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

Goldman Sachs Stock at 52-Week Low

Shares of Goldman Sachs fell today  by 2.5% to a new 52-week low of $133.50 on news that  the SEC is now probing a second collateralized debt obligation  deal, called Hudson Mezzanine 2006-1.

The bad news doesn't stop with this company. Did I mention Goldman was a short? Oh yeah, months ago.


Also remember my prediction when GS stock was over $200: When GS breaks under $100 per share, Lloyd Blankfein is a goner.

This is an object lesson as to what happens when you play footsie with the government. When the government finally turns on you, and you don't have the PR skilz and savvy to blow it back  on the government (and Goldman clearly doesn't), your very existence comes into question.

Goldman Sachs PR Confusion

Goldman Sachs has changed its public relations strategy once again, notes CNBC's John Carney. Carney writes:

Goldman Sachs has decided to keep a low profile in response to harsh criticism and a subpoena fired at the company by the Financial Crisis Inquiry Commission yesterday.

On a conference call with reporters following the announcement of the subpoena, the chairman of the commission, Phil Angelides, angrily accused Goldman of “deliberately and disruptively” trying to thwart the commission’s investigation by dumping billions of pages of documents in response to requests for information.

Goldman offered up only the blandest and most tepid denial. "We have been and continue to be committed to providing the FCIC with the information they have requested," Goldman said in a statement.

Goldman is deliberately under-reacting to the public pillorying served up by Angelides, a person familiar with the thinking at Goldman says.

Given that CEO Lloyd Blankfein is tone deaf when it comes to speaking in public, to a degree this new strategy makes sense. There should be no direct challenges to the FCIC. When Blankfein testifies, he should be totally polite and go totally technical. If he doesn't have the skilz to get his point across during testimony, in a manner that will resonate positively with the general public, he should go completely polysyllabic and use as much technical jargon as possible. No one should understand what he is saying. Boring everyone to death should be his goal.

That said, the Goldman PR battle should not be a one front battle. They are still blowing on the other public relations front. While obfuscation should be the name of the game with regulators, they should create a campaign aimed at the general public that  explains all the wonderful things Goldman does for the world in the daily conduct of their business. (Hint to Goldman: This would be almost anything you do when you are not playing footsie with government) For some reason, they don't seem to understand how this game is played. If they knew how it was played, they could have their image turning positively within three months, and the world would view them as saints within six months.

In the mean time the pot shots, investigations and indictments will continue from every corner of the planet.

Here We Go Again: Goldman Sachs Subpoenaed

The Financial Crisis Inquiry Commission issued a subpoena to Lloyd Blankfein's group over its failure to provide documents related to the financial crisis.

The FCIC said Goldman failed to comply with the panel's request for documents and interviews in a timely manner.

An Update on the Goldman Sachs versus SEC Lawsuit

The clock is ticking on the SEC’s case against Goldman Sachs. Sometime in the next few weeks, Goldman will either go to federal court with a substantive denial of the SEC’s allegations or agree to a settlement.

John Carney emails:

In my latest story at CNBC, I describe a legal strategy that Goldman insiders say may lead to settlement. Goldman has a big problem with the fraud charges and is unwilling to settle any case that continues to allege fraud. The compromise could be a settlement that drops the charges linked to "fraud" and simply charges Goldman with negligently misleading investors in the Abacus deal. Similar settlements have been reached in the Brocade backdating cases.

Here's the link. What's most interesting, in my mind, is that, as John points out, there is no indication from the SEC that they are willing to settle. I continue to believe that their case is extremely weak, but it should be noted this case is being run out of the Washington D.C. office and not the New York office. This has politics written all over it. Sloppy politics, but politics.

Goldman Sachs Girds for Battle With the SEC

Contrary to rumors that Goldman Sacchs is in settlement talks with the SEC, CNBC's John Carney is reporting that Goldman is preparing to file a full-blown, point-by-point defense against the fraud allegations filed by the SEC, according to people familiar with the matter.

A sticking point for Goldman is the SEC’s fraud allegations. The company is unwilling to agree to any settlement that would have the appearance of affirming that Goldman committed fraud, a person familiar with the matter says. However, Goldman might be willing to settle a case alleging that Goldman was only negligent in omitting a material fact in marketing the deal, the person said.

The SEC wants to show that Goldman has been punished. It may be unwilling to cut a deal in which Goldman neither admits or denies wrongdoing, an attorney familiar with the thinking at the SEC said.

If this goes to trial, the proper thing to do is to cheer for a Goldman Sachs victory, for there was no fraud, but also to keep in mind the words of H.L. Mencken:

The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels. For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all.

