Newsweek on Goldman: Goldman vs. Its Clients

[laughingliberal]

Daniel Gross
Goldman vs. Its Clients
The SEC's lawsuit shows how Goldman Sachs put its own interests ahead of its customers'.
Apr 16, 2010 | Updated: 2:20 p.m. ET Apr 16, 2010

At Goldman Sachs, it's always all about the clients. So when the Securities and Exchange Commission charged the firm today with fraud for its role in constructing and peddling a deceptive investment, of course Goldman said it is innocent and will vigorously contest the charges. It was a release terse even by the firm's usual standards.

The company's defense will largely revolve around the fact that Goldman was simply serving its client. At least that's what Goldman, a firm that is ferocious about seeking out its own self-interest, would like us to think. What's the first of Goldman's business principles? "Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow." In the recently released annual letter to shareholders, the word client (or clients) appears 56 times, by my count. To paraphrase Bryan Adams, everything Goldman does, it does it for its clients. "Among the roles we play for our largely institutional client base are advisor, financier, market maker, asset manager and co-investor." Why did Goldman use cheap government-provided capital and government-backed debt to speculate and hedge? "The vast majority of the risk we take and the revenues we generate is derived from trades that advance a client need or objective." Why did Goldman buy credit-default protection from AIG—bets on which the taxpayer later made Goldman whole? "This protection was designed to hedge equivalent transactions executed with clients taking the other side of the same trades. In so doing, we served as an intermediary in assisting our clients to express a defined view on the market."

The Recession's Winners and Losers
Not everyone suffered during the financial crisis. A look at those who won and lost big during Wall Street's meltdown.

The Greediest People of All Time
What They Got Away With

Goldman is just a puppet whose strings are pulled by all-powerful clients. But on Wall Street there is a thin line between clients and easy marks. And Goldman has been accused of not always acting in the best interest of its clients. Several of the books about the financial crisis have noted that Goldman scaled back its exposure to subprime debt while continuing to peddle subprime bonds and securities backed by risky mortgages to clients. Henny Sender reported this week in the Financial Times that a $1.8 billion real estate fund managed by Goldman has lost 98 percent of its value since 2005. Yes, Goldman lost money too, because it invested alongside its clients in the fund. But the firm has also collected tens of millions of dollars in management fees for lighting its clients' funds on fire. <snip>

http://www.newsweek.com/id/236523

It's time to take these guys down. Too big to fail = too big to live.