Obama using SEC suit against Goldman Sachs to raise money on the web

posted at 8:42 pm on April 20, 2010 by Allahpundit

Via JWF, follow the logic here. The SEC suit against Goldman is, allegedly, completely independent of the White House. No politics involved, no arm-twisting by The One, just a simple case of the SEC doing what it does as an autonomous agency of the government. Fair enough.

But in that case, what’s with the ad?

President Obama is bringing his war on Wall Street to the enemy’s turf.

He’ll make his pitch for financial reform in the heart of lower Manhattan Thursday – even as his team make hay of the Goldman Sachs fiasco with a tech savvy appeal to Democratic donors.

Internet surfers who entered “Goldman Sachs SEC” into Google were directed to the president’s campaign Web site via a sponsored link titled “Help Change Wall Street.”

The White House’s political arm paid for the keywords — but would not say how much.

See for yourself. If the White House bears no responsibility for the suit and therefore deserves neither credit nor blame for it being filed, what’s The One doing using it to push a “Help Change Wall Street” message on surfers that links directly to his online operation? In fact, if you click the ad link and provide an e-mail address and zip code in the fields on his site’s home page, guess what pops up?

o-sec

In other words, if you’re excited about the lawsuit against Goldman, send money to a guy who ostensibly has nothing to do with it. The defense here, I take it, will be that The One’s website says nothing about the suit itself and is merely using the search term to attract people who are interested in financial reform more broadly. That’s cute, but it’s a lie: The impression given, clearly, by connecting the two is that Obama’s responsible for the proceedings against Goldman and that cutting him a check will encourage him to sue lots more fatcats. Frankly, if he’s willing to be that shady, I don’t know why he’d limit himself to the Goldman case. Surely there are all sorts of pending DOJ prosecutions with which he has nothing to do that he could milk for some fast cash, no?

Via the Right Scoop, here’s Rush talking about this earlier today.


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It’s the Chicago Way.

Drained Brain on April 20, 2010 at 8:46 PM

Hasn’t Goldman Sucks given The Joker enough money already?

SagebrushPuppet on April 20, 2010 at 8:47 PM

Isn’t a google hack working for Hussain in the WH ?

macncheez on April 20, 2010 at 8:47 PM

Obama supporters cultists don’t give a crap.

JeffinOrlando on April 20, 2010 at 8:49 PM

The mob rules.

ohiobabe on April 20, 2010 at 8:50 PM

Chicago Thuggery!

canopfor on April 20, 2010 at 8:52 PM

Barry is raising money for 2012. I read elsewhere recently that the target is $1B+ … the GOP had better be ready.

And the tea parties.

gh on April 20, 2010 at 8:53 PM

we’ve sunk lower than a banana republic.

exceller on April 20, 2010 at 8:53 PM

Surely there are all sorts of pending DOJ prosecutions with which he has nothing to do that he could milk for some fast cash, no?

So true. Like all those jihadies DOJ has in custody, and those jihadies in gitmo…..man can Hussain milk them for some serious moolah ;-)

macncheez on April 20, 2010 at 8:53 PM

Hey!! He’s got about 11 Trillion dollars to pay off!!!

Give him a damn break.

Wow…that is the very first time, I think, that I’ve ever typed ‘Trillion’….

Jesus H. Christ…..I’ve heard it thrown around…but wow..

Trillion….

BigWyo on April 20, 2010 at 8:54 PM

Let me guess what time Rush mentioned this:

http://www.google.com/trends/hottrends?q=goldman+sachs+sec&date=2010-4-20&sa=X

pedestrian on April 20, 2010 at 8:54 PM

I’m sure Obamao will return the $1,000,000 in campaign donations from Goldman-Sachs employees any minute now.
Bwahahahahaha

itsnotaboutme on April 20, 2010 at 8:54 PM

I thought it was against the law for asking donations out of the White House!!

canopfor on April 20, 2010 at 8:55 PM

I despise Goldman, but my enemy’s enemy is my friend

Daveyardbird on April 20, 2010 at 8:56 PM

“There is no controlling legal authority that says this was in violation of law.” — Al Gore,

canopfor on April 20, 2010 at 8:57 PM

How much does it actually take? Every day, every week, a new, farther-than-before outrage comes out. Every time, I (used) to think “NOW they’ve gone too far, people will not stand for THIS!” Yet they do, and no one cares.

