Goldman Sachs : In Their Favor

• Stayed up watching the GS grilling on CNBC from 10 pm to 4 am Tuesday night, even foregoing Champions League football. Like everyone else, I had been looking forward to hearing concrete evidence of crimes committed and see the high mighty and arrogant fall. 
• No case was made by the Senate that night. Not even close. Fraud? What fraud? 
• Had expected to see the Clash of the Titans, GS vs Senate. Disappointed and shocked by the very superficial level of understanding among the inquisitors of how financial markets work. Most of the time it was chicken vs duck talk and grandstanding for populist votes. What hypocrisy! And such lame accusations (after 18 months of investigation).
• Turned out to be just a bullying session conducted by the Senators, without giving the GS bankers the right of reply and putting things into their proper context. It was clear to me that the Senators did not know what they were talking about and yet, did not bother to listen to others explain things to them. How could such people be conducting a hearing? (listen for eg to Senator Collins. What a joke! Balls carrier. Brown noser. Senator Levin = Chief Bully and Unreasonableness Personified). Distasteful watching. Aren't there smarter people with the relevant knowledge in the US Senate? How did they choose the panel? The ones who appeared don't "get it".
• GS betting against clients : But that's what a market maker does! Client needs to do a financial transaction, comes to GS for a 2-way price. Client can choose to deal or not to deal. Price no good, go elsewhere. No obligation, no pressure. Whatever the clients do, GS is by definition on the other side! Duh ...
• GS running a casino : So what? All the transactions are legal under the existing rules of the financial system. No one is forced to play in the casino. In fact the casino exists because people want to play. You think side bets are wrong, then change the regulations. Nothing in the current rules say that it is wrong.
• Disclosure about Paulson & Co selecting the securities : Almost irrelevant. IKB wants to bet on higher housing prices, Paulson wants to bet lower. GS facilitator. The only relevant thing is that everyone involved knows exactly what securities go into the CDO before placing their bets. At the time, Paulson was a nobody so who cares what he thinks? And the bet could have turned out either way. House prices could have kept going up and Paulson/GS could have lost.
• GS packaging their shitty assets and selling them to clients : This is the only bit that comes close to questionable behavior in my view. But that's a question of ethics, not legal wrong-doing. And its caveat emptor amongst professional counter-parties (own due diligence minimum expected); this is not about selling junk to the man in the street. The Senators imply that the proper course of action for GS was NOT to manage their risks by getting rid of bad assets, and go belly up like Lehman.
• I could go on and on. Nothing I heard that night pointed to legal wrong-doing by GS. Evidence of arrogance perhaps (eg emails), but that's not a crime.
• To me, the Government had GS by the balls when AIG went under, owing billions to GS on their "side bets" ie big losses to GS, unable to collect on its winning bets. Yet "someone" made the decision to pay GS and others 100 on 100. If the Government had forced all AIG's swap counter-parties to take steep haircuts, there wouldn't have been all these subsequent big profits and bonuses paid. So really, the hearings should be about whether there was undue influence exerted on the "someone" who made that crucial decision. Bring forth Timothy Geithner.
• GS profited from betting against US housing : All that time spent trying to ascertain if GS did bet against US housing, going thru VAR charts etc. How is that trade a crime? And if AIG creditors were not made whole by the US Government, GS would have lost money like ML and BS and others. So who is to blame for GS being hugely profitable out of all this?
• Other than 2 friends working in GS London, I have no connection to GS at all. Only writing this because it upsets me to see people getting bullied by higher authority, without being given a fair chance of reply. (Even if they are big boys).
• [But it seems that most of the press are on the other side from me]