Skip to content

7 Reasons Why Goldman Will Make off with Their “Sachs” of Money


I’ve been ranting about this one for a while, and now it has apparently come to a head.  The Securities and Exchange Commission has filed fruad charges against Goldman Sachs.  However, the Feds are going have problems prosecuting the evil-doers at Goldman Sachs.

  1. Goldman Sachs has gone so far as to change the governmental policy to skirt laws.
    • For one, Goldman Sachs managed to get a Federal Bank Charter whereby they became designated a federal bank.  This means Goldman had access to access to the “Fed Funds Rate”  i.e., they could borrow at ZERO percent interest from the Federal Government.
    • In addition, they got the securitization rules changed. they got an exception to borrow more money than the assets their assets would allow.  This went down in 2008, right before AIG went down.  Side note: The key reason AIG is no more is because they had to pay out on bad securities Goldman insured.
    • So in addition to their federal charter, they managed to get paid out first on the money that they were “owed” from failing AIG (for insuring securities they knew were going to fail), leaving other policy holders in the lurch.  That’s like taking a life insurance out on your spouse, then feeding them something you know will send them into a deathly anaphylactic shock (shrimp for me… I know you’re reading this Rhonda!).
  2. They are smarter than us. The smartest graduates from Harvard, Yale, MIT, Stanford and the rest of the best of America’s schools don’t go work for medical or scientific research firms.  They go to Wall Street.
  3. Their lawyers are better than “our” prosecutors. GS has already rushed a defensive posture with a statement today: “The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.”
  4. There will be a “fall guy” that takes the brunt of the blame while the bulk of the culprits go free.  There will be another Ollie North taking the fall, or Charles Keating (from the S&L Scandal) shouldering the blame.
  5. They’ve got us convinced that if we shut them down, the world economy will fail. The truth is if we shut them down five years ago, perhaps the whole economy wouldn’t be at this very grinding halt we’re experiencing.  If something like this (on a exponentially smaller scale) happened to “Joe Plumber,” his accounts would be frozen, his license would be suspended,  he would be jailed and he’d be put out of business.  That’s not going to be the case with these institutions.  They are Too Big to Fail.
  6. The lawyers are going to take their split. It’s true.  What have these lenders been doing with their coffers if they haven’t been lending to consumers and businesses?  In part, they’ve been banking “defense funds” to protect themselves from this very fallout from sketchy investments… A basic admission of guilt.  According to reports, JP Morgan Chase has $2.1 Billion set aside for their defense.  They may need it.  This is likely to drag out for years in courts; meanwhile, the  economy in the world in which we live will continue to sputter.
  7. They are connected. Goldman Sachs alumni are woven through our governmental fabric.  The U.S. Treasury Secretary of the Treasury is Henry Paulson, ex-CEO of Goldman Sachs and a G.W. Bush cronie.  Ben Bernake, Chiarman of the Federal Reserve allegedly overruled recommendations from his staff who opposed the AIG bailout from which Goldman Sachs directly benefited.   Bob Rubin, another ex-Goldman CEO was Bill Clinton’s Treasury Secretary; he helped repeal the Gramm-Leach-Bliley Act which was the law that prevented investment banks, commercial banks  and insurance companies from co-mingling.  Bob Rubin subsequently went to work for Citibank which merged with Travelers (insurance) and Solomon Smith Barney (investment bank) where he made more than $100 million.  And most recently, Goldman Sachs has curried favor with our incumbent.  Goldman gave Predident Obama “Sachs” of money.  They  were his  number one private campaign contributor.

So, as a consumer, I’d revel in the fact that their Golden (Goldman) feet are being held to the fire.  I just wouldn’t bet on anything significant coming out of these charges… In fact, I’d short the position. Can I do that with Goldman Sachs?

4 Comments leave one →
  1. Kathleen permalink
    04/16/2010 4:21 pm

    Well said. I concur

  2. Terri permalink
    04/16/2010 7:48 pm

    And one more reason, Cuz. The Supreme Court is stacked, too. Scalia, Roberts, Thomas? No way they let their boys go down.

  3. 04/16/2010 11:47 pm

    You should get you some of that “defense money” my counselor cuz… And Marcy. I pour my heart into this, and all I got was three letters from you? “Drats!”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: