Goldman sacks

Rape and pillage is the order of business at Goldman Sachs, says a now former insider. But we all knew that already. This company, to which both parties cravenly outsource the Department of the Treasury, was thoroughly exposed as double-dealing and untrustworthy in the aftermath of the Bushist financial crisis. The SEC:

Robert Khuzami, Director of the Division of Enforcement [at the SEC, said,] "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

That privatization of a Cabinet post, until proven otherwise, is why no one - no one! - went to jail over this allegedly legal billion-dollar fraud, for which Goldman Sachs's contracted vig was a paltry $15 million.

Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.

The SEC's complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.

If you're going to lead a life of crime, white collar crime is the way to go, and the rigged game of Wall St. has the highest reward-to-risk ratio. Hell, if your fraudulent investments go sour in a big enough way, the Secretary of the Treasury will insist the middle class bail you out - without clawing back your immense and undeserved bonuses.

The SEC didn't even seek prison, only civil penalties. The Wall St. billionaires have written the securities laws so that their fraud is often only moral, not legal.

Now to Greg Smith's conscience. Where was he when it mattered? Raking in the dough that he's probably planning to retire on...

If you read his claim of conscience, the first thing you'll notice is what a piece of self-serving bullshit it is, even if its headline is true. I don't know about you, but I was not in need of reading a puffed up resume of all Smith's selections and glory and value. He was almost chosen to be a Rhodes Scholar. Whoop-de-doo.

It sounds to me as though the fundamental problem of Wall St. is overweening self-regard that leads to smash and grab ethics and short-termism. Masters of the universe, bitches! That's how they view the world.

Smith is a terrible writer who won't put himself at risk to do more than generalize. He'd have to violate confidentiality to illustrate his piece with names, dates, and deals, and that would put his retirement at age 33 or so at risk. No way!

He's not so much whistle-blowing as horn-tooting.

Update: Satire!

Securitization Excuse Confabulator

We live in a nation where financial crimes are not punished enough to deter them in the slightest:

So to recap: a unit of Citigroup, having repeatedly violated the same laws and having repeatedly violated the SEC’s own cease-and-desist orders and injunctions, is dragged into court one more time for committing a massive fraud.

And what does the SEC do? It doesn’t even bring up Citi’s history of ignoring the SEC’s own order, slaps the bank with a fractional fine, refuses to target any individuals, allows the bank to walk away without an admission of wrongdoing, and puts a cherry on the top by describing the $160 million heist not as a crime, but as unintentional negligence.

And it's not as though Citigroup is the only home of thoroughly institutionalized fraud. All of its competing syndicates do it too:

According to a New York Times analysis, nearly all of the biggest financial companies — Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America among them — have settled fraud cases by promising that they would never again violate an antifraud law, only to have the S.E.C. conclude they did it again a few years later.

Time to turn this over to the Organized Crime Task Force and pursue a few juicy RICO cases.

(h/t John Cole at Balloon Juice)

Sacked

Click image for full Bob Rogers/Pittsburgh Post-Gazette cartoon.

Opportunity breaks the door down

Click image for full Matt Davies/Journal News cartoon.

Yet half the country hates labor

No labor scandal ever came close to the cost of the Madoff Ponzi scheme.

Click image for full Tom Toles/Washington Post cartoon.

Trillions lost, Krugman gives in to lame pun

A world gone Madoff...

Here's the money (ha) paragraph:

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

More clueless reporting

Compare and contrast:

• "The president can [fire the chairman of the Securities and Exchange Commission], ...," said CNN's Tom Foreman.
• [W]hile the president nominates and the Senate confirms the SEC chair, a commissioner of an independent regulatory commission cannot be removed by the president.

The SEC is responsible for part of the credit crisis. In 2004, it allowed waaay too much leveraging of assets. But that was before Christopher Cox's appointment in 2005, which means he's only responsible for continuing bad policy.