Obviously, one of the greatest issues regarding the Wall Street bailout and the recent SEC filing against Goldman Sachs is the critical need for regulatory reforms to protect investors and consumers from the excesses of one or two greedy people.
For those having some difficulty following the reasoning behind how banks make money betting against themselves the is a good ‘parse’ here
Good news! Goldman has just released a much longer statement on the Abacus affair. It’s worth delving into:
We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact.
Is Goldman really trying to say here that because its “extensive record” is OK, that gives it license to do what it likes on any given “single transaction”? Certainly it’s repeating its ill-advised assertion that “the accusations are unfounded in law and fact”.
We want to emphasize the following four critical points which were missing from the SEC’s complaint.
* Goldman Sachs Lost Money On The Transaction. Goldman Sachs, itself, lost more than $90 million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that was designed to lose money.
Goldman goes into no detail here about exactly where the losses came from. But I won’t be impressed if it turns out that they just pulled a $90 million number out of thin air as the value of the equity tranche — which they never even attempted to sell — and then declared that they lost $90 million when it turned out that the equity was worth nothing.
Maddow has more here
