Um, no. The guy is stalling. And it’s not just Levin who’s questioning him, by the way — and not just Levin who he’s trying to stall with his run-out-the-clock schtick.

They all say no policy on discussing problems via emails. But was is a policy? What about an understanding? What about did anyone communicate to you in any way that something should not be discussed via email or written record of any kind? You have to get very legalistic with these guys because they are here to obfuscate and stonewall.

Yeah because he was not being responsive to a question that demanded a yes or no answer not the obfuscation they are trying to throw at the panel.

But I agree, let them have their day in court, also under oath, and see how well the judge responds to the questioning and their attempts to obfuscate.

where’s my ignore button?

cregan’s continued concern trolling about process is counterproductive right now.

Actually it’s Goldman that’s doing the killing and they’ll get away with it. Accountability is so yesterday. As Mr. Bipartisan would say, “the nation has to look forward.”

Wow!!! Coburn slapping Birnbaum for insulting the panel’s intelligence. Don’t tell us you didn’t know what you were doing by trying to make money! Woot!

Uh, that occurred later, so maybe you should get a better handle on events.

Aside from that, companies are told that mitigating risks is the right way to go. If they thought there was risk there, they should have mitigating it by shorting.

Oddly, they were right and came out ahead–as we want banks to do. But, you apparently, want them to fail.

These clients you are so concerned about were very sophisticated financial people. They had their own obligation to check out what they were investing in. Likely, they were very aware of how mortgage loans were being made at the time. You did, didn’t you??

I know I did, and I’m not even in the mortgage business.

Hind sight is 20/20, especially for politicians. Kind of like the hoards of people who KNEW there were no WMD’s and who warned from high and low there were no WMD. In actuality, there were a few who expressed that level of certainty.

Same, in 2007 or 2006, very, very few people were predicting a general failure in the mortgage business.

If so, I think Barney Frank and Chris Dodd were heads of the banking committees at the time. If all these people were seeing this so well in advance and solidly predicting it, what the fuck were these two bozo’s doing at the time???

SMOKIN!!!

I heartily concur.

cregan is just being disingenuous. Have to wonder what his interest is in defending Goldman. Or how he can square the bubble and meltdown with this the ludicrous notion that GOldman both knew and didn’t know about what was happening, that it both made and lost money in the process, that Goldman despite having alums throughout the industry and the Treasury is really just another company.

As you know, the yes or no answer dog and pony show has nothing to do with actually understanding anything. It’s a lawyer’s technique to make a point in his favor. Not an examination of the truth of something.

I had to recheck that – COBURN vs Mr. Tourre! whew!

Sorry, per dakine above, Birnbaum
Sorry! per dosido!
eek! *breathe*

Goldman is getting KILLED in this hearing.

This is the only place they’ll get killed. The reform bill is weak, loophole-ridden faux reform bullshit. Obama’s DOJ wouldn’t think of prosecuting his “savvy” friends. It’s all just more Bullshit Ballet.

Didn’t you love the look of shock on Birnbaum’s face?

The proof is in the pudding. What will Congress and Obama and his DoJ do in response to this exposure of corrupt dealing? Hem and haw, ask for more donations or threaten more hearings or reform the financial system to disincentivize the extreme behavior of firm that admits its own staff “must be willing to kill their own grandmother” to work for it? (A quote from a Goldman partner published in today’s NRC Handelsblad.)

No, I’m talking about actual understanding. You are talking about process and techniques to make something look one way or the other.

It was clear that Levin did not have any intention of understanding.

That is how we get laws that fuck up more than they solve.

Same, in 2007 or 2006, very, very few people were predicting a general failure in the mortgage business.

Actually there were some here including myself who were predicting this since 2005. But obviously I misunderstand events. While you, when did you see this coming by the way?, you understand events so well.

The Bullshit Ballet…I like that.

Maybe if you address my points instead of grandstanding, you might learn something.

Square this:

on one hand, GS doesn’t care about it customers

on the other hand, GS exec cared a lot about customers and was concerned about giving them a shitty deal

Levin’s interpretation is stupid.

anybody on the staff ask for Toturres’ ID this morning?

