Matt Taibbi goes to war against Goldman Sachs

July 2, 2009 | By | 13 Replies More

Rolling Stone’s Matt Taibbi is one of my heroes.   I’ve often recommended his investigative pieces at DI.    Taibbi’s latest Rolling Stone article is an all-out attack on Goldman Sachs as the culprit behind the bubbles and busts.  No, they don’t “just happen.”  [Note: the full article  is here]. No, Goldman Sachs isn’t the only culpable entity, but Goldman serves well as a deserving target for the kinds of criminal abuses that have destabilized the U.S. economy and crushed the savings of so many people.

Image by SpoonMonkey at Flickr (creative commons)

Image by SpoonMonkey at Flickr (creative commons)

Here’s one example of many by Taibbi, this one explaining how it was that so many shitty mortgages were approved by lenders across the United States.   Step One for this problem (as it is for so many other problems with the economy) is to eliminate sane standards for evaluating the economic worth of commodities, individuals and entities.    The first step has the intentional function of destroying the possibility of honest valuation, thereby setting the stage for confusing and misleading investors:

Goldman’s role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren’t in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar.

Beware, that if you watch the videos of Taibbi explaining this blatant robbery of investors and taxpayer, as well as the Democrat complicity with this mess, you will seethe.  You will feel betrayed.


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Category: Economy, Fraud, ignorance, snake oil

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (13)

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  1. Cui Bono? says:

    For more info on Goldman Sachs' influence, give this Capital Research Center article a read:

  2. Tim Hogan says:

    I won't believe there's any leadership on the issues related to the credit crisis, oil speculation and the housing bubble until someone goes to jail.

    Someone has to go to jail because none of this could happen without laws being broken, or someone or many being bribed or corrupted.

    I don't care if the jailed people are Democrats or Republicans but, we need someone to go to jail NOW!

    And I don't mean ome unlucky schlub whose mortgage was given because underwriting was abandoned by Country Wide or some other criminal conglomerate.

    Did anyone remember what the guys who ditched Country Wide after they took their hundreds of millions out of Country Wide? They started IndyMac, and got hundreds of millions more in bailout money!

    Why hasn't anybody gone to jail? These folks stole billions, maybe trillions and they get away with it? I want names and I want them now for the list of those most likely to go to jail!

  3. Paul says:

    Matt Tabbi seems like an upstanding investigative reporter.

  4. Erich Vieth says:

    From today's NYT:

    Startling, too, is how much of its revenue Goldman is expected to share with its employees. Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions.

    Glenn Greenwald takes over where Matt Tabbi left off.… This recent news from Goldman Sachs is disgusting. This is obviously corrupt. Dozens of fat cats should be sitting in prison, not sending out their armies of lobbyists in order to take more of what isn't theirs. Where are some real answers? When will Congress get it?

    Thus, even aside from the bailout money it directly received and the billions in bailout money which it indirectly received (through AIG), Goldman has had access to massive amounts of Fed lending in order to fuel its bulging profits. That unimaginably enormous (though entirely secret) lending is, in part, what is behind the Ron Paul-sponsored bill to audit the Fed — a bill that is now co-sponsored by a majority of House members from across the political spectrum (progressive, conservative and everything in between), yet which continues to be blocked by Congressional leaders from receiving a floor vote.

    Greenwald's chronology and Tabbi and Bill Moyers are so incredibly reassuring, but not because people are being investigated. Not yet. But at least a few journalists are turning their attention to Goldman's and Wall Street's revolving door with the federal government. Maybe Ron Paul's bill will keep making headway. But that assumes that half of the members of Congress aren't corrupt. I'm not talking about intentionally corrupt, because most of them aren't that. In an environment where bribery is encouraged (in the form of campaign contributions), the problem is that far too many members of Congress are too deep into the money culture to know what really drives them along. Nor do they want to know. As Greenwald suggests, this should be easy–a no-brainer. The Federal Reserve should be cracked open for all to see. Goldman Sachs should be totally cut off from government largess. If only more law-makers had pure hearts and the guts to dig deep and expose Goldman Sachs for what it is.

  5. Erich Vieth says:

    Goldman Sachs continues to gain harsh critics on both the right and the left.

  6. Erich Vieth says:

    Paul Krugman explains how Goldman Sachs makes money:

    The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.

    Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.

  7. Erich Vieth says:

    How can Goldman, which accepts $10B in emergency government funds, pay out $16B in BONUSES? Shouldn't a lot of people be in prison? Or is this analysis too simple?