What exactly will it take for average people to demand that this man and his gang of thugs stop?

JamesLee on April 20, 2010 at 8:57 PM

GOP finally pushing back.

Rep. Darrell Issa, the top Republican on the House Oversight committee, is demanding a slew of documents from the Securities and Exchange Commission, asserting that the timing of civil charges against Goldman Sachs raises “serious questions about the commission’s independence and impartiality.”

It’s a long shot for anything to really come through, however, Obama and his admin. is all about narratives, timing, and bullying. When the GOP pushes back, even if the primary ends are out of reach, both the narrative and the timing are thrown off and Obama resorts to bullying. This leaves a very foul taste in American’s mouths and will spell an even greater electoral disaster in November. So good job GOP, keep the pressure up!

Weight of Glory on April 20, 2010 at 8:57 PM

enemy of the state, for the day at least. After they have been brought to heel all is well, until a new enemy is found.

rob verdi on April 20, 2010 at 8:58 PM

Doesn’t anyone wonder about this scenario? Chris Dodd, the crook, wrote the damned thing. That’s enough reason to beat it into the ground.

Although I haven’t had time to read it all, like most legislators, the selling point is that there will be no bank to big to fail.

Why bother? We’ve already witnessed the taxpayer bailout of big banks, right? The big, investment bankers on Wall St. have been deemed too big to fail long ago.

GS, Morgan and the remaining power houses will never be left to fail.

The danger of this bill is that it gives government the power to step in and take over smaller banks. This is all about more nationalization. Soros, Zippy’s daddy, made a statement the other day that the banking system in the US needed to be broken up.

Huh…. wonder what he meant by that? Not his good buds on Wall Street, surely? No. Want he wants to do is nationalize the rest of the banks. Full control. Have a nice little community bank that’s doing just fine? Watch out.

GS is going right along with this charade. Paying fines after pretending to fight this suit will account for approximately 6% of their earnings in 2009. They are posting record earnings despite the meltdown. They will continue to do so. They could care less. This is political theater. Entertainment for the public while they give themselves more power to control your banks.

Cody1991 on April 20, 2010 at 8:58 PM

Even curiouser– zero ads on that search page now. How did that happen?

Any way of finding out when the ad was purchased?

obladioblada on April 20, 2010 at 8:58 PM

So,when do the investigation’s begin!!!

canopfor on April 20, 2010 at 8:59 PM

Obama and Goldman Sachs are joined at the hip. Any fight between them is just for show.

MB4 on April 20, 2010 at 8:59 PM

What Conservatives should do all across the country (screw the RINOs in the GOP, they had their chance)…

… Should be to link this action, with the actual cause of the economic collapse in the first place.

Shove it in back in the Democrat’s face, lay the blame on them, and put them on the defensive…

The MSM has been hiding the truth..

Make it part of the argument, lead every story and debate with it, name names, call for an FBI investigation, don’t let them get away with it again!!!

Seven Percent Solution on April 20, 2010 at 9:01 PM

Where are the trolls defending Barry? He’s filth.

BHO Jonestown on April 20, 2010 at 9:01 PM

What would Lenin have called Goldman Sachs now that Pres Obama recieved 1 Million from them and is busy trashing them all over the place to get more money?

Oh yea “Useful Idiots”

LincolntheHun on April 20, 2010 at 9:02 PM

What despicable behavior. I’m still amazed that we elected this odious lowlife to be president.

WarEagle01 on April 20, 2010 at 9:02 PM

High crimes and misdemeanors?

Liam on April 20, 2010 at 9:03 PM

Goldman Sachs robbed the bank and the dims drove the getaway car.

MB4 on April 20, 2010 at 9:03 PM

Syndicalism

Inanemergencydial on April 20, 2010 at 9:03 PM

What would Lenin have called Goldman Sachs now that Pres Obama recieved 1 Million from them and is busy trashing them all over the place to get more money?

Oh yea “Useful Idiots”

LincolntheHun on April 20, 2010 at 9:02 PM

I would call them partners.

MB4 on April 20, 2010 at 9:04 PM

Hey Barak, wasn’t the donation of over $994 million enough? Goldman Sachs pre-presidency, GOOD, Goldman Sachs post-presidency BAD. Classy.

pjean on April 20, 2010 at 9:05 PM

Obama and Goldman Sachs are joined at the hip. Any fight between them is just for show.