I can’t hear you.

Coburn: ..you may not have been aware of this…. Tourre looks sharp

Goldman was as surprised by the bubble’s bursting as Big Dick was that Shrub was easy for him to manipulate.

I think he is “socializing” his ideas here.

Then, quit dodging the real issue.

If you were such a genius, then why the hell were Dodd and Frank so stupid? When it is their area to intimately know??

If it was so plain, why didn’t Dodd and Frank get to work on it in 2007 when they became chairmen??

You can’t have it both ways.

Goldman Scratch is concerned about itself. Goldman was as concerned about its customers – over whom it thinks it has a lock, thanks in part, to Lehman’s GS-engineered demise – about as much as Enron was concerned about how grandmas would pay their utility bills.

I did.

I might make a still photo of that expression my new wallpaper.

Now you’re playing word games.

We get laws that fuck up more than they fix problems because industry lobbyists write them and Congress lets them.

EXACTLY, you do understand.

That is why the “shitty” comment was not about shitty for the customers, but shitty in way Sparks managed it and lost money on it for GS at the time (not considering later gains made).

But, that doesn’t fit Levin’s drama.

a firm whose staff “must be willing to kill their own grandmother”

that certainly becomes evident when these guys react to any suggestion of reform during today’s hearings.

Kind of funny when Tester et al ask for their “input” on what they would do to make things better because in their mind nothing needs fixing!

Better question: What were all the Bush bozo “We don’t need no regulation” types doing at the SEC at that time”?

Answer:Watching porn all day long.

The body languarge here (and I wish I could see a big screen – I’m watching on my computer at work)is riveting!

Congressional hearings, like any good stage play, are about only drama. Fact finding and consequence-strategizing take place ahead of time or hearings never take place. The question is what do Levin, Reid and Obama want to do with the righteous public outrage this drama will properly evoke.

one thing I would like to see very much is the end of selling mortgage loans or at least, the chopping up of mortgage loans. This is a very unfair practice to the consumer.

/wish

NO, real world logic.

Levin didn’t want to hear an actual explanation of the ‘shitty’ comment.

Besides, as I said, even if Levin WAS right, one person’s opinion of a security doesn’t mean anything.

There are lots of contrary opinions on securities every day. For every share of stock you sell thinking it is going to go down, there is a guy buying your share thinking it will go up.

So, one person’s opinion, even if the manager actually felt the deal was shitty for customers, means nothing.

Thank you! Yes, plus a spoonful of education of how these things work.

Asking Goldman what needs fixing and how to fix it is like the DoD asking Boeing how to open up its aircraft tanker bids to its competitors. The answers are not likely to solve the question; they are more likely to make it impossible for anyone but Boeing to win any bid.

Actually there were quite a few people saying that the mortgage bubble was unsustainable, especially in 2007. A few less in 2006. The people that didn’t foresee the bubble were working mostly at the Fed oddly enough and were not members of the Democratic party. As far a that goes in 2006 neither Dodd nor Frank were in charge of their respective committees. They both took on their respective committees in 2007 and could hardly have been the driving force for legislation crafted by Bush that lead to the bubble. The majority of problems in the financial deregulation debacle were not created by the mean old Ds, that result seems to have been primarily come from the efforts of the Rs.

As for the goofy assertion that no one knew there were no WMDs before the invasion that is patently false. What is the case is that very few politicians had the courage to admit that they were being railroaded by lies created by the Bush administration.

then why the hell were Dodd and Frank so stupid?

You have very odd ideas abou things. Why would you think I would defend either Dodd or Frank? If you have ever read anything I have had to say about either, you would know I have described them as the two of the biggest corporate whores in Congress. Dodd and Frank are both stupid and bought. This is fairly common knowledge. It has nothing to do with today’s hearing, a hearing good in its own terms but kabuki in so far as it is likely to affect current legislation. But please blather on.

If it was so plain, why didn’t Dodd and Frank get to work on it in 2007 when they became chairmen??