SEC Investigating Leaks in Galleon Insider Trading Case

The Inspector General of the SEC has informed attorneys for Raj  Rajaratnam, head of Galleon, that it is investigating the source of allegedly improper leaks of information about the case pending against him, according to a spokesman for Rajaratnam, reports John Carney.

Yes!

These government leaks need to be investigated. They are some of the most evil government attempts at distorting a case. They leak carefully selected information prior to trial to poison a jury.

Separately, the Office of Professional Responsibility for the Department of Justice has also informed Rajaratnam’s attorney’s that it is launching a leak investigation.

The DOJ of the OPR should also look into who leaked information that the DOJ was conducting a criminal investigation of Goldman Sachs.

The Opening Statement of Lloyd Blankfein at the .....

2010 Goldman Sachs shareholder meeting is now in the EPJ Vault, here.

The Legal Team Goldman Sachs Has Assembled to Fight the Bogus SEC Charges

According to AM Law, this is the team that Goldman has assembled to date:

1. Skadden, Arps, Slate, Meagher & Flom's Greg Craig
2. Sullivan & Cromwell's Rich Klapper
3. O'Melveny & Myers's Lee Blalack
4. Paul Weiss's Ted Wells
5. Gibson, Dunn & Crutcher's Mike Bopp
6. Goldman Sach's Greg Palm
7. Counsel Mark Fabiani
8. Lawyer and lobbyist Stephen Labaton


AML adds that Goldman is also looking to supplement the team and is negotiating with lawyers from Paul, Weiss, Rifkind, Wharton & Garrison.

I really hope this goes to trial. You have a bogus SEC charge, with a jury angry at banksters and Goldman being defended by this crowd. Dali could never paint such a surreal image.

What a Criminal Inquiry Portends for Goldman

by Peter Henning

The disclosure of the Justice Department’s inquiry into Goldman Sachs substantially alters the calculus for how the firm and its employees should approach the civil fraud charges filed by the Securities and Exchange Commission.

Even though a criminal investigation is only in its earliest stages at this point, the mere revelation that the United States attorney’s office in Manhattan is involved shows the powerful impact such information has on the firm, as Goldman’s shares dropped almost 10 percent in response to the news.

As I discussed in a post last week, “What’s Next for Goldman Sachs,” a criminal investigation may well cause individuals at the firm to assert their Fifth Amendment privilege against self-incrimination if the S.E.C. seeks to depose them in its suit. The potential for criminal charges creates much greater uncertainty for Goldman itself, a serious problem for a firm that needs the trust of its customers and access to credit markets that, as the past two years have shown, despise even a whiff of doubt about an enterprise’s future.

Read the rest here.

Warren Buffett on Lloyd Blankfein and Goldman Sachs

At this year's annual meeting of Berkshire Hathaway, the top question put to Warren Buffett by shareholders was about Goldman Sachs. Berkshire made a $5 billion investment in Goldman preferred during the height of the financial crisis. NYT reported details from the shareholder meeting:

Warren E. Buffett became the highest-profile defender of Goldman Sachs on Saturday, offering staunch support of the firm as it combats fraud charges from the Securities and Exchange Commission.

Mr. Buffett also strongly defended the firm’s chief executive, Lloyd C. Blankfein, saying he did not think Mr. Blankfein needed to be replaced...His support for Goldman came in a question-and-answer session at the annual meeting in Omaha of Berkshire Hathaway...what drew the most attention was Mr. Buffett’s full-throated support for Goldman. He drew upon some of the same points that Goldman has used in its own defense, including the sophistication of the investors the S.E.C. says were defrauded by Goldman’s lack of adequate disclosure in the deal. He said those investors should have conducted better due diligence. Of one investor, he said, “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.”

He also stood behind Mr. Blankfein. When asked whom he would select if Goldman needed to find a new leader, Mr. Buffett replied, “If Lloyd had a twin brother, I would vote for him.”

The Extremely Odd DOJ Investigation of Goldman Sachs and Its Dangerous Ramifications for Goldman

The latest twist in the Goldman Sachs fraud saga is that the DOJ did not leak news of an investigation to WSJ until after it received a letter from Congresswoman Marcy Kaptur, that was also signed by 61 Congressmen, demanding that Goldman Sachs be investigated. (The full letter is in the EPJ Vault, here)

How political can you get?

Keep in mind that most securities lawyers have serious concerns as to whether the SEC has anywhere near a case to win a civil suit in court. The chances of winning a criminal case are a fraction of that. Legally, there is nothing there. That's why DOJ chose not to investigate the case in the first place. (Normally, if there was interest by the Justice Department, it would have been announced jointly with the SEC announcement)

Here's the real problem.

The DOJ will now be looking at Goldman Sachs from the inside. They do not only have their foot in the door, they will now be able to look at every nook and cranny of Goldman. As I reported yesterday:

Once the DOJ starts an investigation they can convene a grand jury and look anywhere they want..."I have seen these things up close, it's a terrible thing for Goldman," [a friend who is familiar with DOJ investigations said to me].

The securities industry is an extremely regulated industry. It is very easy to step over on to the wrong side of the regulation line, especially if you are as aggressive a firm as Goldman is.

If DOJ wants to find something they consider "criminal" at Goldman, given the regulations covering the securities industry and the fact there are 32,000 employees at Goldman, they are likely to be able to do so.

It is still unclear how serious DOJ is about this investigation. It may simply be an "investigation" to mollify Congress, that will go nowhere. On the other hand, if anyone at DOJ is taking this investigation seriously, the damage that could be done to Goldman, in a worst case scenario, could be firm ending a la Arthur Andersen given that, as Goldman Sachs CEO Lloyd Blankein put it,:

Our clients' trust is not only important to us, it's essential to us.

The question for the moment is, "How many top employees are going to sit around waiting to find how bad it gets, and how many are simply going to step in the elevator and head somewhere else with their talent?"

Goldman's failure to settle the bogus charges against them, given the current political climate, appears to be one of the worst decisions made by Lloyd Blankfein.

DOJ Investigation of Goldman Sachs "Extremely Serious"

A friend, who knows a thing or two about this type investigation, tells me that it has the potential to be extremely serious for Goldman.

Once the DOJ starts an investigation they can convene a grand jury and look anywhere they want, he tells me. "I have seen these things up close, it's a terrible thing for Goldman," he said.

Is Goldman About to Buckle and Settle Charges?

The big swinging dicks apparently don't have the balls to match.

Word from NyPo is that "Goldman Sachs may soon settle its fraud case with the SEC, opting to end the legal fight rather than endure a repeat of the public flogging it received Tuesday in Washington."

If this in fact is true, it indicates another blunder that will paint Wall Street in a bad light when it is really a Goldman Sachs problem, and not a Wall Street problem. 

Further, from a legal perspective any securities lawyer (outside of the SEC) will tell you that the SEC has no case.

If Goldman settles now, it indicates another tactical error by Goldman. They should have foreseen the negative publicity that the charges would bring and have had a full court press public relations campaign, with people who know how to present these things, in every nook and cranny of the news media. That they didn't, and still don't, points to a public relations failure of the first order. 

Outside of strategically leaking voicemails to the media, they haven't done anything right. And the communications disaster is not something that started with the SEC suit. It has been on-going from the time MSM  got wind of the fact that former-Goldman people were crawling all over the U.S. government and governments around the world. This should have been presented and promoted by Goldman as executives leaving big money to "serve" the world, never to return to Goldman big money. "We give Goldman people, who are very smart and talented people, the opportunity to make extremely good money, so that ultimately money does not become a concern and they can use that freedom after they leave Goldman to advance their pet projects, be it advancing freedom, intellectual curiosities, whatever."

That this theme was not promoted is at the core of Goldman's problem. To the man on the street, Goldman is just a bunch of evil bastards, doing evil 24 hours a day. And while Goldman does do enough evil that were  the Goldman perpetrators to confess, it would keep a bunch of pedophile priests so occupied in confessionals that they wouldn't have time for the kids,  Goldman also does do some fundamental Wall Street work that sadly is beginning to be associated with Goldman evil doing, when it is nothing of the type.

The best thing that could happen for Wall Street is for a volcano to erupt under Goldman's headquarters and the entire bunch of them turn into particles of ash that perhaps delay air flights over America for a week.


A less desirable, though next best alternative, would be for Lloyd Blankfein and Goldman PR chief Lucas van Praag be bounced from Goldman, and replaced by people who understand what Wall Street is about and want to make money the old fashion way by earning it and not by playing footsie with the government to the degree that crooked politicians are embarrassed to be seen in their presence.

Bill Clinton Is Now a Gold Bug

File this under unexpected. Former President Bill Clinton blames the current financial crisis on the U.S. leaving the gold standard.

During an interview conducted at the Peterson Institute by Bob Schaeffer, Clinton sounded like a hardcore gold bug as he said that the problems in the economy started when the U.S. went off the gold standard.

He then hedged a bit and justified the U.S.  leaving the gold standard for "economic management" reasons.

Those economic management reasons were, of course, that the U.S. had printed so many dollars at the then price of gold ($35 per ounce) that the U.S. did not have enough gold to back up all the money it printed. But Clinton's statement clearly implies that he understands that gold is a check on out of control government printing of money.