And where does the SEC fit into this?

YYZ on April 20, 2010 at 9:07 PM

The MSM has been hiding the truth..

Make it part of the argument, lead every story and debate with it, name names, call for an FBI investigation, don’t let them get away with it again!!!

Seven Percent Solution on April 20, 2010 at 9:01 PM

While I’m no fan of Greenspan (and his awful wife) I’ll give him credit for having warned Congress repeatedly in the past.

I listened to many hearings when Greenspan spoke about derivatives, the housing market and entitlements. He tried in his cryptic, garbled manner.

The problem is Congress. They are bent on policy without understanding or caring about the the consequences. Of course, when you have to explain anything to Maxine Waters you might as well poke your eye out with a stick. It’s pointless.

Cody1991 on April 20, 2010 at 9:07 PM

Does RICO come into this anywhere? How about possible insider trading? If you artificially create circumstances to generate a money flow, isn’t that illegal?

Liam on April 20, 2010 at 9:07 PM

Wll H*lls Bells,heres the court document,stamped,

April 15,2010!!!!
———————

Btw,what if some sites already have it stored!!
==================================================
Goldman Sachs SEC Fraud Complaint 041610

http://www.scribd.com/doc/30098799/Goldman-Sachs-SEC-Fraud-Complaint-041610

canopfor on April 20, 2010 at 9:07 PM

I don’t see it. Did they get rid of it?

Babino on April 20, 2010 at 9:09 PM


How Goldman Sachs Made Tens Of Billions Of Dollars From The Economic Collapse Of America In Four Easy Steps

Investment banking giant Goldman Sachs has become perhaps the most prominent symbol for everything that is wrong with the U.S. financial system, but most Americans cannot even begin to explain what they do or how they have made tens of billions of dollars from the economic collapse of America. The truth is that what Goldman Sachs did was fairly simple, and there may not have even been anything “illegal” about it (although they are now being investigated by the SEC among others).

The following is how Goldman Sachs made tens of billions of dollars from the economic collapse of America in four easy steps….

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients at vastly overinflated prices.

Step 2: Bet against those same mortgage-related securities and make massive bets against the U.S. housing market so that your firm will make massive profits when the U.S. economy collapses.

Step 3: Have ex-Goldman executives in key positions of power in the U.S. government so that bailout money can be funneled to entities such as AIG that Goldman has made these bets with so that they can get paid after they win their bets.

Step 4: Collect the profits – Goldman Sachs is having their “most successful year” and will end up reporting approximately $50 billion in revenue for 2009.

MB4 on April 20, 2010 at 9:10 PM

Aay, wassa matta; weer jus doin’ some biznis here, huh? Get outta da way now and stop wit the stupid questions.

PaCadle on April 20, 2010 at 9:16 PM

When the GOP takes over in November, let’s hope Issa immediately begins hearings into this.

–Before the Commission had released its announcement, the New York Times published on its website a story describing the suit.

–Less than half an hour after the Times story’s publication, Organizing for America, the successor organization to Obama for America and now a project of the Democratic National Committee (“DNC”), sent millions of supporters an e-mail message from President Obama urging support for “Wall Street Reform.”

–Within hours, the Democratic National Committee had purchased AdWords advertising from Google, Inc. The DNC’s Google campaign fundraising advertisement, headed “Fight Wall Street Greed,” appeared whenever a user ran a Google search for the phrase “Goldman Sachs SEC.” It read, “Help Pres. Obama Reform Wall Street and Create Jobs. Families First!” and included a link to http://www.BarackObama.com, the website of Organizing for America.

JammieWearingFool on April 20, 2010 at 9:17 PM

I think the deal is that the Obama admin will go after Goldman Sachs for basically small potatoes fines and thereby deflect criticism that they should be going after the Goldman Sachs crime syndicate with RICO. No one will serve any time, except maybe some flunky. Any fines will be pocket change to Goldman Sachs and they can way more than make up for that on their next con.

MB4 on April 20, 2010 at 9:18 PM

Government Sachs strikes again.

TXUS on April 20, 2010 at 9:23 PM

Indeed, the link to Obama’s website has gone down the memory hole when you run that search now.