Because it was in their interests not to? You seem to mistake what the government is doing, and what gets said on TV about how the economy is doing, for being the sum total of what we think about it.

As for one of your comments earlier, that you didn’t hear people talking about how there were no WMDs, one of the things I remember at the time was being so frustrated by the obvious foolishness of what the “experts” were saying on the news, when it was perfectly clear at the time that most of it was fiction (only later was it clear to me that it was all fiction). You didn’t hear it either because you didn’t want to, or because any sensible voices were drowned out by the idiocy.

Paulson’s equity perspective?

yeah, and gee, isn’t that kind of what happened under that other Paulson guy?

What should we do?

Let’s help Goldman…

If it was so plain, why didn’t Dodd and Frank get to work on it in 2007 when they became chairmen??

So chairmen can overrule the President, the Fed and the Treasury and implement any law they choose?

THIS is why Levin has no patience for these MOTU, they are not being sincere and have no intention of being sincere in responses.

They didn’t get to the top at GS by being nice considerate guys.

Levin seeking comment on GS mis-representing Paulson’s position (long instead of short)

If that mis-representation was intentional, is it criminal?

I think the odds are they want to use the outrage from these hearings to elicit Democratic votes for primary and national elections. They are not interested in using it to make it possible to pass new legislation or to elicit support for stronger enforcement of laws already on the books. Hence, Hugh’s take that this is kabuki for the groundlings (to mix theatrical metaphors).

My sig other left me in March, 2005 and said she was going to buy herself a house. I told her not to do it, because she’d be buying a market that was topped out and ready to crash. And I’m no real estate expert, just a regular market guy.

All the smart guys knew the crash was coming, and did nothing to stop it, because the money continued to be good until it happened. There are no goodd guys except the short sellers, and they were ignored.

“i think you have not answered the question the best you can,so let’s go on…”
Levin

Levin and Tourre hit a conversation ‘bug’.

inaccurate?
let me say…it could have been more accurate
what was inaccurate?
mr chairman…it could have been more accurate
what was inaccurate?

wow, just wow. Levin: I think you have not answered the question the best you could. LOL!

My big wake up moment was Powell’s testimony at the UN on WMD. My essential reaction was “O shit.” It wasn’t just that it was weak. It was that it was so obviously weak.

..Selected by Paulson/ACA…

How about a f’ing hearing from Dodd or Frank??

How about shining a light on this problem you say was so known?

This is their area of oversight. They were supposed to be very familiar with it.

You know very well that these guys could have held hearings on the problem and brought it to light. At least we could have had a warning or some chance to keep it from getting another 18 months worse before addressing it.

So, the point stands, if it really was so well known about how bad these securities were, etc., then why didn’t Dodd and Frank do their job?

Either it really wasn’t all that 20/20 known, or Dodd and Frank fell down on the job.

oh, just a typo

Oh, let’s see….

Hmmm….what could they do? Oh wait, I’ve got it, HOLD A HEARING LIKE THEY ARE DOING TODAY.

“Could have been more accurate.”
Levin counts to 10
Levin: “Let’s sum up…”

You know, at some point, will Mr. Tourre just surrender and go with the flow, and tell just the unvarnished truth?

Wow!!! Coburn slapping Birnbaum for insulting the panel’s intelligence.

So?

it’s not like he’s going to break with the R bloc and vote for the Financial Reform bill….

Goldman’s Timberwolf Lost Eighty Percent Of Its Value Before Being Liquidated
Tuesday, 27. April 2010, 16:37:28

Goldman Sachs

The Goldman communications released on Monday involve Timberwolf, another so-called collateralised debt obligation, or CDO, which was structured by the bank to give investors a chance to bet on subprime mortgages.

Tom Montag, then a senior Goldman executive and now head of corporate and investment banking at Bank of America, was quoted as describing the deal in an e-mail as follows: “Boy that timeberwof (sic) was one shi**y (sic) deal,” according to the Senate subcommittee.

The subcommittee said that Matthew Bieber, the Goldman trader responsible for managing the deal, later described the day that the Timberwolf security was issued as “a day that will live in infamy”, recalling the language President Franklin Roosevelt used for the Japanese attack against Pearl Harbor.