Do you think Bill and Hillary have a few gold coins tucked away?

On another note, during the same interview, Democrat Clinton makes clear that he doesn't think the SEC has a case against Goldman Sachs. "I read a lot of material on this," he says.

The first  roughly two minutes of this clip are priceless. At 1:58 get a load of Bob Schaeffer's face, just after Clinton says leaving the gold standard was the problem. Schaeffer is an insider who was probably taught to hate gold when he was still in diapers. Clinton's comments were certainly a shock to him.It's tough when an insider breaks the rules and tells the truth.

'Fabulous Fab' Opening Statement Is Out

Fabrice Tourre, the broker at Goldman Sachs who has been charged by the SEC with civil fraud, will testify this morning. His opening statement is out and in the EPJ Vault, here.

Key snippet:

I deny — categorically — the SEC’s allegation. And I will defend myself in court against this false claim...First, the only two investors in this transaction, ACA and IKB, were institutions with significant resources and extensive experience in the CDO market. ACA was a specialty financial services company that, at year-end 2006, managed 22 CDOs with approximately $16 billion in assets. IKB, a large German bank, had a separate mortgage group and was an active participant in the CDO market.

According to IKB, as of January 2007, they had launched and managed more than
$16.8 billion of CLOs and CDOs and viewed securitizations and CDO investments
as an integral part of their business model... the AC-1 transaction was not designed to fail. ACA and IKB were two of the most important clients of my desk. Moreover, the securities referenced in the transaction did not underperform the other securities of that ratings class and vintage. All of the securities of that ratings class and vintage performed poorly because the subprime mortgage market suffered a broad collapse. Goldman Sachs also had no economic motive to design the AC-1 transaction to fail. Quite the contrary, we held long exposure in the transaction just like ACA and IKB. When the securities referenced in AC-1 declined in value, we lost money too. Goldman Sachs’ overall losses in connection with the transaction exceeded $100 million, including $83 million with respect to the retained long position.

Goldman Congressional Hearings Live

Online: Cspan 3, here

SEC Inspector General Begins Investigation of Goldman Fraud Charges

It's official.

The SEC investigative office has opened a probes into whether charges against Goldman Sachs were politically timed.

SEC Inspector General H. David Kotz wrote Rep. Darrell Issa (R-Calif.) on Sunday to notify Issathat he had opened an investigation, at the congressman's request, reports The Hill.

In the letter to Issa, Kotz said he would seek any documents relevant to the investigation, and would conduct interviews "of all persons with potential knowledge of the facts and circumstances regarding this matter, including those outside of the SEC."

Brain Freeze in D.C.: What the Real Insiders Think about the Goldman Case

WaPo has a short feature out today on the legal team surrounding the Goldman Sachs fraud case. The article is here and it is worthwhile reading. The team is a very sharp group of people, but they have to be in some sort of brain freeze. It's a phenomena you run into often in D.C., very bright people who are somehow in denial about the basic elements of what they are doing. They are so caught up in the bright lights, glamor and power that they simply ignore the fact that at the core of what they are doing is an obvious but very ugly truth that there is no fundamental reason they should be dong what they are doing. Whether it is promoting or carrying out some regulation that at its core is evil, or promoting legislation they know has no chance of achieving its stated goal, or bringing a court case that has no merit, they march on. At best it is a brain freeze, at worst they have sold their soul.

The Goldman Sachs fraud case is such a situation. The people identified in  the WaPo story are working on a case that simply had no reason to be brought. Goldman Sachs, especially Lloyd Blankfein, are evil bastards for the way they raped America through the bailout of AIG, but the SEC case has nothing to do with that. It is a case about a trade that went down between very sophisticated financial  people on all sides, who certainly had all the information they needed to analyze the security they were buying or selling.

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.

One player directed me to an Op-Ed by Fareed Zakaria, editor of Newsweek International. The Zakaria piece reflects the insider thinking. He wrote:

There's so much resentment toward banks these days -- some of it quite justified -- that anything resembling a defense of them is bound to anger people. But the rage surrounding the Goldman Sachs case can cloud our perspective and distort public policy. We need to step back and try to understand what happened.

Evidence may yet be presented that documents specific misrepresentations and false claims by Goldman, but much of the public debate has struck me as guided more by emotion than careful analysis. Even if some Wall Street practices seem dodgy, or unethical, that's not the same as illegal. I want financial reform, but I also want our system of governance to be characterized by fair play and equal justice -- even for people making $10 million bonuses.

