I know it’s hard to believe, but Goldman Sachs is in some trouble. They may not ultimately see indictments of their executives or massive forced payouts of a large chunk of their profits. But the well-researched, well-described Senate Permanent Subcommittee on Investigations report, which partially covered Goldman’s lies to their clients and to Congress, could have serious consequences for the firm. For one, the SPSCI report (i.e. the Levin report, named after the chairman of the committee, Carl Levin) has already led to Manhattan DA Cyrus Vance Jr. requesting documents from Goldman. The legal costs alone in defending itself could be significant; US regulators received a figure from Goldman on this front. Goldman spent at least $1.25 billion on legal issues just last year. And the reputational risk is legitimate; bank stocks are falling and bargain hunters want no part of them as the negative headlines continue to mount, with the Manhattan DA query, added to investigations by the SEC, the Commodities Futures Trading Commission, the Justice Department and the New York Attorney General, fell in with these negative assessments.
This is all taking a chunk out of Goldman’s reputation and potentially their profits. So they plan to fight back.
Goldman Sachs Group Inc., trying to counter a Senate subcommittee report that is fueling investigations and suspicion of the firm, plans to accuse the subcommittee of drastically overstating Goldman’s bets against the housing market in 2007, people familiar with the situation said.
The securities firm is considering releasing documents about its mortgage bets that are aimed at showing what Goldman officials claim is sloppy math and incomplete analysis by the Senate Permanent Subcommittee on Investigations as the panel sifted through tens of millions of documents turned over by Goldman.
The information might be released soon on Goldman’s website, though a decision hasn’t been made yet. Even if the documents aren’t made public, they could be used by Goldman to defend itself in ongoing investigations that appear to be linked to the Senate subcommittee’s report.
Clearly Goldman doesn’t want to disclose these bets at all, or they would have done so already. But the damage from the Levin report may trump official corporate secrecy. Somehow, I would have less trust in Goldman’s spinning of the numbers than the Senate investigators, which nailed down the subject pretty thoroughly in their report.
I’m not sure how Goldman could convince through numbers or anything else that they weren’t engaged in a big short against the housing market in 2006 and 2007, given not only the public documents, emails and reports showing the opposite, but the simple fact of their profits during this period, which clearly show how far out ahead of their competitors they were on this. Coming in with a flood of new documents is merely designed to muddy the waters in a case so clear that Goldman execs were high-fiving each other over it throughout this period.
Anyway, I welcome this new era of openness and transparency at Goldman. Hopefully they will show the same deference in document requests to the Manhattan DA and New York Attorney General.





18 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
That Goldman profited off of the housing crash is not the issue, though people tend to forget this. The issue is whether they knew they were selling their clients garbage.
Businesses are supposed to make money, it’s only when they make it the wrong way that it’s a problem.
claw back
ALL our money!!!!!!!!!!!!!!!!!!!
“Anyway, I welcome this new era of openness and transparency at Goldman.”
David — You are dreamin!
or spin off any OH we didn’t know what was happening.
Slightly off topic but $$$$$related.
austan gooslbee is leaving the administration to return to an ivory tower.
this sounds like what John Taylor CEO FX Concepts on bloomberg was hinting at today that ‘risk was off, the cycle has turned, the euro will drop and the dollar will get strong again’.
This is after his predictions last March pretty much fell out like he said. Interesting anyway.
from last week on how lousy next year will be.
http://www.zerohedge.com/article/john-taylor-next-year-going-be-truly-miserable-and-qe-3-will-come
and today,
http://www.zerohedge.com/article/john-taylor-says-he-now-long-usd-week-ago
So do I. So do I! I’m looking forward to the documents. Really, really looking forward to seeing those tid bits.
IANAL, but that sure sounds like a risky proposition on Goldman’s part.
First of all, it would seem to this layperson (FDL Legal Eagles chime in please!) that by making their trading documents public, Goldman would be surrendering privileged information, and perhaps the privilege itself.
