Bond markets slammed Goldman Sach this week, making the firm pay more for cashizzle then even the bailed-out Citigroup. Goldman’s yield rose to 2.79 percentage points over Citigroups’ 2.29. At the end of March, before the legal and regulatory headaches began, Citigrouop’s spread was wider than Goldman’s by .45 percentage points. Higher yields on debt usually indicate a higher risk of default or other negative credit events. Concerns continue to mount over how long and how deep the firm will be tainted by the SEC’s civil lawsuit and the investigation by federal prosecutors, and what other skeletons the scrutiny might shake out.
As if Goldman Sachs didn’t already have enough problems with the SEC’s civil probe of the firm and senators screaming at execs about the “shitty deals” offered to clients, word is out now that federal prosecutors are investigating the company. According to reports out this morning, the investigation is just starting up, and no charges have been made against the company.
We don’t normally put expletives in our headlines, but when a Senator says the word nearly a dozen times in an open hearing, who are we to argue? And, we have to admit, Senator Carl Levin (D-MI) certainly makes a compelling case when he reads back Goldman Sachs internal emails and concludes that the company’s “top priority was selling that shitty deal.” Video after the jump.
A mosquito-boat’s worth of Somali pirates stunned the courtroom today when they disclosed their entire piracy enterprise was in fact a subsidiary of Goldman Sachs. [More]
When the SEC announced its fraud complaint against Goldman Sachs, people noted that the penalties involved would involve money, not jail time. But an attorney writing for seekingalpha.com argued over the weekend that John Paulson, the hedge fund manager who worked with GS to create “synthetic derivatives,” accessed FICO scores to create his financial product and therefore violated the Fair Credit Reporting Act (FCRA)–which could mean a penalty as high as $1 billion, and even jail time if the FTC or Justice Department decides to go after him. [More]
“Waterfall” provisions of asset backed securities are the rules that explain the flow of funds in the transaction, and they are are very hard to read. Blogger/professor Jayanth Varma calls them “horrendously complicated,” leading trustees to make mistakes or pull stunts that investors never expected. To remedy this, the SEC is proposing that the provisions be written in a programming language, filed on EDGAR, and made available as downloadable Python source code. [More]
The SEC today announced civil fraud charges against Goldman Sachs and VP Fabrice Tourre. The chargea allege that Goldman ripped off investors by allowing a client who bet against the housing market to pick the mortgage securities being sold to other investors who were also investing in the housing market. [More]
In these tough times, it’s easy to forget about the struggling bankers out there as you dodge their SUVs on your walk to the unemployment office. So it’s a good thing they have someone looking out for their financial interests — themselves. [More]
Looks like Goldman turned the Parthenon into a gunpowder magazine for a second time; Greece’s recently revealed debt crisis is rattling the world economy and familiar culprits are at play: Wall Street banks, off-the books loans, derivatives, and other occult financial instruments. I guess we blame the consumer on this one too? [More]
A 5-month investigation by McClatchy Newspapers has found that Goldman secretly bet on the housing crash, went out and pimped the dickens out of assets it knew were junk, and may have broken securities laws in doing so. McClatchy found that Goldman…
A study by the Associated Press says that executives at bailed out banks got $1.6 billion in salaries, bonuses, and other benefits — including cars, personal use of company jets, and country club memberships.
Goldman-Sachs read my post, “Goldman Rips Off Non-Profits, Endowments, Foundations, And Charities” about a conversation I had with a Goldman-Sachs trader where he boasted about ripping off charitable organizations with excessive fees, and they’re hopping mad. Here is the lovenote sent by Melissa Daly, VP of Corporate Communications: