Any Fund or Pension Manager that does not pull out of Goldman-Sachs should be FIRED

[Vinnie From Indy]

After reading the latest about how Godman-Sachs actually bundled up investments and sold them to clients and then bet against them, I am a bit shocked that many large fund managers around the nation have not not threatened to pull their assets from Goldman. If I were a fund manager or pension fund manager and had a business relationship with Goldman, I would be raising holy hell about the news coming out. It seems Goldman was playing their customers for chumps and marks. How in the world could any manager ever have faith that Goldman wasn't/isn't betting against their interests in the future?

It would seem that if one were in the position of handling funds for a group and using Goldman-Sachs, this latest news would be something that could not be ignored.

In most professions, fiduciary responsibility is a big deal and failure to uphold this relationship is actionable in court. I guess that only applies to the little people.

******************************************

"For years, Wall Street whispered that Goldman Sachs profited handsomely by trading ahead of — or even against — its own clients.

On Tuesday, a Goldman executive made an unusual admission that, in some cases, the rumors were true.
In an e-mail message to select clients, Thomas C. Mazarakis, the head of Goldman’s fundamental strategies group, acknowledged that his unit often provided investment ideas that the firm had already traded on. Sometimes Goldman has even taken the opposite approach, betting against particular instruments that the group has recommended.

Last month, the Securities and Exchange Commission and Congress began investigating how Goldman and other firms had created bundles of mortgages known as collateralized debt obligations, or C.D.O.’s, that were sold to investors at the same time that the banks had privately bet against the instruments. Some of these C.D.O.’s later fell in value, creating losses for those clients who bought them — and profits for Goldman.

Goldman also prevailed upon ratings agencies to assign the C.D.O.’s high investment grades, even as it planned to short, or bet against, the securities


http://www.nytimes.com/2010/01/13/business/13goldman.html

[cbdo2007]

1. They make too much money off of them.

[uponit7771]

2. Or the company seriously sued, anyone advocating getting into the market now is...

...incompetent or on the take

[FarCenter]

3. Any fund or pension manager who relies on what he's told by a bank or broker should be fired

Or who relies on a rating agency rating.

[closeupready]

4. When it comes to money, few are scrupulous.

Indeed, holding to scruples can land you in hot water, which is not fair, but is a reality.

[Mithreal]

6. Very much agreed, but not just at banks is this true

Anyone else get the feeling they have to give the banking employees such big bonuses to avoid embarrassing outbreaks of conscience?

[Igel]

5. It was a hedge fund.

Hedge funds hedge. It's what they do. If they didn't hedge they wouldn't be hedge funds.

Hedging often involves short selling. Perhaps just to mitigate losses. Perhaps to increase gains.

It's rather like eschewing because he was a community organizer that, um, actually organized instead of going and setting up calling him a "community organizer engaged in full-time legal practice."

Moreover, not only was it a hedge fund it was an edgy hedge fund. Great when Harvard's endowment was high and we bloviated about how Harvard and other Ivy League schools should disburse its wealth to its students and there was Congressional pressure to make them do precisely that. Harvard, of course, terminated that program effective next year.

What I want to know is what unethical lender yielded the faulty mortgages that went into the CDOs--they'd be a bit closer to the facts and have even better knowledge. It should be closed and anybody in government with any links to it while it was engaged in such reprehensible behavior should be immediately fired or impeached.

Oh. Never mind. If we did that we'd have to flush billions of dollars of federal funding for some quasi-governmental agencies that are far too big to fail and, apparently, too well connected to testify.