There are two core claims of wrongdoing. The first is that hedge fund manager John Paulson was allowed to select the securities he wanted to bet against. This is disputed -- but in a routine hedge transaction on Wall Street somebody decides to bet against some set of stocks or securities; that person approaches a firm, which finds someone with the opposite view on those securities. This is how large companies offset the risks to their balance sheet from fluctuating currency, energy or commodity costs. Both sides examine carefully the securities involved in the wager.

The main institution that took the other side here, IKB, is a large German bank that had whole departments devoted to analyzing just these products -- departments many times larger than Paulson's firm. IKB surely knew that someone was betting against them: Otherwise, there would have been no transaction. Did IKB realize that the other party thought these securities were garbage? Yes -- disagreement over the value of stocks or securities is what creates the market.

The second charge is that Goldman Sachs designed a product it "knew" would decline in value. Dozens of transactions like this took place in 2005, 2006 and 2007. In most, the people who bet that the housing market would go up made money, and those betting it would fall lost money. These kinds of collateralized debt obligations went up in value in 2006. In fact, had this bet been made nine months earlier, Paulson would probably have lost a huge sum and IKB would have been a winner.

It's easy to say now that the housing market was doomed to go bust by 2007. But Michael Lewis documents precisely the opposite point in his recent book "The Big Short." He shows that in 2006 and even 2007, almost all the storied names in finance -- Lehman Brothers, Bear Stearns, Merrill Lynch -- were betting that the housing market would continue to rise. Only a handful of contrarians believed the opposite, and many of them had lost money for years on bets that the market would drop. At the time of the Goldman deal, Paulson was still seen as an oddball.

Whatever the new rules, one thing will not change: We can't be sure in advance which securities are "good" and which are "bad." If you doubt this, pick any asset you think is overvalued -- American stocks, Chinese real estate, Pakistani bonds -- and bet against it. Six months from now, you'll be proved a genius or a fool. Oh, and to make the bet you'll have to find someone to take the other side, so you'll need someone to handle the deal. Calling Goldman Sachs . . .

This is pretty much the case that I have been making since, a day after the charges were brought when I called SEC enforcement chief Robert Khuzami a buffoon for bringing the case. There is really no case here, unless there is the highly unlikely situation that the SEC is holding back a smoking gun.

Bottom line: Nothing new in D.C., we have a bunch of very bright people in brain freeze being controlled by a buffoon with power.

Details of the Goldman Sachs Congressional 'Show Hearing'

It's hard to feel sorry for Goldman Sachs since they did rape America via the AIG bailout, but the Levin hearings are about dragging Goldman across the coals for their legitimate trading activities. This is simply a 'show hearing' giving Senators the chance to posture for the voters back home, as though they are really taking on Wall Street. Here's the scheduled line up:

Testimony is scheduled to begin at 10 a.m. ET time on Tuesday, April 27.

The first panel will question Fabrice Tourre, who is accused of civil fraud by the SEC , Michael Swenson, a managing director in Goldman Sachs’s structured products group, and two former employees: Daniel Sparks, who was head of the mortgage department, and Joshua Birnbaum, who was a managing director in the structured products group.

A second panel will feature Chief Financial Officer David Viniar and Chief Risk Officer Craig Broderick, followed by a final panel at which Lloyd Blankfein is scheduled to appear alone.

The only real problem, aside from another public relations disaster, that Goldman will have is explaining the amount of net profit they made by shorting mortgage backed securities. It better be small, since in their 2009 annual report they said it was "not enormous>"

The grilling overall will be exceptionally tough and distorted. Here's Bloomberg on what to expect:

Blankfein may get tougher questioning than he received in front of the Financial Crisis Inquiry Commission led by former California state Treasurer Phil Angelides in January, Geisst said. Levin’s committee first subpoenaed information from Goldman Sachs on June 30 and sent a second subpoena on March 12, before conducting interviews with Goldman employees this month.

“Levin is smarter,” said Martin Mayer, a guest scholar of the Brookings Institution who has written books including “The Fed” and “The Bankers” about the financial system. “It’s a stronger committee.”


Levin has been chairman or the top Democrat on the Permanent Subcommittee for more than a decade. He delves deeply into the issues, said Jack Blum, who spent 14 years as an investigator for other Senate panels and has testified before Levin’s committee as a private citizen.

“What you’re going to expect is a guy who first of all really will have done his homework,” Blum said. “He’s a very influential senator.”


Blum said the permanent subcommittee also is one of the rare panels in which senators and their staffs cooperate across party lines.

Parade of Critics

Criticizing Goldman “is going to be everybody’s great moment,” Blum said. “It’s the parade you want to be in.

We recommend the extra large size popcorn for this event.