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‘God, What a Piece of Crap’

Posted on Apr 27, 2010
AP / Charles Dharapak

Goldman Sachs Chairman and CEO Lloyd Blankfein prepares to testify at Tuesday’s televised Senate hearing.

Q & A - Live Chat with Robert Scheer

A live Q & A session related to this column took place on April 29, 2010 at 11:30 am PT.

Click here to view the transcript.

By Robert Scheer

It was the Perry Mason moment in the unraveling of what was left of Goldman Sachs’ reputation. Only in this case, it involved a grizzled former prosecutor, Sen. Carl Levin, rather than a genial defense attorney. The case was broken and the truth about the depth of Goldman’s corruption revealed in his startling cross-examination of Goldman Chief Financial Officer David Viniar.

The Michigan Democrat, citing the language of the internal e-mails of Goldman traders concerning the deceptive products they were selling, asked: “And when you heard that your own employees in these e-mails are looking at these deals said `God what a shitty deal. God, what a piece of crap,’ when you hear your own employees and read about those e-mails, do you feel anything?”

Viniar’s answer told us all we need to know about the banal but profound immorality of Goldman’s business culture: “I think that’s very unfortunate to have on e-mail.”

A flabbergasted Levin cut in with “On e-mail? How about feeling that way?” and Viniar, apparently moved by jeers of ridicule from the audience, conceded “I think it is very unfortunate for anyone to have said that in any form.” Pressed further by Levin asking, “How about to believe that and sell them?” the CFO finally conceded, “I think that’s unfortunate as well.” To which Levin responded, “That’s what you should have started with.”

But Goldman’s executives didn’t start with any such moral qualms or end with them, as was made clear in the testimony of Goldman Chief Executive Officer Lloyd Blankfein that followed. Blankfein basically pleaded ignorance about the company’s scams, making it clear that offering the details of such products was below his pay scale. That would be $68 million in 2007, the highest in Wall Street history, when Goldman’s bets against its customers paid off so handsomely. What was clear is that his job was to ensure the company’s immense year-end profitability with no questions asked about the methods used. “I did not know” he replied when asked about the details of the company’s trades, and at another point he added, “We’re not that smart.” Then there was “I don’t have any knowledge” on selling short, and finally, “We did not know what subsequently occurred in the housing market.”


Square, Site wide

What he did know is that the scoundrels in his mortgage betting rooms were, as with that high-flying London operation that got AIG so much loot before it exploded, raking in enormous profits. Such ignorance is bliss for a Goldman CEO who apparently is rewarded in inverse proportion to what he knows of the operation as long as he pays attention to the bottom line.

That was certainly the case for the man whom Blankfein succeeded the year before, Henry Paulson, when Paulson went off to serve as George W. Bush’s treasury secretary. As Paulson admits in his memoir, he was unaware that suspect mortgages were at the heart of the banking meltdown, even though he was head of Goldman when those toxic mortgage securities were developed.

And then there is that other Goldman-honcho-turned-public-servant Robert Rubin, who was a Goldman vice chairman before serving as Bill Clinton’s treasury secretary. In that Cabinet job, Rubin pushed through the Financial Services Modernization Act, which demolished the wall between investment and commercial banking. Ironically, that reversal of the New Deal regulations that had operated successfully for 60 years, the Glass-Steagall Act, was referenced by Blankfein in his Tuesday testimony explaining how Goldman and other firms spun out of control.

When asked by Sen. Ted Kaufman, D-Del., how Goldman had morphed from a traditional investment bank backing sound business ventures to a market gambler in fanciful products, Blankfein attributed it, somewhat forlornly, to “a change in the sociology of the business that took place over the last 15 to 20 years.” He added, “I’m not sure that it was precipitated by the fall of Glass-Steagall or it caused Glass-Steagall to fall. …” 

Of course there was nothing inevitable about the fall of Glass-Steagall in 1999, since it was the result of decades of lobbying by the financial industry. That change was followed by the total deregulation of financial derivatives by the Commodity Futures Modernization Act, which Rubin had pushed and which President Clinton signed into law.

Clinton recently conceded that he got bad advice from Rubin on derivatives regulation, but he still holds to the notion that the reversal of Glass-Steagall was not harmful. No one listening carefully to the day of testimony by the various Goldman executives could accept the idea that these folks can function decently without strict boundaries. 

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By erichwwk, April 28, 2010 at 6:44 am Link to this comment

We’ll know how serious Levin and Congress is by the extent that insist on clawbacks, or the return of that income ‘earned” only in a bookkeeping sense.

One cannot pretend to oppose theft and at the same time allow the thief to retain his ill gotten gains.

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By BobZ, April 28, 2010 at 6:37 am Link to this comment

Interesting the tendencies of American’s to blame government for whatever evil
befalls us whilst bemoaning the fact that government is too big and needs
downsizing, but don’t take away my benefits. There does seem to be one truth
about Wall Street though: when you go to work there, leave your ethics, if you
ever had any, behind. We are now in our second decade now of listening to Wall
Street types trying to explain their way out of damaging e-mails. These guys
have the same problem that the Nazi’s did; a need to document their evilness.
Yes Congress is to blame too but they operate in a very flawed democratic
system that gives lobbyists unfettered access to Congress every day of the year
while the rest of us are consigned to writing e-mails. Lobbyist worked overtime
for the last half century to overturn Glass-Steagel. They finally succeeded and
now we have reaped that misfortune.  Today all of the stupid talking heads are
saying there not even sure Goldman did anything wrong. Of course they did
and the rest of us who live in the real world know that.