JammieWearingFool on April 20, 2010 at 9:24 PM

All in a day’s scamming….open a case now, come up with some “slap-on-the-wrist” thing before November, claim to be “tough on Wall Street scam artists” before the elections — and block the next Congress from doing more because of “double jeopardy”.

Nothing to see here, move along…

cthulhu on April 20, 2010 at 9:24 PM

It’s all just coincidence! Really! TRUST ME!
Barry Obama

GarandFan on April 20, 2010 at 9:24 PM

Step 3: Have ex-Goldman executives in key positions of power in the U.S. government so that bailout money can be funneled to entities such as AIG that Goldman has made these bets with so that they can get paid after they win their bets.

MB4 on April 20, 2010 at 9:10 PM

And that’s the key. And for that crime – the real crime – the robbing of tax paying Americans – they all skate.

TheBigOldDog on April 20, 2010 at 9:24 PM

Obama and Goldman Sachs are joined at the hip. Any fight between them is just for show.

And where does the SEC fit into this?

YYZ on April 20, 2010 at 9:07 PM

Shell game.

http://www.rollingstone.com/politics/news/;kw=3351,11459

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It’s a gangster state, running on gangster economics, and even prices can’t be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can’t stop it, but we should at least know where it’s all going.

the_nile on April 20, 2010 at 9:26 PM

This is a bad sign. The investment banks were a large contributor to his campaign, so if he loses the banks for some reason, then that means he will have a large shortfall that will need to be made up. I think his early fund raising means he’s going to drop the hammer on the investment bankers. It looks like the double dip might start anytime between now and the end of the year, so he’s going to throw the investment bankers under the bus to appease the voters, and it may work. A long line of investment bankers wearing orange jumpsuits paraded across the TV screen during a financial crisis might be the only thing that can save them.

DFCtomm on April 20, 2010 at 9:26 PM

The following is how Goldman Sachs made tens of billions of dollars from the economic collapse of America in four easy steps….

Step 1: Sell mortgage-related securities that are absolute junk to trusting clients at vastly overinflated prices.

MB4 on April 20, 2010 at 9:10 PM

You forgot Step 1/2: Have Democrats pass the Community Reinvestment Act as part of a ‘Social Engineering’ program, give it ‘teeth’ under President Clinton to force banks to make bad loans, then add Fanny Mae and Freddy Mac under Franklin Raines, Jim Johnson, and Jamie Gorelick which bundled the bad loans into junk stocks that were sold to Wall Street with the promise that the Federal Government would back them up.

Seven Percent Solution on April 20, 2010 at 9:28 PM

It’s like that old poker adage. You are at a table with others, in this case Barack Obama and Goldman Sachs, and you can’t figure out who the mark is. Well guess what.

MB4 on April 20, 2010 at 9:28 PM

Seven Percent Solution on April 20, 2010 at 9:28 PM

True. I also left off step 5 – We’re scroomed.

MB4 on April 20, 2010 at 9:29 PM

If he hires William K. Black, then we know the orange jumpsuits are coming out.

DFCtomm on April 20, 2010 at 9:31 PM

Is this Prez a total scumbag or what…………….

Cinday Blackburn on April 20, 2010 at 9:33 PM

Looks, to me, like he is daring anyone to impeach his ass.

Cybergeezer on April 20, 2010 at 9:34 PM

I did not have SECsual relations with that firm
Goldman Sachs
;-)

macncheez on April 20, 2010 at 9:34 PM

You forgot Step 1/2: Have Democrats pass the Community Reinvestment Act as part of a ‘Social Engineering’ program, give it ‘teeth’ under President Clinton to force banks to make bad loans, then add Fanny Mae and Freddy Mac under Franklin Raines, Jim Johnson, and Jamie Gorelick which bundled the bad loans into junk stocks that were sold to Wall Street with the promise that the Federal Government would back them up.

Seven Percent Solution on April 20, 2010 at 9:28 PM

Step 1/2 wasn’t needed once you loosened the regulations and allowed them to capture the regulators, then it would have been off to the races no matter what. The CRA was just the whip cream and cherry on the sundae. It was nice but wasn’t necessary.

DFCtomm on April 20, 2010 at 9:35 PM

If he hires William K. Black, then we know the orange jumpsuits are coming out.