Within five months of issuance, Timberwolf lost 80 per cent of its value. The security was liquidated in 2008. Among the biggest buyers of Timberwolf was a hedge fund under Bear Stearns Asset Management, which held $300m of the $1bn deal, before the Bear fund collapsed, according to the Senate material

Dodd and Frank would plead the same ignorance as GS. They know that as long as 80%+ of the population think only that Red=Bad, Blue=Goodish then Dodd and Frank both have their job security AND access to the money faucet.

Either it really wasn’t all that 20/20 known, or Dodd and Frank fell down on the job

They didn’t fall down. They were bought. They did hold some hearings which were extremely painful to listen to. The Republicans at least some of the crazier like Bunning actually asked some of the better questions. The Democrats were mainly into covering Obama’s ass.

priceless! Birnbaum struggling with the notebook with all the docs they have!! It’s huge!

I’ve been on the road all morning and just started listening. The staff has done its homework!

PUTS on Equity? Part of Macro Hedging Strategy? Someone has dug into the record? Puts on equities were a real winner.

I find myself wondering whether the corporate attorneys for these GS guys specifically recommended to *not* read the materials they were provided in order that they could “truthfully” claim, over and over, that so much time has passed that they can no longer recall any details….

Same here. I’d had doubts earlier, of course, but anyone with a skeptical mind would have. Powell’s presentation turned them into certainties.

I understand. But if there is any justice, perhaps GS rep is sufficiently trashed enough to hurt business. that’s the only outcome I’m really counting on. Any time these WS guys have to eat some humble pie is satisfying to me. It’s not enough, but I still enjoy it. OK?

they are conveniently unprepared on these, aren’t they?

Puts on Bear Stearns: which bought a ton of the Shitty Timberwolf deal? Wow. Just wow.

‘zackly….

More I know notzing from Birnbaum. Why is he even here? He knows nothing about everything.

see the link at 250 for more details on their representation. Enron, Duke Cunningham and other stellar entities in the client roster.

Kabuki squared!! HA!!!!

Sorry, but for the uninitiated like me, “puts” are?

and he’s aware of HIS position.

These young men must have thought it to be the best, most adrenaline -rush, spin-gold-from sh!t online game.

While I completely agree with Hugh that neither Dodd nor Frank fell down on the job, because they are doing what their lobbyists require, I also really see them as the inheritors of the bought and paid for efforts of the Rs over the last 20 or so years. This problem is much deeper than sideline guys who were recently made chairmen. Paulson and Greenspan had much more significant roles than any single Senator except possibly Gramm.

Coburn obviously doesn’t believe a word Birnbaum is saying.

Birnbaum: I don’t speak for the firm, I speak for my position?

Puts on Bear Stearns: which bought a ton of the Shitty Timberwolf deal?

Yes, it was all an amazing coinkydink.

Trying to catch up here, but I just got back and am agog at Sen Tom Coburn’s drill-down about how GS sold Timberwolf to Bear Stearns, then shorted Timberwolf.

The more Birnbaum tries to evade or circle, the more he’s pissing off Coburn is the way that I’m seeing it. But maybe someone here sees it differently?

I love when some folks say we need to use “real world logic” when it is attacking the MOTU but fall back on “but it’s the law” otherwise when it is the MOTU attacking the rest of us.

I don’t think anything will come of this hearing from the Senators, but it did give us a chance to see who these creeps are.

I’m stunned. This is competent questioning from Coburn. I would have asked the general question first; that is a much better strategy, it would have pinned him down.

I want to see the staffers chortling in the corners. Bravo People!

that’s one of birnbaum’s stock answers.

I don’t know the firm’s position, I only know my position.

I don’t recall (yes, invoking The Great Abu).

Put

A put option (usually just called a “put”) is a financial contract between two parties, the writer (seller) and the buyer of the option. The buyer acquires a short position by purchasing the right to sell the underlying instrument to the seller of the option for specified price (the strike price) during a specified period of time. If the option buyer exercises their right, the seller is obligated to buy the underlying instrument from them at the agreed upon strike price, regardless of the current market price. In exchange for having this option, the buyer pays the seller or option writer a fee (the option premium).