  8. Erich Vieth says:

    I suspect that Dylan Ratigan has it about right regarding the way Goldman Sachs can run a big profit in these times. They've been kept afloat in massive tax handouts:

    1. 10 Billion in TARP

    2. 11 Billion from the Fed

    3. 30 Billion from the FDIC

    4. 13 Billion from AIG

  9. Erich Vieth says:

    How did Goldman survive the meltdown of the subprime securities market? McClatchy has dug further on the growing evidence of widespread fraud of Goldman Sachs, which promoted the mortgage backed securities to its client's while simultaneously dumping its own similar holdings and attempting to cushion the blow to itself by "making myriad insurance-like bets, called credit-default swaps, to "hedge" against a housing downturn."

    [A] five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

    "The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."

    The article mentions that several pension funds have now brought class actions against Goldman, alleging widespread fraud.

    Despite updating its numerous disclosures to investors in 2007, Goldman never revealed its secret wagers.

    Asked whether Goldman's bond sellers knew about the contrary bets, spokesman DuVally said the company's mortgage business "has extensive barriers designed to keep information within its proper confines."

  10. Erich Vieth says:

    On DemocracyNow, Amy Goodman speaks to McClatchy reporter Greg Gordon:

    In 2006 and 2007, the bank reportedly peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in US housing prices would send the value of those securities plummeting.

    See, Goldman was selling these bonds as—most of the bonds, 80 percent or so, as triple-A securities, that being the highest grade that you could get. These were gold-plated investments. Yet it was—yet it was betting the other way.

  11. John says:

    Wow, interesting Gold Tungsten Story.

  12. Erich Vieth says:

    Stephen Colbert interviews Matt Taibbi regarding Goldman Sachs:

    <table style='font:11px arial; color:#333; background-color:#f5f5f5' cellpadding='0' cellspacing='0' width='360' height='353'><tbody><tr style='background-color:#e5e5e5' valign='middle'><td style='padding:2px 1px 0px 5px;'><a target='_blank' style='color:#333; text-decoration:none; font-weight:bold;' href='; rel="nofollow">The Colbert Report</td><td style='padding:2px 5px 0px 5px; text-align:right; font-weight:bold;'>Mon – Thurs 11:30pm / 10:30c</td></tr><tr style='height:14px;' valign='middle'><td style='padding:2px 1px 0px 5px;' colspan='2'><a target='_blank' style='color:#333; text-decoration:none; font-weight:bold;' href='; rel="nofollow">Matt Taibbi</td></tr><tr style='height:14px; background-color:#353535' valign='middle'><td colspan='2' style='padding:2px 5px 0px 5px; width:360px; overflow:hidden; text-align:right'><a target='_blank' style='color:#96deff; text-decoration:none; font-weight:bold;' href='; rel="nofollow"&gt <a href="http://;</td></tr><tr” target=”_blank”>;</td></tr><tr valign='middle'><td style='padding:0px;' colspan='2'><embed style='display:block' src='; width='360' height='301' type='application/x-shockwave-flash' wmode='window' allowFullscreen='true' flashvars='autoPlay=false' allowscriptaccess='always' allownetworking='all' bgcolor='#000000'></embed></td></tr><tr style='height:18px;' valign='middle'><td style='padding:0px;' colspan='2'><table style='margin:0px; text-align:center' cellpadding='0' cellspacing='0' width='100%' height='100%'><tr valign='middle'><td style='padding:3px; width:33%;'><a target='_blank' style='font:10px arial; color:#333; text-decoration:none;' href='; rel="nofollow">Colbert Report Full Episodes</td><td style='padding:3px; width:33%;'><a target='_blank' style='font:10px arial; color:#333; text-decoration:none;' href='; rel="nofollow">Political Humor</td><td style='padding:3px; width:33%;'><a target='_blank' style='font:10px arial; color:#333; text-decoration:none;' href='—nyc-marathon—olympic-speedskating&#039; rel="nofollow">U.S. Speedskating</td></tr></table></td></tr></tbody></table>

  13. Dan Klarmann says:

    The tungsten-Gold conspiracy theory has been running for while.

    Gold and tungsten are not mined together (laws of nature) and the gold that is mined is carefully tracked. If more gold were being claimed than has been mined and delivered, then it would be a story. Until something like that is revealed, then I give this claim as much credulity as everything else on those conspiracy web sites.

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