DFCtomm on April 20, 2010 at 9:31 PM

I think that’s what should be done , but that wont happen.

the_nile on April 20, 2010 at 9:35 PM

A D.C. Insider Joins the Team
Goldman Hires Former White House Counsel; Charged Employee Deregistered
—————–

By EVAN PEREZ

Goldman Sachs Group Inc. hired one of Washington’s most prominent Democratic lawyers as it gears up to defend itself from civil charges of defrauding investors. At the same time, the company deregistered the employee charged in the case.

Greg Craig was White House counsel under President Barack Obama until January, serving as the president’s top lawyer and a key player in the administration’s efforts to close the Guantanamo Bay prison for terror detainees.
===================================================

http://online.wsj.com/article/SB10001424052748704448304575196462276959440.html?mod=WSJ_hpp_MIDDLTopStories

canopfor on April 20, 2010 at 9:39 PM

I think that’s what should be done , but that wont happen.

the_nile on April 20, 2010 at 9:35 PM

I completely agree, but politically it wouldn’t be good for the GOP. It’s an interesting strategy if they decide to pursue it, but I think the inevitable financial hardship from doing the right thing would swamp them regardless.

DFCtomm on April 20, 2010 at 9:39 PM

It’s already set up in the MSM: If we use the law against Obow, the laws Dems themselves have passed, then it’s inherently and automatically racist to apply those existing laws to their guy in the WH.

Liam on April 20, 2010 at 9:39 PM

True. I also left off step 5 – We’re scroomed.

MB4 on April 20, 2010 at 9:29 PM

It’s a good thing under ObowmaCare…

… Lotion is free.

Seven Percent Solution on April 20, 2010 at 9:40 PM

did not have SECsual relations with that firm
Goldman Sachs
;-)

macncheez on April 20, 2010 at 9:34 PM

macncheez: I smell a lit cigar!!haha:)

canopfor on April 20, 2010 at 9:40 PM

Why is the WH soliciting donations anyway? The GOP better keep fighting and playing hardball or we won’t make it to November.

conservative pilgrim on April 20, 2010 at 9:42 PM

So did Obama give back the nearly 1,000,000 dollars he took happily for his election?

Accountability and all that?

Good Lt on April 20, 2010 at 9:42 PM

Step 1/2 wasn’t needed once you loosened the regulations and allowed them to capture the regulators, then it would have been off to the races no matter what. The CRA was just the whip cream and cherry on the sundae. It was nice but wasn’t necessary.

DFCtomm on April 20, 2010 at 9:35 PM

Putting banks and lending institutions under the penalty of fees, fines, and regulations for not implementing a Democrat sponsered ‘Social Engineering’ program that continued under the radar of most Americans for thirty years that evenually caused the collapse of the World’s economy doesn’t sound like a loosened regulation to me…

… Maybe you can elaborate?

Seven Percent Solution on April 20, 2010 at 9:43 PM

Heh. “goldman sachs sec 10th most popular search in the past hour”, per Google Trends.

KS Rex on April 20, 2010 at 9:43 PM

This needs a theme!!!
==============================
supertramp-crime of the century

http://www.youtube.com/watch?v=PdXU_M9t004

canopfor on April 20, 2010 at 9:43 PM

You forgot Step 1/2: Have Democrats pass the Community Reinvestment Act as part of a ‘Social Engineering’ program, give it ‘teeth’ under President Clinton to force banks to make bad loans, then add Fanny Mae and Freddy Mac under Franklin Raines, Jim Johnson, and Jamie Gorelick which bundled the bad loans into junk stocks that were sold to Wall Street with the promise that the Federal Government would back them up.

Seven Percent Solution on April 20, 2010 at 9:28 PM

All sold as good public policy. The right thing to do. The moral thing to do.

Meanwhile, Frank, Raines, Dodd, Johnson, Gorelick and others were making huge amounts of money in a variety of ways. For nothing, really, other than running a Madoff type scam on taxpayers.

Wall St. types have a handy label for their clients – “Bag Holder”. They have other names they use, but that is the most polite one.

My point is that Frank, Dodd, Clinton and numerous others do the same thing as their Wall St. cronies. They create a scam, pawn it off on the public, i.e. the taxpayers, and proclaim that they’re helping people.

The only people they help are themselves.

