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Goldman Sachs Stonewalling Highlights Trading Mentality

Posted by Larry Doyle on June 8, 2010 3:30 PM |

Did Goldman Sachs ‘flip the bird’ at the Financial Crisis Inquiry Commission and, in turn, America by its handling of the commission’s request for information? The fact that the FCIC felt it necessary to issue a subpoena to Goldman is an indication as to how serious the commission is handling this issue. Why would Goldman be so brazen and bold in its dealing with the commission?

Nathaniel Popper of the Los Angeles Times wrote a comprehensive article on this Goldman bombshell this morning, Goldman Sachs Stonewalling, Federal Panel Says:

Goldman Sachs Group Inc., already under fire for its actions leading up to the financial crisis, came under attack from a federal commission that accused it of refusing to divulge information, including documents detailing its controversial bets on the mortgage market.

Saying it had been stonewalled, the federal commission investigating the financial crisis on Monday took the unusual step of issuing a subpoena to Goldman that demanded information about the investment bank’s role before and during the mortgage meltdown and credit crunch.

“We did not ask them to pull up a dump truck to our offices to dump a bunch of rubbish,” commission Chairman Phil Angelides told reporters during a telephone conference call.

A Goldman spokesman said, “We have been and continue to be committed to providing the FCIC with the information they have requested.”

Really? Is that how Goldman operates? The commission says ‘please’ and ‘thank you’ and Goldman says ‘you’re welcome?’ Not in the rough and tumble world of Wall Street. What makes Goldman tick? What is the Goldman mentality?

I addressed that very question in a discussion with Nathaniel Popper yesterday, as further highlighted in the LA Times article:

“These guys have a trading mentality — you try to collect as much information as possible and give as little information as possible, so they can gain and maintain the edge,” said Larry Doyle, a former Wall Street trader who blogs about the financial industry. “Lloyd and team can talk all they want about implementing changes, but their DNA is such that it would require more than just some tweaks.”

If Lloyd Blankfein were trying to build a case for a change of leadership at Goldman Sachs, his firm’s engagement with the FCIC provides regulators a wealth of ammunition to make that happen.

America deserves total truth, transparency, and integrity at this point in our history. Blankfein and team need to appreciate that. Their handling of this request by the FCIC is a clear indication that they don’t ‘get it’. Trading is one thing. National interests are another.


  • phil trupp

    Larry, you put it well: GS hides what it knows because what it knows, if displayed in public, would compromise the firm. As you say, it’s a “trader’s mentality.” But it’s also the mentality of a thug. According to New York magazine, Madoff recently told a fellow prisoner, “F–K the victims…” He said he “carried them” and sneered at their greed. GS thinks the same way. Acts the same way. And GS is the face of Wall Street. We need to do all we can to keep it from becoming the face of America.

  • Sweet Ebony Diamond

    I have to agree with Phil above. Lloyd is not smart enough. He is a thug.

    Hank Paulson is also a thug.

  • Randy

    While I also happen to agree with Phil above.. and it may very well be true that many might consider the two men mentioned as thugs in the truest sense of the word (would they not also regard many of our current politcians as in that very same category?) we should be careful not to underestimate them regardless of how “smart” we think they may or may not be.

    These guys not only know the lay of the land and where all the bodies are buried (figuratively, of course) but they were astute enough to have carefully forged strong realtionships with the law-making and regulatory bodies of this country and keep that bond strong by a highly remunerative revolving door policy of employment (Wall St. to Goverment and back again) for select incumbents on both sides.

    I fear that what we are seeing today in the media headlines and such is little more than entertaining dinner theater for the public, put on by the politicos. Never forget that they are absolute masters of public relations sleight of hand.

    It is most often what we are not allowed to see that truly counts. Their real focus, as regards the masses, is on appearances over real substance. The recent flurry of activity we now see is engineered to provide a shot in the arm to public confidence that perhaps our representatives are going to stand up and do what is right after all.

    Well, I gotta say… that and about $3 will maybe get you a cup of coffee at Starbucks. I would wager that key members of both sides (Wall St. and D.C.) got together behind closed doors well ahead of time and decided just how far to play this out as we head into the November elections later this year.

    Remember when the big savings and loan debacle occurred? Many people went to prison for their actions at that time.

    This time, the major commercial banks and large investment houses robbed us blind in broad daylight and what happens? They get taxpayer money in the form of “bail-outs” with which to wager in the trading markets while the fix is in and they cannot lose.. so that they can rebuild their balance sheets and cash reserves.. as large amounts of wealth continue to be transferred from the public.

    Do you see these executives going to prison? Nope, not even close. That should tell us who really controls things in this country.

    Never forget… The more things “appear” to change.. the more they actually stay the same.

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