Financial crisis inquiry begins

[democracy1st]

Run time: 10:25 https://www.youtube.com/watch?v=1rzo3Axz5lY   Posted on YouTube: January 14, 2010 By YouTube Member: Views on YouTube: 0   Posted on DU: January 15, 2010 By DU Member: democracy1st Views on DU: 368

 
Will commission lead to legislation and criminal prosecution, or just more cathartic theater? Political economist Tom Ferguson and McClatchy Newspapers Economics Correspondent Kevin G. Hall sit down with Real News Network Senior Editor Paul Jay to discuss the opening act of the new US government commission.


Goldman Sachs Admits to 'Improper Behavior' At Yesterday's Banking Hearings
By Susie Madrak


WASHINGTON — Goldman Sachs' chief acknowledged Wednesday that the investment bank engaged in "improper" behavior in 2006 and 2007 when it made huge bets on a housing downturn while peddling as safe more than $40 billion in securities backed by risky U.S. home loans.

Lloyd Blankfein, Goldman's chairman and chief executive, made the surprising concession at the opening hearing of the Financial Crisis Inquiry Commission, a 10-member panel that Congress created to investigate and lay out for the public the causes of the worst financial crisis since the Great Depression.

Blankfein and senior officers of three other of the nation's most prominent banks told the panel that serious flaws in their risk models and business practices contributed to Wall Street's meltdown and the massive taxpayer bailouts that followed. The commission also heard testimony that the banks and quasi-government mortgage giant Fannie Mae recklessly took on as much as 95 times more risk than they could cover, and that Wall Street excels "at pulling the wool over the eyes of the American people."

Blankfein faced the toughest questioning.

Commission Chairman Phil Angelides, a former California state treasurer, warned Blankfein that he'd be "brutally honest" in his questioning. He asked why Goldman thought it was necessary to take out protection against investment-grade mortgage securities it was selling by purchasing insurance-like contracts known as credit-default swaps. Angelides likened it to selling a car with knowledge it had faulty brakes and then taking out an insurance policy on the buyer.

"I do think the behavior is improper, and we regret . . . the consequence that people have lost money in it," Blankfein told Angelides.

I don't want Blankfein's feigned regret. I want him to have to live the rest of his life eating ramen noodles and living in a cardboard box on the street, just like the people who lost their life savings have to do.

Until Wednesday, Goldman had insisted that it was merely managing its risks when it placed "hedges," in the form of wagers against the housing market, various venues including in secret offshore deals, with insurance giant American International Group and on a private London exchange.

In November, McClatchy reported exclusively that Goldman failed to tell investors about its contrary bets while selling $39 billion in risky mortgage securities it had issued, and another $18 billion in similar bonds issued by other firms. The Securities and Exchange Commission and Congress are investigating Goldman's swap dealings, said knowledgeable people who asked not to be identified because of the sensitivity of the issue.

While conceding that its contrary bets were improper, Blankfein said that in most cases Goldman took those positions to offset bets it had underwritten for clients seeking to wager on a housing downturn.

http://crooksandliars.com/susie-madrak/goldman-sachs-admits-improper-behavio

[Enthusiast]

1. Like the man said-

finally we aren't hearing from someone spouting the ACORN-Fanny and Freddy mantra explanation for the meltdown. Someone should pay dearly for this malfeasance. The sooner President Obama separates his administration from Summers and Geithner the better. They were cheerleaders for the kind of lax regulation and enforcement that led directly to the this problem.

[midnight]

2. Geithner was put in charge of a rescue plan for second mortgages last spring

that has failed to get started... The excuse is that the bailed out banks have not yet singed on to this program?????

[PA Democrat]

3. This is the type of analysis of the financial crisis that is so glaringly LACKING in the MSM.

If I have to hear another person spouting the idiot's talking points about ACORN or the individuals buying homes that were beyond their means I am going to scream. I keep asking these people WHY banks made these loans in the first place and then explain the credit default swaps. I used the great analogy I read somewhere of allowing everyone in the neighborhood to take out an insurance policy on the house where the unsupervised kids who like to play with matches live.

[Enthusiast]

4. You said it, PA Democrat!

How many times have we heard the simplistic ACORN, Barney Frank, Freddy Mac and Fanny May explanation for the meltdown? I would bet this has been repeated on Fixed Noise every day since the crash. And every Faux Noise viewer believes this wholeheartedly.

I watched Limbaugh repeat this nonsense on the Leno show. He had to hurry up to get it in. It was almost funny. The GOP is desperate to shift the blame to poor people and the Democrats.