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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.


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