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By chambalkirani, April 28, 2010 at 6:36 am Link to this comment

It seems that what is lost in the discussion is that for the most part what they did
was legal.  And GS’s argument that they did what was in the best interest of their
shareholder is true.  In fact, short-selling (literally) their investors was exactly
what their shareholders expected them to do, obviously more money was to be
made from credit default swaps than on CDOs.
Can congress deal with the inherent conflict of interest between shareholder and
investor in these types of financial institutions? doubtful.  It can only bring back
Glass Steagall to separate banks from this folly, so that bankers don’t get
humongous bonuses for putting together risky financial products.

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By keepontryon, April 28, 2010 at 5:55 am Link to this comment

How odd that Sen Levin never wonders what Congress might have done to make it necessary for bankers and mortgage lenders to make bad loans to keep the home construction industry working over-time. This put thousands of folks into loans that they could not pay for unless home values rapidly appreciated forever.

The real culprit is a greedy Congress that took us all for a sleigh-ride. Now they have to find a way to blame those that gamed the system that they created with too much leverage opportunity.So much so that sharpies could make billions for their bank employers and win millions in bonus awards.

The bank gambling department made most of the money for the banks to give to the government in taxes, and contributions to politicians who wanted to keep the game going.

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By bachu, April 28, 2010 at 5:52 am Link to this comment
(Unregistered commenter)

This is a dog and pony show put on by the rich to pacify the poor and it seems to be working.

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By neoconscience, April 28, 2010 at 5:50 am Link to this comment

Oh well. You want to live under capitalism, this is what you get. And if anyone thinks these Congressman are doing anything about this, other than using these hearings for anything other than political posturing… Well, you know how it goes.

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By frank1569, April 28, 2010 at 5:40 am Link to this comment
(Unregistered commenter)

Headline: “Al Qaeda Sachs Attacks US Economy, Steals Billions, Kills 8 Million Jobs”

Headline: “Taliban Money-Warlord Blankfein Threatens To Hurt America If Forced To Answer For His Crimes”

Headline: “No Wall Street Economic Terrorists Arrested Yet; All Continue To F**k America Out Of Every Last Penny”

Oh - right, I forgot: economic terrorism is still legal, as long as the terrorists pay off as many Republican representatives of We The People to protect them as they can. And they can. And have. Sorry.

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By Mike789, April 28, 2010 at 5:00 am Link to this comment

Set limits on leveraging. Make off-balance sheet trades a felony with a mandatory 30 yrs in the slammer. Disengage the the rating companies from the issuers of securities. How do they wiggle out of these fundamental changes?

I reckon I have the answer. We elect lawyers to Congress who get chummy with corporate lawyers.

Keep it simple. We certainly do not need another bill that dwarfs encyclopedia Britainica.

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Ouroborus's avatar

By Ouroborus, April 28, 2010 at 3:54 am Link to this comment

Ashes, ashes, we all fall down.

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thebeerdoctor's avatar

By thebeerdoctor, April 28, 2010 at 3:50 am Link to this comment

Yet another example of useless political theater, which Robert Scheer finds entertaining. Outrage has become an anachronism in an age where near every computer comes equipped with Microsoft OS or people wait in lines for whatever new gadget Apple shovels out.
The consumer zombie has little time to worry about some “savvy businessmen” (Obama’s words not mine) who figured out how to commit legal crimes that result in shit piles of money. As Matt Taibbi astutely reminded recently how Alan Greenspan is a big fan of the philosophy of Hollywood screen writer turned novelist, Ayn Rand, where money is finally given its rightful place as the one true God of the universe.
Within such a sociopathic philosophical framework, it is not surprising in the least that Goldman Sachs CEO Blankfein said he was doing “God’s work”.

It is so tragically laughable that the United States Senate holds an enquiry into the practices of a money lender they receive money from. They are shocked, absolutely shocked that those campaign contributions came from dubious enterprise. What’s worse? cussing on those e-mails.

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PatrickHenry's avatar

By PatrickHenry, April 28, 2010 at 3:20 am Link to this comment

Goldman Sachs reminds me of a legal RICO operation.

Time to use the asset seizure laws and close that operation.

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By godistwaddle, April 28, 2010 at 2:51 am Link to this comment

The only good investment banker I ever saw was dead.

They are traitors and should be treated as such.

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By C.Curtis.Dillon, April 28, 2010 at 12:56 am Link to this comment

Listening to this litany of obfuscation and lies only served to highlight both sides of the issue ... greedy, corrupt businessmen being lectured by greedy, corrupt politicians.  They could also be joined by the growing number of greedy, corrupt citizens who think only about their personal well being.  This is not an isolated situation in America let alone the world.  Anyone who watched Ukrainian legislators throwing eggs at each other or pelting the chamber with smoke bombs could see the same sickness at work there.  Conservative political thought and behavior is sweeping the entire world and the inherent corruption and self-interest that philosophy engenders is destroying years of progress.  It is “every man for himself” in every corner of our planet and we will soon reap the results of this stupid behavior.  I hold little hope that we can deflect this self-destructive trend anytime soon.  I suspect another Armageddon is coming ...

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