Thursday, July 15, 2010

Conspiracy Theory Alert: Goldman Sachs Settles

Goldman Sachs has settled with the SEC all outstanding fraud charges for a puny (in Goldman's world) $500 million, the SEC has just announced. For conspiracy theorists, there is a lot to look at here.

Many believe that the original charges in April were politically motivated to help push the financial "reform" package through Congress. You see Wall Street is so baaad that the "reform" package is a must. The charges themselves appeared to be bogus. In April, I wrote:

Major players in the world of finance, and I am talking about the top players, tell me that they are yet to find any top level lawyer who thinks there is any merit to SEC's case. They are quite simply amazed that the SEC brought this case.
Things got so suspicious that the head of the SEC head to come out and deny any political motives. CBS reported back then:

The head of the Securities and Exchange Commission said Wednesday there was no connection between the timing of the agency's fraud charges against Goldman Sachs and efforts in the Senate to speed passage of sweeping legislation overhauling financial regulation.

SEC Chairman Mary Schapiro was speaking to a Senate panel weighing the agency's budget request. Some Republicans have accused the SEC of timing the April 16 announcement of civil fraud charges against Goldman to bolster prospects for the legislation, now at a critical stage in the Senate.
That's the background, now lets look at what has occurred in the last 48 hours.

As I reported this morning, Warren Buffett met with the President yesterday. In part, this is what I wrote:

The last time Buffett was in heavy contact with the executive branch was when he was in heated phone conversations with former Treasury Secretary Hank Paulson. After those conversations, Buffett bought a multi-billion dollar position in Goldman Sachs. When it them became clear that Goldman was going to be treated different than Bear Stearns and Lehmann Brothers, and that the government was going to support the firm, the stock soared, making more billions for Buffett.

Expect happy talk from Buffett, after this meeting with the President.

Reportedly, the meeting was at Buffett's request. Not a good sign. Buffett is a taker. It is not clear what Buffett took from the meeting. But Buffett sure likes the Mr. Rogers happy talk cover. Word out of the meeting is that Buffett came in with a frayed tie, so the President gave him one of his. If that's all Buffett got out of the meeting, I'll eat my shoes.

My shoes shall remain comfortably on my feet. 

Buffett, the largest shareholder in Goldman Sachs, meets with the President, the next day Goldman settles for chump change. Nuff said.

BUT, not before the financial "reform" bill passes. Within hours of its passing, the SEC called a press conference to announce its settlement with Goldman.

So in order to believe this was NOT a conspiracy. You will have to believe in the following coincidences:

1. That the initial charges against Goldman came at the same time as the financial reform bill started to heat up in Congress was just coincidence.

2. That the SEC charges appeared hurriedly put together and didn't seem to appear particularly strong to top legal experts was all just coincidence and not a political rush job.

3. That the meeting just yesterday between Warren Buffett, Goldman Sachs largest shareholder, and the President was just coincidence.

4. That the  SEC dropped the charges only after the financial regulation "reform" bill passed was just coincidence.

Yes, if you believe the all the above was just coincidence, call me. I have a great fog making machine in San Francisco that I would like to sell you.

P.S. The indication of what a bunch of evil bastards this entire crew is, is that they are going to let  (former?)Goldman trader, Fabrice "Fabulous Fab" Tourre, continue as the fall guy in this spectacle. He continues to face SEC charges. Goldman on Fabrice:

Goldman will cooperate in the proceeding against Fabrice Tourre, the employee who was also named in the S.E.C.’s lawsuit


  1. The lack of surprise at the turn of events is deafening. Honestly, Goldman will end up making MORE money after the "reform" package goes through than they did before. How? I don't know- but they do. They don't allow regulation to move forward without ensuring that they benefit more than everybody else.

  2. Is that $500 mil tax deductible??