Von Aldo
Round One to Goldman, and Can McCain Say Keating Five?

Round One to Goldman, and Can McCain Say Keating Five?

carl_levin_grills.jpgIf you watched the Senate show trial yesterday, you might agree that it was a farce. Sen. John McCain seemed completely out of it, trying to somehow blame Goldman Sachs for community banking problems in Arizona. Uh, Sen. McCain: Investment banking and community banking are two completely different business models. And I don't think that any of the Senators understand what obligations market/makers have to their clients.

God Bless GOD-man Sachs CEO Lloyd Blankfein for keeping his temper, because I would have shouted: What are you talking about McCain? And, perhaps, I would have asked him if he were having Keating Five flashbacks. (We have short memories, but a friend reminded me that McCain was tainted by the S&L bankruptcy crisis of 1989 and 1990. Charles Keating Jr., who ran Lincoln into bankruptcy that cost taxpayers millions, was able to duck a FDIC investigation . . . somehow . . . perhaps it was all the donations he made to McCain and the others. McCain was only chastised for poor judgment, it should be noted, and not nailed for anything criminal.)

Anyway, it is clear to me that the senators on the subcommittee for investigations haven’t any idea what they were talking about. The FT describes Goldman as "battered, bruised, but still standing." Disclosure: I did not see Fabulous Fabrice Tourre's testimony, but I hear he did admit that some of his descriptions on the mortgage-backed securities "could have been more accurate."

Imagine if every market/maker had a fiduciary responsibility in every order it filled? "You want to buy 100 shares of Mister Softie? Well, I can't be sure, but our trading unit may have a short on it. Have you done your homework? Are you sure you want to buy Microsoft shares? Have you brushed your teeth?"

Anyway, the NY Post got it right in its rather opinionated news article this morning, quoting bankers as saying, "It was just grandstanding. The questions were shallow, not probing." The Post also noted that the senators didn't seem to care to listen to the answers, just to play Huey Long (the Louisiana governor who authored such populist crap as a Share Our Wealth program in 19334) --- to pose as populist everyman to the mob back home who want blood. I thought that was what the Bill of Rights and the Constitution were for: to protect the minority of one against an angry mob. Oh, well, guess not.

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