Stockholders might think they were injured as a result, and hit Goldman with more lawsuits.
Further with regard to the privilege issue, if Goldman were to release these documents, they might weaken their own position in court battles with regard to releasing all of their documentation.
Secondly, Goldman might inadvertently criminally hang themselves by their own petard. They might inadvertently release damning information. Perhaps information that contradicts sworn testimony of Goldman employees.
Lastly, Goldman might further injure itself with this document release by providing proprietary strategies and tactics that would arm their competition.
All in all, this reaks of desperation on Goldman’s part.
Lawyers tell their clients to always shut the fook up! Clients who disregard their lawyers advice by babbling away tend to owe their lawyers lots more money.
don’t you think GS has had time to scrub their cue cards squeaky clean by now?
Ya think they might be feeling a little pinch? I can assure it is nothing compared to the pain the rest of America has been experiencing. Besides, they are the creme de la creme of document fraud these days. You can’t even believe what they show in writing these days. It’s all a mock up for appearances sake!
If it were a few hundred documents/email chains, yeah, probably scrubbed squeeky clean by their legal “advisors”.
But…legal folks aren’t necessarily qualified to understand all the ins and outs of financial trading, so it may be that some dirt would fall through the cracks.
And if the number of documents/email chains doubles, trebles, quadruples in size, then all bets are off.
From the repeal of Glass Steagall to date… Goldman has been in charge… whether it was Rubin repealing Glass Steagall or Paulson creating the AIG Special Purpose Vehicle and AIG bailout… Goldman runs the show.
Thus far their cover has consistently been “this is complex and it’s too difficult to explain, so move along. IMO their “analysis” will simply be upping the ante to “this is complex and you’re simply not smart enough to ever understand this.”
And, via Judd G, they’re simultaneously reminding Senators of the benefits of playing patticakes.
Their pain is assuaged by their 7 and 8 figure annual incomes with the 7 and 8 figure bonuses, so they’re probably crying in their
beerchampagne.Still it strikes me as similar to the fatcat owner of a yacht throwing his liferaft overboard to lessen the impact of taking on water.
There could have been an informal scrubbing. No emails, no memos remaining.
Just whisper it down thru the food chain as people go out to lunch, etc… “so I hear we may be making EVERYthing public. That would be the right thing to do! But no need in making personal or irrelevant emails public. So it’d probably be best to delete all those old emails soon. It’ll save time in the future, if they tell us to release everything.”
Sure, stuff could fall thru the cracks… i.e. the subordinate needs some CYA that his/her boss directed her to do something. So maybe something relevant exists. But there’s a reason that Obomba reports to Lord Blankfein… so I’m not holding my breath.
The real problem with Goldman (and many traders) is that they think this whole thing is a game. It’s high stakes gambling to them. They live on the high of it. And they’ll never be able to comprehend what they’ve done to so many people… at least not until some of The Fraudsters start going to jail.
I’m glad the NYDA is doing something. PlaceHolder wouldn’t want to jeopardize his future seat next to Judd.
The truth about all things is that nothing, good or bad, can continue on forever. How many of us sneer at every investment outfit advertising on the TV? Nobody even believes even what may be the few honest dealers in stocks, mutual funds, 401K and other offerings are saying.
There is risk in every attempt to invest in a retirement account, and now even the folks with a whole lot more money than me and you have good reason to shy away from Goldman Sachs and the proven shysters of Wall Street. Small, large and huge transactions require trust in the integrity of those who want to do business with you.
Trust has been obliterated on Wall Street. Without restoration of Glass-Steagall and all the FDR spawned banking regulations, Goldman Sachs is doomed to implode and sink into history, taking all the MOTUs down with it.
But, but, but, Obama said we were all supposed to “look forward” in 2009!
I guess the Manhatten DA and NY state AG’s office didn’t get Eric Holder’s memo…
Boo Fuckin’ Hoo. Makes me want to learn how to knit, in the off chance I get to attend the trial.