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The Senate Permanent Subcommittee is hauling in Goldman Sachs executives as exhibit C in its ongoing series of hearings on what caused the financial crisis. Up first is Fabrice Tourre, a co-defendant in the Securities and Exchange Commission's fraud suit against Goldman, who is testifying along with other Goldman traders. Next up is chief financial officer David Viniar, then Goldman chief executive Lloyd Blankfein. New emails and details are surfacing now the Senate subcommittee, which seem to contradict Goldman's claims of transparency, of supporting tough disclosure rules, that it was a disinterested market maker standing between trades, and that it did not have a "massive" short position on mortgage-backed securities that helped to drive the market lower. According to newly released Senate documents, Goldman had at one point a $13.9 billion in a net short position in mortgage related securities, or 53% of the firm's overall value at risk. The Senate says documents show that the firm was short in the mortgage market throughout 2007, and that twice in 2007, "it established and then cashed in very large short positions in mortgage-related securities, generating billions of dollars in gross revenues." And that while showing the world a public face of transparency, behind the scenes Goldman worked hard to clean up its books by possibly burying the worst "dogs" of these assets in baskets of subprime securities, then traveling the world over to sell these investments by targeting the "buy and hold" crowd, investors not as smart as their other hedge fund clients. The Senate also has Goldman's performance reviews of the first panel of traders to testify, including Tourre. Tourre is a co-defendant in the Securities and Exchange Commission's securities fraud suit against Goldman Sachs, which alleges Goldman didn't disclose the role of the Paulson hedge fund, which cherry-picked assets for a securities deal and then shorted the deal itself, with the help of Goldman. But wasn't Goldman simply trading the crisis? Analysts ask: "Where are the Fannie and Freddie hearings?," whose recklessness sits at the root of the crisis. Congressmen defended Fannie and Freddie during the bubble years, and the two had told the markets it was taking on high-quality assets onto their balance sheets. But Peter Wallison of American Enterprise Institute, an expert in Fannie Mae and Freddie Mac, shows 53% of their book of business was comprised of low-quality, subprime and Alt-A assets, not the high quality stuff their execs said they only supported in the markets. We will keep you posted on whether Congress holds these hearings. Don't hold your breath. But here are some of the more illuminating emails the Senate subcommittee just released: "[Y]ou refer to losses stemming from residual positions in old deals. Could/should we have cleaned up these books before and are we are [sic] doing enough right now to sell off cats and dogs in other books throughout the division."-Lloyd Blankfein, Goldman CEO "These are all dirty '06 originations we are going to trade as a block."-Goldman Sachs email This target list of investors "might be a little skewed toward sophisticated hedge funds with which we should not expect to make too much money since (a) most of the time they will be on the same side of the trade as we will and (b) they know exactly how things work and will not let us work for too much $$, vs. buy-and-hold rating-based buyers who we should be focused on a lot more to make incremental $$ next year."-Goldman's Fabrice Tourre And email exchange with Tourre notes how the firm allegedly gamed the Abacus deal that is the focus of SEC suit: "Do you think [portfolio selection agent 1 is easier to work with than [portfolio selection agent 2]? They will never agree to the type of names [P]aulson want to use."
This is NOT about the culture of corruption on Wall Street, it's about the culture of corruption in an amoral country from which all these people come. A nation that has substituted the end result of wealth as a moral value, rather than the morality that generated wealth as it's primary byproduct. Remember Pogo? "We have met the enemy and they are us."
I agree with anonymous, Bush tried to bring this to light multiple times but was stoped by dodd, barney and some aka repubs. why don't we talk to franklin raines, regarding bundling moatages and fanie's involvement with the chicago climate exchange; o yeah! let's include o'bama and al gore. raines was convicted and his multi-millon dolars fines were dismised. where are fredie and fannie why are'nt they tesitfying on capitol hill. TIME TO CLEAR THE TRASH IN WASHINGTON!!! TIME FOR TERM LIMITS, TIME FOR THESE BEAUCRAPS TO GET A REAL JOB WITH "0" BENE'S AFTER SERVICE
Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
If you want to stop all this nonsense in Washington and your state, simply STOP SPENDING. Keep your discretionary dollars in your wallet or bank. Let the states go belly up. The Feds won't be able to bail all of them out.
Let Obama know now what is going to happen if he insists on a VAT.
The so-called rich are going to stop spending.
Let's see if the 47% who pay no federal tax can bail themselves out.
This will be funny to watch!!!!! The poor helping the poor.
SIT BACK AND RELAX. DON'T SPEND YOUR MONEY ON VACATIONS AND OTHER JUNK. BANK IT. WATCH THE STATE AND FEDS ACT LIKE THEY ARE WITHDRAWING FOR HORSE - COLD SWEATS AND ALL. OOPS, NO TAX MONEY COMING IN TO SPENd. WHAT TO DO? WHAT TO DO?
this isn't about left or right. this is about the culture of corruption that exists on wall street and in washington DC.
there are whores on both sides of the political spectrum and the democrats just happen to be using this as leverage to con the general public into accepting their financial regulation and to beat the GOP.
they're all the same when it comes to money. the blue bloods in NH, CT and DC...all cut from the same cloth.
anyone that doesn't believe that insider trading makes wall street work is living in cuckoo land.
Once again, another investigation focused on the wrong group. Why are we looking at the residual effect of this crisis and ignoring the cause? Making billions of dollars available to bankers and investment brokers in any form and expecting them to act with self restraint is like chum baiting sharks and asking them to show some table manners. Freddie mac and Fannie mae cooked up the mess, all Wall Street did was serve it. The two FMs are the ones that need to be investigated.
Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
GS is taking one for the gipper. They were called in, advised by the SEC and the White House (why else have four meetings at the White House recently) and will do their penance. This is all for the greater good:Financial Reform, GS's profit to be made in the Cap and Tax hoax and more jobs at the White House. They have a symbiotic relationship with the Democrats, starting with Clinton, and will be laughing all the way to the bank. Don't believe they support Republicans. More than 60% of their money goes to the Democruds.
corrutican read the following Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
anonymous...repeat after me, i'm a moron who listens to others and have no thoughts of my own, signed hannity/
I've heard those rightwing pundits and can see it from thier minions here, they blame barney frank for the housing crash, but I've never heard any numbers, I would like to know how many low income earners lost their homes and how much it cost us, as compared to the higher income earners who lost thier homes and how much it cost us? My arguement has been to my rightie freinds that I believe the low income home owners bought homes they could afford because they budget their money differently and want home ownership as compared to higher income earners who bought more expensive homes in hopes of the markets continuing to rise and could sell for a profit in a couple of years.
That's a good point - low income families would and should know what they can afford. However, buying your first house can be confusing. Once you mix a lender who will lend much more than you can afford, a fast-talking realtor, and the American dream of owning your own house - plenty of people could get in over their heads.
What difference does it make whether you are a wealthy speculator or a fist time home buyer when both of the FMs are cranking out sub-prime loans like dixie cups. Spraying the entire market with high risk loans is a great way to hide it all in plain sight. The FMs were the problem from the start and they still remain the problem regardless of who they were loaning to.
Please.....Freddie and Fanny weren't giving money to the upper income earners who were over extending themselves...they were created and their mission was to allow a house to low income earners...many of whom bought houses (and were approved by Franny and Freddie) when they could not realistically expect to pay their mortgages!!!!! The politicians who pushed Fannie and Freddie are the true criminals.
corrutican read on: Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
Thanks EMAC Would the the freedom of information action work on Freddie and Fannie they are government owned?
The fed and Freddie/ Fannie are the perps. They pumped up the market and let the toxic assets grow like fungus. Goldman wan only an arbiter - doin their job, and making money while the bubble got hyper extended. Blame Dodd, Frank, Clinton, et al.
corrutican and liar read on: Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That's right "” most subprime mortgages did not meet Fannie or Freddie's strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower's income or employment history? All made in the private sector, without any support from Fannie and Freddie.
Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn't accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.
Goldman Sachs becomes liable for a Super Lien based on the facts of this illegal trade.
1. The disparate treatment given to the "buy and hold rating based buyers" who are selected primarily because they are not as smart as the "hedge fund " investors, and not because they are more likely to handle risk. In fact the opposite would be true, since the hedge fund investors are more sophisticated than the "buy and hold rating based buyers" and it has a detrimental affect on a segment of the investor population with mixed results when the underlying product is unenforceable as these Derivative Obligation Securities. 2. Next Goldman offers a deal on a buddle of high risk investments for a price to Paulson to sell as a "put" position knowing they are a low risk investment. Paulson then stands in the shoes of Goldman for a price. 3. Next Paulson sells off their low risk investment to the "buy and hold rating based buyers" who became an accessory after the fact or accomplices. 4. Next the "buy and hold rating based buyers" suffered huge losses as expected by Paulson's "put" position on a buddle of defective Derivative Obligations it had a hand in cherry picking. 5. Goldman removed the "dogs and cats" from its portfolio for a profit from Paulson, but should be liable for the Super Lien to the "buy and hold rating based buyers" for their loss.
I just think that if we don't uncover the real root cause, this problem will come back again and again. There is something that doesn't pass the smell test; Fannie and Freddie, managed by the government and forced to make loans to everyone, regardless, had to make some other investments to try and make up the losses. I think the problem ultimately will go back to the government and some collusion they had with Wall St. in general. It's just seems odd that the likes of Geithner, Raines, Obama, etc., all seem to have ties that go back to Goldman; big campaign donations, meetings at he White House. It just seems odd.
Teldofan, wake up stop blaming obama when all this happened under BUSH.
Please research Goldman Sach investment in CCX Chicago, Barrack Obama's funding through Joyce Foundation of CCX, Fannie Mae's obtaining a patent for CCX Chicago technology for trading carbon credits. Al Gore's investment vehicle in CCX via his British Company GIM. They are all in bed together. Goldman Sachs is being setup as a smoke screen for the real behind the scenese work-pass Cap & Trade and use CCX Chicago as the vehicle for carbon trading. Tell America, please.
The Analysts had the overiding best question, What about Fannie and Freddie hearings? This is the true cause of the recession. Congress know a full investigation will lead back to them. Barney Frank is a scoundrel and he and other liberals are at the core of this.
these are all unregulated BETS - even Vegas has regulations - but still doesnt seem Goldman violated any laws - bc there were no laws on the books in the first place - watch Frontline: the Warning - a great documentary on the unregulated OTC derivatives Markets
It bagan with Barney and Dodd don't try to blame Bush. Repeat after me, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd, BARNEY and Dodd
What a low-life bunch of dogs! 'Tis too late to save this nation.
I think you may be right! It is too much of a mess but we can't keep trying to straighten it out or we will be just as much to blame as the dirty dogs that caused it.
Elizabeth MacDonald is the stocks editor for Fox Business Network. She is recognized as one of the top prize-winning business journalists in the country, and has received 14 awards, including the top prize in business journalism, the Gerald Loeb Award for Distinguished Business Journalism, and the Newswomen's Club of New York Front Page Award for Excellence in Investigative Journalism.
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