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Goldman Sachs sued - another hit to US economy? (pg. 5)
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| slingshot |
welcome back to TA Tony....figured you might post in here, lol.
:p |
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| Magnetonium |
This is getting ugly.
http://news.bbc.co.uk/2/hi/business/8645945.stm
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Goldman Sachs' Lloyd Blankfein under fire at hearing
Goldman Sachs' chief executive has denied his bank contributed to the US financial crisis by betting some of its own investment products would fail.
Lloyd Blankfein and other executives at the Wall Street giant were accused by a US Senate panel of acting unethically, while Americans lost jobs and homes.
Mr Blankfein said clients came looking for risk "and that's what they got".
The hearing comes as the US Congress considers the most sweeping reform of the financial industry since the 1930s.
During hours of hostile questioning on Tuesday, Goldman executives were accused of marketing some investments that the bank's own staff dismissed as "junk".
'Banksters'
The highly charged hearing saw fierce argument and occasional obscenities, while protesters, some in striped prison outfits, waved signs reading "shame" and "Goldman banksters".
Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, said Goldman had caused widespread harm to American society.
At the heart of the questioning was how Goldman packaged complex mortgage-backed securities, marketed them to investors - but then bet - or shorted - that these securities would fall in value.
"They're buying something from you, and you are betting against it. And you want people to trust you? I wouldn't trust you," Mr Levin told Mr Blankfein.
The firm's "misuse of exotic and complex financial structures helped spread toxic mortgages throughout the financial system," said Sen Levin.
LLOYD BLANKFEIN
Chairman and chief executive of world's biggest investment bank, Goldman Sachs
Earned more than $70m in 2007 - a record for a Wall Street boss. Took home less than $1m in 2009
Told magazine interviewer last year "I'm doing God's work".
Profile: Lloyd Blankfein
Goldman's 150-year reputation on the line
"And when the system finally collapsed under the weight of those toxic mortgages, Goldman profited from the collapse," he added.
Mr Blankfein - who often squinted as if puzzled by the questions and was frequently interrupted - strongly denied any wrong-doing.
The chief executive said clients had wanted an investment that would give them exposure to the housing market.
"Unfortunately, the housing market went south very quickly... so people lost money in it", he said.
But that did not mean Goldman had acted improperly, he insisted.
"Our clients' trust is not only important to us, it's essential to us. That's why we are a successful firm," he said.
Mr Blankfein - who said late last year he was "doing God's work" - was the last of seven past and present Goldman executives to testify.
Former mortgage chief Daniel Sparks came closest to an apology, telling the panel that the bank had "made some poor decisions in hindsight".
FABRICE TOURRE
Fabrice Tourre, Executive Director, Goldman Sachs Structured Products Group Trading
31-year-old executive director of Goldman Sachs International
Charged with securities fraud for misleading investors
Ran Abacus 2007-ACI, a complex product at heart of regulator's probe. Denies charges
Referred to himself as "the fabulous Fab" in an e-mail
Earlier, Fabrice Tourre - the London-based bond trader named in civil fraud case against the bank - denied misleading investors by selling a financial product that the bank had bet against.
Goldman says the charges brought by the Securities and Exchange Commission are wrong in "fact and law".
Mr Tourre told the Senate panel: "I deny, categorically, the SEC's allegations. And I will defend myself in court against this false claim."
Neither the hearing, nor Tuesday's market turmoil triggered by downgrades in Greek and Portuguese debt harmed Goldman shares.
They were up 0.7% at $153.04 (£100) by close of trading.
Elsewhere at the Capitol, Republicans succeeded for a second day in thwarting moves to debate a bill for sweeping financial reform - the party floated their own proposals.
With Congressional elections in November, Republicans and Democrats have been urging stricter oversight of the financial sector, and analysts expect a bill to pass eventually. |
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| Skipper |
I watched part of the hearing yesterday. It was a train wreck. The committee was so confrontational, so argumentative, and so accusatory. It was not really a Q&A, it was a load of leading questions. They often made it difficult for the execs to answer (ie if someone from Goldman asked the chair to repeat the exhibit number, they wouldn't - just to be a dick)
It was brutal. The whole thing is about political posturing.
Maybe I don't know enough about it, but whoopdeefack for Goldman betting against the mortgage sector. At a certain point, they saw the bubble coming, and they switched from long to short before everyone else. |
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| Nrg2Nfinit |
apparenty they are banning short selling in some european markets.