$3.7bn in short profits in 2007? Did I hear that right?

you know dosido, regardless of politics when Duke went criminal and corrupt, he broke a bunch of hearts

I see withdrawal into petulance and self pity. The junior team is beginning to feel the love. When do the Masters come on?

What do you see?

I hope to hell the staff has every bit in their quesioning cued up with the page number in the document book!

I think most of this goes back to Reagan and trickle down economics and deregulation. The CFMA, Gramm-Leach-Bliley, and Greenspan/Rubin/Summers were all under Clinton. The dot com bubble burst and when Bush came in there was a push to inflate a bubble in housing. Then in 2004 there was Chris Cox’s decision at GOldman’s and Hank Paulson request to take limits off leveraging. Also the Comptroller of the Currency preempted state actions against predatory mortgage practices in this time frame. The rest as they say is history.

Well, they’ve been going at it for some time now, with NO breaks,that I recall.Perhaps as tempers shorten, some actual breakthroughs may occur.

Hire a thief to catch a thief, hire a liar to catch a liar.

Let the “games” continue…there’s plenty of both on both sides of the equation for extra innings.

ETA on when Count Blankfein takes the stand?

All I get from that, plus a few minutes of reading Bloomberg’s financial translation page, is that the buyer thought this might turn out to be a less than optimal deal. Considering how much information was not available to customers, that seems like a good idea.

Or was that the point?

Actually, the real point is that they were knee deep in this shit like Fannie Freddie, GS and everyone else.

Here’s a great question I saw the other day:

If Democrats and Republicans are both against deficits, they why do we have them?

The obvious, intended answer is that both are actually in favor of deficits.

Just as here, both are in favor of not clamping down on Wall Street, only seeing who can get the most voters and cash.

That is the biggest reason Levin is a clown.

I was wondering that,also.

I arrived at the “festivities” a little late.

What I’m getting from all this is that there has to be a less expensive way of proving to each generation that they’re not smarter than their grandparents.

intolerable. fundamental conflict of intersest

The Squid Kids! What a great headline!

resess 10 minutes

nice concise summary.

well
he’s the third panel – so not soon

recess – and the slime oozes toward awaiting limo’s.

Okay, but could you explain this business of buying a put on Bear Stearns using the actual parties, and how the payoff worked. (In other words, GS purchased a put on BS at such-and-such a price good until such and such time and then…?)

(Pardon my stupidity, but I’m a liberal arts guy, not a numbers/finance guy.)

Thanks.

brilliant! just what i was imperfectly truying to convey earlier – kids in the principal’s office being schooled.

O/T

What is the thread comment record for FDL?

Oh, now you’ve done it. Recess! :)

kids in the principal’s office being schooled.

too bad they’ll go on to make billions and billions

(at times, I sure regret going to classes for quantum physics, electromagnetic radiation, Gaussian principles, field effect transistors and all the rest of engineering studies)

could have chosen finance. Just think, I could have made something of myself

What I’m getting from all this is that there has to be a less expensive way of proving to each generation that they’re not smarter than their grandparents.

LOL! How funny, and how true!

wow, five hours.

Far more than double what this thread is at currently

just a guess, but I’d say around 650.

IIRC there was one last year pre-Inauguration after Jane had been on CNN talking about Rick Warren that I think hit the 900 plus comments

Look, we have a deficit right now for two big reasons: Bush’s tax cuts and two wars, brought to you by a Republican president and a Republican majority in Congress.

And a depression — because that’s what this is, not a recession in spite of all the denial — cannot be exited by clamping down on spending. We wouldn’t have one iota of difficulty spending our way out of this depression had we not already been deeply entrenched by the reduced revenues of the Bush years combined with two wars which didn’t pay for themselves or short as projected by assholes like Don Rumsfeld.

