Senate committee details Wall Street criminality

Goldman Sachs and Deutsche Bank AG, two of the largest investment banks in the world, profited from the sale of securities they knew to be worthless, and Goldman later “misled” congress about its activities, according to a report published Wednesday by the United States Senate Permanent Subcommittee on Investigations.

The Senate committee, headed by Michigan Democrat Carl Levin, concluded that Goldman Sachs “used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs [mortgage-backed securities] in ways that created conflicts of interest with the firm’s clients and at times led to the bank’s profiting from the same products that caused substantial losses for its clients.”

Levin’s report goes further than the Financial Crisis Inquiry report, issued January 27, which stopped short of naming individual cases of malfeasance. The 635-page report offers specific details about offenses committed by Goldman Sachs, Deutsche Bank, Washington Mutual and Moody’s rating agency, but does not have the authority to call these actions criminal, according to Levin.

Levin’s report presents the doings of individual organizations—including credit rating agency Moody’s, subprime leader Washington Mutual, Deutsche Bank, and Goldman—as case studies, pointing to the much broader criminality throughout the whole of Wall Street.

In addition to selling worthless securities to investors, the report concluded that Goldman attempted to manipulate the mortgage-backed securities market as a whole in 2007 by artificially inflating prices in order to drive out competitors who had taken “short” positions on mortgage-backed securities.

Goldman traders were encouraged to offer prices that would “cause maximum pain” and “have people totally demoralized,” according to internal emails. In earlier testimony before Levin’s committee, Goldman traders denied that they had attempted to manipulate the market, and claimed that their emails to the contrary were exaggerations.

via www.wsws.org

Comments

[Alain]

This is a perfect example of the "decline of symbolic efficiency." The truth of the financial crisis has been discussed everywhere: best selling books, newspapers, even MSM and now the US Senate. It doesn't make a difference in terms of solutions or changes in policy. In terms of the financial architecture, everything is the same as it was before the crisis. It would seem nothing short of complete chaos will make a difference - and even then maybe not.

[The Mathmos]

Great David Harvey talk, with humoristic drawings, on the financial mess :

http://www.youtube.com/watch?v=qOP2V_np2c0