This is getting to be stupid. |
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| Nrg2Nfinit |
| quote: | Originally posted by Skipper
Maybe I don't know enough about it, but whoopdeefack for Goldman betting against the mortgage sector. At a certain point, they saw the bubble coming, and they switched from long to short before everyone else. |
+ 1000. |
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| SniFFleS |
| quote: | Originally posted by Nrg2Nfinit
apparenty they are banning short selling in some european markets.
This is getting to be stupid. |
Are you kidding? |
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| zoogla |
| quote: | Originally posted by Skipper
Maybe I don't know enough about it, but whoopdeefack for Goldman betting against the mortgage sector. At a certain point, they saw the bubble coming, and they switched from long to short before everyone else. |
it's not just their bet, it's their fiduciary duty to disclose material facts about an investment before they proactively sell it to their clients. Sophisticated instutional investors or not, it's the bank's duty, with their reputation on the line, to provide impartial, objective facts about the investment. The materiality of the information that they withheld is being questioned; SEC (and I) think it's material, but GS doesn't. Let's see what the courts have to say about it. |
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| Nrg2Nfinit |
| quote: | Originally posted by SniFFleS
Are you kidding? |
greece for now
http://www.inthenews.co.uk/news/wor...ing-ban-begins-$1374887.htm
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Greek debt crisis hits world markets as short-selling ban begins
Wednesday, 28, Apr 2010 09:29
By Matthew Champion.
Markets across the world have felt the force of Greece's escalating financial crisis, as the struggling eurozone economy had its debt downgraded to junk status by credit agencies.
In Japan the Nikkei closed down more than 2.5 per cent, a day after the FTSE 100 slipped 2.6 per cent and the Dow Jones 1.9 per cent.
In Europe on Wednesday meanwhile markets in Frankfurt, Paris and London were all opening down around 0.5 per cent.
Greek bank shares fell by nine per cent on Tuesday after Standard and Poor rated Greek bonds as junk, prompting Athens to announce a two-month ban on short-selling on shares listed on Greece.
The credit downgrading means the two-year bond yield in Greece is above 22 per cent, while for ten-year Greek bonds the interest rate is 10.13 per cent - a record for a eurozone economy.
There are also fears that Portugal could transform the crisis into a two-prong emergency after its debt was also downgraded on Tuesday. Portuguese shares closed down 5.4 per cent on Tuesday.
Greece has requested $52 billion from eurozone governments and the International Monetary Fund to back up its central finances.
But with Germany, the eurozone's largest economy, so far reluctant to commit, EU president Herman van Rompuy has called an emergency meeting of leaders in mid-May ahead of a looming May 19th deadline for Greece to pay $12 billion in bond payments.
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| tonybologna |
| quote: | Originally posted by slingshot
welcome back to TA Tony....figured you might post in here, lol.
:p |
Who dis?
Anyway the real question here is why Goldman has bank holding status. They are structured like a hedge fund plain and simple. They have no business borrowing from the Fed or getting FDIC insurance. Senators like Levin are engaging in a dog and pony show and not asking real questions about government subsidies given to these institutions.
http://beforeitsnews.com/story/2168..._Reporting.html |
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| PivotTechno |
Freddie Mac seeks further $10.6bn in US aid
US mortgage giant Freddie Mac saw a loss of $8bn (£5.3bn) in the first three months of 2010 and said it would ask for a further $10.6bn in state aid.
The firm has made a number of federal cash requests since it was taken over by regulators in September 2008.
And it said it would continue to need government funds with the US housing market not yet fully recovered.
The new request brings the total cost for rescuing Freddie Mac to $61.3bn.
'Fragile'
Freddie Mac hit trouble during the American property boom, when many higher risk - or sub-prime - loans were made which were not repaid.
The recession also resulted in reliable homeowners with good credit defaulting on payments.
The latest $8bn loss was $6.7bn before adding a $1.3bn dividend payment on senior preferred shares owned by the US Treasury.
On Wednesday chief executive Charles Haldeman said the firm was looking to beef up its underwriting standards and improve credit quality.
"Though more needs to be done, we are seeing some signs of stabilisation in the housing market, including house prices and sales in some key geographic areas," Mr Haldeman said in a statement.
"But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and high unemployment among the key risks." |
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