NOT!!!!

Link: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7642325/Goldman-boss-Lloyd-Blankfein-denies-moral-obligation-towards-clients.html

Goldman boss Lloyd Blankfein denies moral obligation towards clients

Lloyd Blankfein has admitted that he believes Goldman Sachs has no moral obligation to tell clients it is betting against a product it is asking them to buy.

By James Quinn, US Business Editor
Published: 6:00AM BST 28 Apr 2010

The stark admission – made by the bank's chairman at the end of a more than nine-hour marathon hearing before the US Senate – came in spite of his assertion that "I think people trust us" as he tried to fend off accusations that Goldman inflated the US housing bubble.

Senator Carl Levin told the veteran banker that he "wouldn't trust" Goldman as he repeatedly asked whether the bank would disclose its position "when they're buying something you solicit them to buy, and then you're taking a position against them?"

"I don't believe there is any obligation" to tell investors, Mr Blankfein responded. "I don't think we'd have to tell them, I don't think we'd even know ourselves."

His responses are key in the light of the Securities and Exchange Commission's civil fraud charges against Goldman Sachs in connection with a $1bn mortgage-backed derivative which the regulator alleges was mis-sold to investors, allowing one investor to benefit over another.

The admission came during testy questioning of seven of the bank's current and former executives before the Senate permanent sub-committee on investigations.

Senator Levin said he was "deeply" troubled by "Goldman documents [which] show it was betting heavily against a market it was selling to clients."

Using 901 pages of internal Goldman emails and other documents, Senator Levin tried to highlight examples where the bank used clients "as objects for its own profit."

He referred to a $2bn transaction – known as Hudson 1 – the aim of which he said was to "shift risk" from Goldman's balance sheet. One email showed a Goldman salesman admitting Hudson was "junk" while a senior manager later called the effort a "great job".

For much of the hearing, the seven 'witnesses' attempted to use a market-maker defence, based on the assertion that Goldman's role was purely as a middle-man in the market.

Dan Sparks, the former head of Goldman's mortgage department, was the only one of the seven to come close to apologising for the bank's role in the financial crisis.

He admitted that Goldman was "a participant in an industry that got loose" and that it "made some poor decisions in hindsight."

However, despite having left the bank in 2008, Mr Sparks still employed the continually-repeated mantra used by his former colleagues – that full disclosure to clients "was not something that's a responsibility of a market maker."

Earlier in the day, Fabrice Tourre – the French-born Goldman trader also accused of fraud by the SEC – admitted to a lack of accuracy in key documentation relating to the $1bn (£655m) toxic debt parcel at the heart of the fraud allegations engulfing his employer.

Mr Tourre confessed that a document submitted to the bank's mortgage capital committee concerning the Abacus 2007 derivative "could have been more accurate" and "was merely a 'cut and paste' from previous transactions."

The memo stated that Goldman and ACA Capital selected the mortgages within Abacus – a synthetic collateralised debt obligation (CDO) under scrutiny by the SEC – when in fact almost half were selected by Paulson & Co, the hedge fund which made a $1bn profit from shorting the transaction.

Mr Tourre denied the SEC's allegations against him, saying he had been the subject of "unfounded attacks" on his character and motives.

Link: http://www.huffingtonpost.com/steven-g-brant/the-death-of-goldman-sach_b_554371.html

Snippet one:

"We have been a client-centered firm for 140 years and if our clients believe that we don't deserve their trust, we cannot survive."

Comment on snippet one:

Suggest he should have referred to his firm as self-centred, and on that basis, they do not deserve to survive.

Snippet two:

Senator Carl Levin's simple question - the one that killed Goldman Sachs - was "Do you think it's proper for Goldman Sachs to bet against the security it is selling to a client without telling that client that it is making that bet?"

(I will check the transcript later, to make sure I have the wording of this question correct.)

Mr. Blankfein said over and over again that it was proper for Goldman Sachs to do what they had done. He even said at one point that the minute Goldman Sachs sells something to its customer, it no longer owns that security and has "the opposite interest" to its client regarding that security. This was just one of many breathtaking moments, as I could tell that Mr. Blankfein had no idea what he was doing to his firm.

Comment on Articles and Snippet two:

This is the mindset that is embedded generally, within the banking industry worldwide.

Snippet three:

Lloyd Blankfein just admitted to Sen. Levin that he never thought about the fact that there are certain investors (such as Universities and other institutions) that can only invest in Triple A Rated securities. This is in a discussion of Goldman's desire for rating agencies to make sure more securities are rated Triple A than any other rating. By creating a Triple A rating where such a rating is not deserved, the rating agencies - and Goldman by then selling them - put those institutions that must invest conservatively (because their investments go to supporting things like education) at risk.

This is further proof that clients cannot trust Goldman Sachs. The head of Goldman Sachs has admitted that he never knew that some of his company's clients have to be protected from investing in risky investments. As a result, he did not make sure that Goldman Sachs did not sell risky investments that look like Triple A rated investments without actually being Triple A.

Comment on Snippet three:

Would you trust this man (and the company he heads up), with your assets?

General Comment:

And this firm provides the financial brains and direction to the U.S. government?

Good Luck to all!