It’s all a game. We know what they’re doing. This isn’t anything new in DC, but we know.

Time to get rid of them. Interesting that quite a few of the old bastards like Dodd are leaving. Dim sod that he is, he knows the game’s up for him.

Cody1991 on April 20, 2010 at 9:44 PM

So did Obama give back the nearly 1,000,000 dollars he took happily for his election?

Accountability and all that?

Good Lt on April 20, 2010 at 9:42 PM

He’s raising money off the Goldman Sachs suit to do just that.

/

JammieWearingFool on April 20, 2010 at 9:44 PM

Is it any wonder why 76% of the awake public doesn’t trust the government.

tru2tx on April 20, 2010 at 9:45 PM

Goldman Sachs (GS) is bulletproof for the next two years, particularly when the Dodd act passes. Buy when its stock goes down to 150 and sell when at 160, just a few cents above its close today. Take your profits then put them into gold and guns.

TXUS on April 20, 2010 at 9:45 PM

It’s a good thing under ObowmaCare…

… Lotion is free.

Seven Percent Solution on April 20, 2010 at 9:40 PM

My country was destroyed and all I got was this lousy Health Care.

TheBigOldDog on April 20, 2010 at 9:46 PM

I can’t believe this fuc&ing a$$hole still has a fuc&king logo. A LOGO for chrissakes.

D2Boston on April 20, 2010 at 9:49 PM

I smell a lit cigar!!haha:)

canopfor on April 20, 2010 at 9:40 PM

I smell a future senator and and a future Sec Of State !

macncheez on April 20, 2010 at 9:51 PM

Waterloo

uknowmorethanme on April 20, 2010 at 9:51 PM

The danger of this bill is that it gives government the power to step in and take over smaller banks. This is all about more nationalization. Soros, Zippy’s daddy, made a statement the other day that the banking system in the US needed to be broken up.

Not to nationalize but to sell off the assets to the big banks, the owners of the Fed. It’s about the expansion of power between big banks and government.

True_King on April 20, 2010 at 9:54 PM

Maybe you can elaborate?

Seven Percent Solution on April 20, 2010 at 9:43 PM

There were CDSs based on the securities that were based on the mortgages, and there was a large demand for all these products. The bottle neck on the system was that there are only so many people and only so many houses to produce the mortgages that were the basic building blocks. They would have written every one of these bad loans regardless of the CRA just to get the mortgages, eventually.

The changes made to Glass/Steagel to remove the leverage limits and drop the firewall between investment banks and deposit banks, plus the capturing of the various regulating bodies who were more than willing to turn a blind eye to criminal fraud ensured that you didn’t need the CRA.

DFCtomm on April 20, 2010 at 9:58 PM

My country was destroyed and all I got was this lousy Health Care.

TheBigOldDog on April 20, 2010 at 9:46 PM

It isn’t even health care! It’s a mandatory purchase enforced by the IRS!

Inanemergencydial on April 20, 2010 at 9:59 PM

DFCtomm on April 20, 2010 at 9:58 PM

I appreciate your insight, there is enough blame to go around…

… But why were the Democrats so insistent that there was no problem right before the crash?

Seven Percent Solution on April 20, 2010 at 10:07 PM

It’s about the expansion of power between big banks and government.

True_King on April 20, 2010 at 9:54 PM

So the big banks and the joooos who own the big banks will get fatter with poor people’s money and Hussain’s government will be aiding and abating and facilitating it all along ?
And what is it that the lefties keep accusing Bush and repubs for ? Oh snap!

macncheez on April 20, 2010 at 10:11 PM

This has all the reality of a professional wrestling match.

kingsjester on April 20, 2010 at 10:19 PM

But why were the Democrats so insistent that there was no problem right before the crash?

Seven Percent Solution on April 20, 2010 at 10:07 PM

Why would they? Most people in the financial sector didn’t think there were any problems. You had a few bears who would go on CNBC and say we were in trouble, and they got snickered at. The FBI had an idea that the system was eaten up with fraud, but they had manpower shortages and increased responsibility dealing with terrorism, and I don’t think they had any idea how big the problem in reality actually was. It seems easy now to see what happened, but at that time the band was playing and we didn’t really want to know what went on behind the curtain.

