(28 Apr 2010)
TRUE DATE CREATED = 28-04-2010
1. Goldman Sachs CEO Lloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
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What Senator MacCaskill doesn't seem to understand is that "gambling" as she calls it is exactly what the stock market is all about. Whether you are buying futures in the corn market, munis in the bond market, short sells of crude oil, common stock, or yes even MBS certificates, it's all gambling. The investor is "betting" that the product he purchases....whatever it is....will appreciate in value the longer he holds onto that security. Gambling? Of course it's gambling. Everybody already knows that.
Why did the Obama justice department not prosecute these fucking people for outright fraud? Both parties are paid off. Fucking period. Bought and paid for by these cocksmokers. These fucking senators were showboating with no results other than sound bites for their next election. Our government is more monolithic than the cocksuckers like Chris Matthews or that guy Maddow are willing to ever admit. For them it is monolithic when Trump is in charge. But not 5 slamma Obamma. They protected him at all costs. Including paying tax dollars to these criminals. Because of race our media didn't call out one of the most blatant criminal acts by our government while everyone else in this country struggled to survive.
When you signup for insurance, your insurance agency is making a bet against yours: you bet your car will catch fire and you’ll get reimbursed, they bet it won’t and they’ll get the annual fee. When you buy a stock, a house or any kind of investment it’s the same fucking thing: you buy something because you think it’s gonna raise in value and the person who is selling it to you believes it’s not. Why would it sell it to you otherwise? How fucking delusional can you be to believe a speculation happens to the benefit of both parties? It doesn’t. That’s how the free market works. Why would someone sell you something that’s gonna be valued more than it’s valued today? Because they don’t believe it’ll be (or not enough for the risk it has). They’re betting against it. That’s not rocket science, it’s simple logic and if you’re so retarded not to realize something like this you *deserve* to loose your bets. You should stay miles away from any kind of investment or speculation.
What the senator was saying was nonsense, when I buy a security I could care less of the brokerage firms position on that security. Their job is simply to provide the security to me, not to tell me what to do with it. If you’re an idiot and lose all your money, that’s just how the markets go.
how dumb can they be? ibanks are market makers they have to hedge against positions that they sell or buy. if your a distributor and a client wants to buy 5 tons of apples in 5 months. what you do? you say ok sure . then you go find a farm and make a contract to buy 5 tons of apples in 5 months from them.
He's smaller then Michael Bloomberg. That's a very small man. Typical Napoleon complex. Napoleon complex" is a theorised condition occurring in people of short stature. It is characterized by overly-aggressive or domineering social behaviour, and carries the implication that such behaviour is compensatory for the subject's stature. The term is also used more generally to describe people who are driven by a perceived handicap to overcompensate in other aspects of their lives.
You could well ask the question that why did a Goldman exec fill his tank with oil before placing a bet that oil prices will go up. Senators are trying to sound intelligent and agressive but their knowledge appears inadequate.
0:58 - Yes.... that is what shorting is.
1:40 - What a silly question. Anyone who even sells a security is--in a way--betting against it because they obviously don't think it is worth holding.
2:21 - Any investment has a certain level of risk. I can't stand these ad hominem attacks. If someone else has a really high-risk tolerance and wants to bet against the strength of a specific sector, it isn't your moral prerogative to try and gloss some illegality over top of it.
The primary issue here is that it is very difficult to explain what they've done to an audience of senator's that do not have a background in finance. What's really going on is the firm's principal investment arm are both long and short in mortgage securities. They are short because it is a hedge that would reduce their downside exposure to the cyclical housing market.
Secondly, if you think they caused the financial crisis, you clearly don't understand the financial system. The total activity in the mortgage security market was only about $1 trillion, which is a drop in the bucket considering the size of the financial system of about $123 trillion. The reason why such a small amount mattered was due to the excessive amount of leverage (debt) that banks and shadow banks were taking. For an institution that was financed 97% with debt, a 3% drop in asset prices (which could be caused with something as small as the housing market. Additionally, there was a liquidity crunch that prevented some institutions like Bear Stearns from financing themselves (the overnight repo market collapsed). The proper solution is in regulation. You can't prevent banks from taking on risk because they have very low return on capital numbers like 1%, so they have to take on debt to be able to become profitable (debt has no upside and equity does, the leverage amplifies the equity returns) to get a return on equity of 8%. The issue is that there are government incentives for banks to take on leverage like Too Big to Fail and interest deductions from taxes. It is now in the Fed's mandate to ensure financial stability with stress tests, banks are financed more with capital today, and there are liquidity requirements which help to prevent another financial crisis from happening.
Anyone who thinks the banks should not bailout systemically important institutions like AIG and Bear Stearns is a moron. You should see how the financial system totally froze when Lehman collapsed. If we did not bailout AIG, there probably would have been another great depression, and you would have wished the Fed bailed them out. The financial system is incredibly important to modern economies because it is the system that determines where capital goes. If capital freezes, you will see a lot of firms shut down overnight. That means people lose jobs and the economy produces less.
is this levin guy a moron?... he doesn't seem to understand anything financially related from the couple clips i've seen...
yes... it's FUCKING NORMAL to have opposing positions, it doesn't matter a fucking lick what position an entity takes vs what positions its clients take... bonds frequently move opposite of stocks (not always, but just for the sake of the example).... would anyone be stupid enough to question a person who has both stocks and bonds in their portfolio?
is this fat slob really the only person they could find to be qualified enough to lead these testimonies?
a construction retailer could sell BOTH: items that help you build the house and items that help you accomplish demolition of a house
that old fuck is completely clueless
This is pure inquisition all over again. Fucking Obama. They pretend to care and need a public scape-goat to direct the anger of the people away from themselves. Who is guilty of mortgage collapse you ask? Oh that is Jews.
I really don't give a shit about the investors that bought all the securities shares and lost money in this little game, but I feel sorry for the people who took out the loans thinking they could pay it off and couldn't pay latter and had their house confiscated. Mostly these people were given credit without their understanding of the interest rate, and not only they lose their house but it also harms their credit rate. Its crazy.
Et Immortalem people took out loans knowing they couldn’t afford it. It was just as much as the seller of the loans fault as much as it was the buyer. Yeah they were solicited but to say that it was all on the banks making the loans is false. Just an ugly situation though and very sad that people today are still affected by it.
The way I understood it, the government demanded that the people bail out the banks under the aegis of "Only these bankers have the expertise to put out this fire." You know, the fire that /these bankers/ started! They did this while sitting on the sidelines, giddy at the fact that they got away with foisting all the blame on the banks - who don't care, ensconed in their infinite money factory and already plotting their next moneymaking scheme once the people's trust returns (which it always does) - while leaving the people with the bill.
Taking a position against a security that your selling is not illegal or immoral. If I sell 500 WTI contract at market prices to a willing buyer, but at the same time short WTI, there is nothing to say that I can’t do that. These committee members have no understanding of even the basics of financial markets.
However, you are under a fiduciary responsibility to cater to your clients and that is where it is, in fact, dishonest and wrong. I realize it is important to mitigate risk, but if done so, you should always make it know which side you're taking and that position you're in.
People in the comments arguing about the bailout. Do you even know the consequence if the government didn't bail out and just left the market to correct itself? Dont try to logic with your lesbian dance therapy degree here,, its economics.. do some research and come to conclusion!
yes, senators, a market maker both buys and sells and it is gambling, which the participants know and choose anyway...ask a better question: "are you selling products you know to be flawed in their representation?"
....what a charade ... Levin pretending to smack-down Lloyd Blankfein who's firm ( Goldman Sachs ) contributes large amounts of money to Levin's democratic party ... careful there Carl ..... too funny ....
... I betcha' Blankfein and Levin " worship " at the same synagogue and rehearsed this charade of a hearing weeks before with an assurance from Levin that no charges would be brought against Blankfein / Goldman Sachs ....
It reminds me of The Wolf of Wall Street nobody wanted to snitch until the Captain of the Ship was force to. Our government did absolutely remotely close to nothing to punish or make them suffer consequences, other than added regulations after the damage was deep in the veins of the American Tax Payer. Majority of the debt we will not pay back. Unfortunately, today it has not change at all. Right now their is a stock buble that is roughly 10 times bigger than the last bubble which was the real state buble. Mark my word all of this is just a movie scene. Federal Reserve is responsible for the entire collapse of 2008. They lowered interest rate down and eventually allow banks to borrow money and of course the IRS did absolutely nothing also and SEC plus the FBI. I know the SEC is more civil rather than criminal, but come on men.
That is the message Obama administration wants everyone to hear. Clear as day. Pick a investment house with Jewish sounding name despite the fact that that firm has Nothing to do with mortgage crisis and financial collapse orchestrated by Big banks and US government pure liberal stupidity.
So few people care to even watch this video to find out why their struggling fat to day and why they have no money. It lands all on the public and their heads hurried in the sand waiting for someone else to do it for them.
Everytime I watch this and realise how all the big guys get away at the end, i clap my hands ! No wonder America is falling behind China. If this happened there, heads would roll, as in literally fucking roll !!
Yes they provided a security for the housing market, but that is not the issue, the ISSUE is that they made it seem like a good security, but in reality it was GARBAGE. They committed fraud plain and simple.
You forgot to take your medication today, didn't you boy? Speaking of descendants, have you been sterilized yet? I'm surprised you even came into existence as I'm sure your grandparents were on the lists when sterilization laws were still on the books in 37 states to prevent more than 3 generations of idiots as Supreme Court member Oliver Holmes most famously stated in Buck v Bell.
Wow Jack, you are one more link in a long chain of stupid ancestors that preceded you...I hope in the next 300 years you descendants will evolve a bit to add more brain cells to the two you already have.
P.S. Your post has so much stupid, hillbilly 'wisdom' that I am truly uncertain if you could be called a homo sapiens.
It's interesting how clearly these senators don't have a clue what they're dealing with. It was very apparent with Senator McCaksill's useless and ignorant little speech and Senator Levin's lack of knowledge on investment bank corporate structure
from a technical standpoint a financial institution can have multiple branches and have some people selling a security and some others betting against that security isn't that ridiculous. Good luck proving wrong-doings from this.
people keep blaming the bankers, and yes these guys are so very much greedy, but the 08 financial crisis was a failure on pretty much every component of the system. If US citizens weren't being so greedy and did not rush to apply for loans they could absolutely not afford, the crisis couldn't have happened. The fact is people are greedy, everyone is greedy, people hate the bankers because the bankers have the instrument to get the most return. If there is anyone that should go to jail, it should have been the Feds people. They were supposed to be the ones to set rules to prevent greedy people doing crazy things, they failed horribly.
I agree! If everyone acts in self interest (bankers, consumers, etc) then the ultimate blame lies with the person who gives these people the freedom to act against the best interests of the system as a whole. If you give your child an ax and he/she chops the legs off the dinner table to get at the cookie jar on top, it's your fault the table is broken!
Anyone that thinks fighting cancer is a task like checking email is a bit crazy. blah blah we didn't do anything wrong mommy and won't do it again...as a business owner who wants to work in an office with sycophants and crazy people.
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