As for Levin being a clown: you got anybody on the other side of the aisle actually doing anything about the bullshit which collapsed this economy? That guy you’ve called a clown is the single reason why this country isn’t uniformly paying more than $4 a gallon for gasoline right now; he wrote and submitted legislation which changed the amount of margin required for speculation on commodities. Once enacted it forced the price of gasoline and its precursors down dramatically in summer of 2008. You can thank that clown for minimizing the damage to our economy as we entered the kill zone brought to you by the criminals he’s questioning today.

maybe a dumb question, but… (never having stopped me before)

why is GS being singled out here? are they the only firm who engaged in this type of deceptive selling?

I seem to recall seeing a list somewhere which placed GS being approx the 10th largest operator in this area.

or I could be entirely wrong.

We’re not in complete disagreement. The problem with blame is that there is plenty to go around.

I don’t agree with your assessment of Levin, when there are so many others that have done worse. The real architects of this were not Frank or Dodd and they shouldn’t be accused of creating it. They aren’t the big fish that made this all happen. Even Fannie and Freddie were border-line problems until Congress ordered them, via the Bush directives to make housing available to anyone with a couple of quarters. Once congress pushed them to drop lending criteria those companies were headed for the wall.

I defer to your recollection.

Missed that one. *g*

A put is an agreement for say me to have the right to sell a stock to you at a certain price. For this right I pay you a fee. If the price of the stock goes down, I can buy the stock at the cheaper price and force you to buy it at the higher price. Your side of the bet is if you think that the price won’t go down, in which case I lose the fee I paid you.

That guy you’ve called a clown is the single reason why this country isn’t uniformly paying more than $4 a gallon for gasoline right now; he wrote and submitted legislation which changed the amount of margin required for speculation on commodities.

Righteous Rayne !

Two more panels to go, and already I am pleasantly surprised at the participation on this thread.

Great point Rayne, but I’m afraid you’re pouring water on sand …

Yes to all PLUS there was a need to reflate the stock market after the 2000 crash, and the only way was to drive up house prices so people could refinance and spend the equity money.

The constant need to access conservative money and get it into the stock market, where the smart money can reap it, explains all that happened since the 1980′s.

The entire Establishment went along with it and thought it was a good idea, because they figured it would be good for them in the short-term.

Rayne, tha was righteous!

Thanks for the Levin defense, Rayne. Now I don’t have to give an all pissed off reply!

I could look it up but I’m mostly a programmer myself. I have some of the Bear Stearns stories archived It’s only in the last couple of years that I have become fascinated with the ways that taxpayer money becomes insurance for private companies. It’s like a watching a thousand Willie Sutton’s explain rationally why they do what they do.

“As Willie Sutton the bank robber said when asked why he robbed banks, ‘because that’s where the money is’.”

One thing I do remember was that Goldman Sachs and Bear Stearns were competitors. Hank Paulson was a Goldman alumni. Both knew that Bear Stearns was short on capital (this was back when there were still some rules around mark-to-market) so the end of Bear Stearns was not simply about CDOs that GS would collect. It was also about being the last guy in the investment bank field.

Why would you think I would defend either Dodd or Frank? If you have ever read anything I have had to say about either, you would know I have described them as the two of the biggest corporate whores in Congress. Dodd and Frank are both stupid and bought.

Hugh, if you need a witness on this thread, count me as one. You have definitely made these points.

Wow, am I curious to know at some point how much of this you were able to see, and what you thought of it all.

Hugh, I second what ROTL wrote.

about CDOs that GS would collect

Which is to say Credit Default Swaps not Collateralized Debt Obligations.

“As Willie Sutton the bank robber said when asked why he robbed banks, ‘because that’s where the money is’.”

haha, one of my dh’s favorite quotes.

Viniar….the freaking parsing of words with the total smug arrogance that becomes a holy roller market manipulating WS exec….it’s all freaking smoke and mirrors game to these arseholes…using clever words and accounting gimmicks….it’s all an illusion and game…the smartest guys in the room my arse. They’re the Smarmiest Arsholes in the room. Mother effers…that’s what the M in MOTU really stands for.