DFCtomm on April 20, 2010 at 10:22 PM

What is being overlooked is the role of the rating agencies. I don’t think the SEC has much of a case against GS or the fellow that constructed ABACUS. Paulson and Paolo Pellegrini simply identified the problem and took the other side of the trade, period.

The claim that Paulson stacked the deck is tenuous at best and not illegal. Paulson & Pellegrini identified specific tranches with the worst of the worst 2005-2006 NINJA, ALt-A mortgages, primarily located in the states where real estate prices had run up the most. They recommended over 100 instruments of which only around 50 were included. Moreover, these were not retail investors. These were by definition sophisticated investors. Something like 7% defaults were all that were required to wipe out the guys on the other side of the trade.

It is stupid to suggest that GS had an obligation to identify a) the people on the other side of the trade b) that Paulson was betting against the CDOs. People who are making such claims need to put their big girl panties on.

I tend to agree that the derivatives market needs to be regulated and needs greater transparency. Between $400 trillion & $750 trillion dollars of derivatives are floating out their like a super massive black hole. But this is political grandstanding. Where are the other IBs who were doing the same thing and on an equally large scale?

The CRA was indeed the first domino and without it none of this would have been possible. So it is more than a little disengenous for Barney Frank and Barack Obama to wag their finger at the IBs when they too played a part in creating the circumstances for the MBS blowup.

I’d much rather see government focus on the commercial real estate market which has significant implications for the community and regional banks. As well as the coming foreclosure and strategic defaults for the 2005-2006 Alt A defaults that should begin this year but carry over for the next couple of years.

R Square on April 20, 2010 at 10:22 PM

DFCtomm on April 20, 2010 at 10:22 PM

They knew, it was all part of the plan because an election was coming up…

… Winning at all costs, what ever it takes, the ends justify the means.

Seven Percent Solution on April 20, 2010 at 10:33 PM

R Square on April 20, 2010 at 10:22 PM

The CRA demands that banks offer credit in a manner consistent with safe and sound operation. What part of these mortgages were safe and sound operating procedures? Wasn’t the creation of the CDO and later the CDS the first and second dominoes?

DFCtomm on April 20, 2010 at 10:42 PM

They knew, it was all part of the plan because an election was coming up…

… Winning at all costs, what ever it takes, the ends justify the means.

Seven Percent Solution on April 20, 2010 at 10:33 PM

Your implying that this was a large conspiracy. The banks set themselves up to fail so the government would be able to seize yet another industry? That’s very elaborate. Isn’t greed a much simpler motivation. If it was a conspiracy and the banks intentionally set themselves up for failure, then why did they allow Lehman brothers to fail? If it had been a conspiracy wouldn’t they have saved them as well.

DFCtomm on April 20, 2010 at 10:47 PM

The Chicago Way:
1. Set up Straw Man.
2. Demonize the dirty rotten greedy Straw Man.
3. Ask for money to fight Straw Man.
4. Laugh on way to bank.
5. Anybody who disagrees belongs to the Ku Klux Klan.

Steve Z on April 20, 2010 at 11:12 PM

The CRA demands that banks offer credit in a manner consistent with safe and sound operation. What part of these mortgages were safe and sound operating procedures? Wasn’t the creation of the CDO and later the CDS the first and second dominoes?

I would approach it from a slightly different angle. The CRA was given teeth under Janet Reno to impose penalties on banks that red-lined and created incentives for institutions to comply with the stated goals of ACORN, Barney Frank et al, and that was to make home ownership easier for people who had traditionally been unable to acquire home mortgages.
This was facilitated in part by Fannie Mae and Freddie Mac.

The move to securitize mortgages (MBS)was an effort, in part by the market to reduce risk, by creating tranches of mortgages and selling the income stream to investors. In theory, there is nothing wrong with this process so long as the rating agencies do their job and rate securities relative to their risk, which implies adjusting risk premiums etc…

But at some point BBB tranches were rated as AAA which obviously distorts the market clearing mechanisms of evaluating risk and reward. Moreover, the securitization process allowed underwriting institutions to flip mortgages quickly rather than keep them in their loan portfolio for the duration of the loan. To underscore this point, traditionally, local banks would make loans after evaluating the credit worthiness of the borrower, knowing they would be stuck with the loan. However, the CRA fundamentally changed this model by imposing costs on lending institutions who did not lend to less credit worthy individuals.

So I put the fist domino at the foot of ACORN and others who agitated for government action which created unintended consequences relative to the CRA. The securitization process provided a way for institutions to reduce their risk profile

The CDO process failed in part due to the velocity and magnitude of the market and the rating system.

The role of the synthetics you allude to only magnified the problem which permitted exponential growth of the limited supply of mortgages.

R Square on April 20, 2010 at 11:19 PM

Isn’t greed a much simpler motivation.

DFCtomm on April 20, 2010 at 10:47 PM

Not when absolute power is at hand…

… and you can employ those in the Federal Government that caused the failure, giving them immunity.

It is not a conspiracy theory, we are living with it.

… The fact ’60 Minutes’ can’t be bothered to explain it all in an hour like everything else, just proves the fact.

Seven Percent Solution on April 20, 2010 at 11:25 PM

R Square on April 20, 2010 at 11:19 PM

The CRA didn’t really get teeth till 94, but the first CDO was created in 87, so it doesn’t appear that the CDO was a response to heightened pressure from the government. I am however, not in the financial industry so it is possible that the creation of the CDO, was not a response to the CRA, but was later found to be an excellent tool to move the bad loans mandated by the CRA off their balance sheet. If you are in the financial sector then you might be able to elaborate more on the behind the scenes motivation.

P.S. I do agree with you about the ratings agencies.

DFCtomm on April 20, 2010 at 11:39 PM

R Square on April 20, 2010 at 11:19 PM

I understand what your saying. That the CDO was created as just another financial tool, but do to pressure from the CRA it was utilized as a method to move questionable loans off of banks balance sheets, and that is how the ball got rolling. My point is that regardless of the CRA the CRO would have eventually been put to the same destructive purpose regardless of the CRA, and that’s why I state that the CRA was just a secondary cause of the crisis.

DFCtomm on April 20, 2010 at 11:52 PM

How long in advance does it take to buy a google keyword?

Buy Danish on April 20, 2010 at 11:55 PM

The White (Goldman Sachs) House

Nope. Nothing to see here …

It’s just a mere coincidence that the following list of Goldman Sachs employees went on to work in the White House and U.S. Treasury. These people are simply the “best and brightest” (who had no idea of a pending financial crash, yet novices were sounding the alarms).

No crime here … Just our humble “public servants.”

MB4 on April 21, 2010 at 12:14 AM

The Clinton/Rodham Crime Family sold pardons for money and politics.

The Obama/Alinsky administration is selling prosecutions for politics and money. They can sell the pardons later!

Progress!

Noel on April 21, 2010 at 12:34 AM

interestingly enough, there’s an article today about how Obama is upset at Netanahu since the latter’s advisers are running pro-Jerusalem ads in the papers.

Phoenician on April 21, 2010 at 1:09 AM

Putting banks and lending institutions under the penalty of fees, fines, and regulations for not implementing a Democrat sponsered ‘Social Engineering’ program that continued under the radar of most Americans for thirty years that evenually caused the collapse of the World’s economy doesn’t sound like a loosened regulation to me…

… Maybe you can elaborate?

Seven Percent Solution on April 20, 2010 at 9:43 PM

The idea that the banks wouldn’t have made these bad loans without government pressure is a joke. I’m sure everyone was writing liar loans to idiots buying $700k houses on $60k salaries because of government pressure.

People were greedy and bought into the idea that housing prices would always go up. Banks were more than happy to give you any loan you wanted since they were just going to securitize it anyway.

Republicans who blame every problem in the world on something some Democrat did in the past are as tiresome as Democrats who blame everything wrong in the world on Bush.

Can’t you guys see what the plan is? Obama targets Goldman Sachs to goad Republicans into defending them. And so many people are so quick to take the bait. “Enemy of my enemy is my friend”? Do you really want to call GS your friend? Holy crap, it’s like you guys want to hand 2012 to Obama right here and now. Criticize Obama for trying to profit off this, but putting yourself out there to defend the bankers who have ripped off US taxpayers for astronomical sums is just political stupidity.

John9400 on April 21, 2010 at 2:09 AM

I’d much rather see government focus on the commercial real estate market which has significant implications for the community and regional banks.

What do you expect the government to do about the coming CRE crash?

John9400 on April 21, 2010 at 2:17 AM

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