Levin not letting him off the hook. Yeah you keep arguing Viniar…Levin finally got him to finally admit that yes overall we were consisently short that year.

This might be of interest to you:

Employer Health Costs Do Not Drive Wage Trends | The Seminal » …. (http://www.nytimes.com/2009/12/23/business/economy/23leonhardt.html?_r=1) …. Daily Kos: Blackstone, Goldman Sachs Back New Insurance AgencyDec 21, 2009 … …
seminal.firedoglake.com/diary/23487

Health Care on the Road to Neo-Feudalism | EmptywheelDec 15, 2009 … Screw the insurance companies (they’ve done it to us for many decades now …… Blackstone, Goldman Sachs, Credit Suisse and ING Launch Independent Insurance Group …. emptywheel.firedoglake.com/…/health-care-on-the-road-to-neo-feudalism/

NOTE: Blackstone is Pete Peterson’s equity group.

Oh poor baby, Viniar whines they only made half a billion dollars that year in that area. Uses Eddie Haskell’s plan to go short as the firms plan against Viniar.

Lots of theater in these hearings. Of course, they are meaningless without follow-up tough regulatory laws imposed on these people who are no better than the mafiosi. Don’t expect much from Levin, though. He helped to torpedo the public option, voted against providing an extra 250.00 to seniors on SS who will not receive COLA AND voted against his own amendment for importing drugs from Canada. Remember these ACTIONS before for you begin anointing him a “progressive” hero in these, most likely,pointless hearings.

I remember Billy Tauzin excoriating Enron,then turning around and taking a cu$hy job with Big Pharma.

Jus’ sayin’.

NOTE: Blackstone is Pete Peterson’s equity group.

Thx for the reminder (!)

Ummm… are you comparing Carl Levin to Billy Tauzin…?
Because that’s kind of like trying to equate a dolphin to a viper.

Scarecrow has a new GS post up at Seminal: http://seminal.firedoglake.com/diary/43728

Oh poor baby, Viniar whines they only made half a billion dollars that year in that area.

I actually am not bothered in the least at that sum of money.

What is cheesing me no end is that it was principally created by creating ‘synthetic CDO’s,’ which is like creating something to bet on. Then they took short positions on those CDO’s, which were basically comprised of various forms of D-E-B-T: mortgages, car loans, credit card loans.

Those CDOs were not productive economic activity.
Those CDOs did not provide meaningful productive work for Americans; they provided vast bonuses for Wall Streeters.

The CDOs did not provide stable pension funding.
They were a vehicle for leverage, and in that respect they fundamentally sabotage productive economic activity.

They are **economically** like tumors.

Thank you!

Interesting – Dylan Ratigan reports that GS lost approx. $1.2bn on their gambling; HOWEVER they were insured for, and received payout for, $12.9bn! Now that’s the ultimate dead peasant policy!

Don’t get me wrong…I’m not against them making money either, but he just made it seem like it wasn’t much and almost scoffed at the amount (even though as Levin pointed out it was a significant swing that year) Plus I agree with you it’s the way they made the money.

Who was the Insurer?

If I were the betting type, I’d said ultimately it was the US taxpayer.

yeah, I’d be betting with you

Good thing they took a break – did you see Viniar’s eye twitching? :^)

No, I wasn’t,actually.

However, Levin has yet to leave.

Politics make very strange bedfellows,indeed.

Levin ain’t leavin’…yet.

They got 12 billion from AIG (taxpayer). They also said a few times that they wouldn’t have lost money if they hadn’t been paid by AIG (taxpayer) because they were ‘hedged’ elsewhere. Which means they were ‘hedged twice’ = shorting.

But they were paid off on that bet by ‘the house’, you and me.

I realize you have moved on to greener pastures but I just found a reminder that Levin voted for the Gramm-Leach-Bliley Act. I feel like Taylor in Planet of the Apes. “We finally really did it. You maniacs! You blew it up! Damn you. God damn you all to hell.”

Now there was some acting from, ah, well, kind of perspective. There aren’t many clean hands in this story.

I thought Senator Levin was excellent. Enjoyed every minute of the hearing.