Our elected officials largely missed the most important point in examining the Goldman witnesses. The questions that should have been asked but weren't, follow.
The questions that were asked (for background):
Q: Mr. Blankfein, the CMO's and CDO's you "brokered" suffered a dramatic decline in value, costing the pension funds and banks that purchased them billions of dollars, right?
A: Yes [this answer would have required pain to extract].
Q: Your company, on the other hand, shorted those very same investments so that, if they failed, you would make a lot of money?
A: Yes [this answer would have required pain to extract].
The questions that were not asked:
Q: But you made a mistake didn't you, your counterparty on the short was AIG. And when you went to get paid your profit, AIG said it wouldn't pay. And over the next year, you made demand after demand, only to get the same answer from AIG, "no." Isn't that right?
A: Yes [the answer that would have required pain to extract].
Q: You're a public company aren't you? Did you tell your investors you had over $13 billion owed to you by a bankrupt company during that year?
A: [gurgling sound]
Q: So, as it turned out, the people who bought the garbage from you were left holding the bag. And your attempted profit from their loss was to be paid by a bankrupt company. Right?
A: [louder gurgling]
Q: But you had something your customers did not have didn't you. You had a former Chairman of your firm as Secretary of the Treaury, right?
A: [long answer, we never talked to him about our business except when we needed $13 billion or so really desperately]
Q: Now because so much of this garbage was sold to so many banks, it threatened the very survival of the world's economy, right?
A: Yes [the answer that would have required pain to extract].
Q: So to solve the problem the Secretary of the Treasury used taxpayer dollars to give AIG the money to pay you on your bet that failed because, like the mortgagors around the country, AIG was broke?
A: [gurgling sound]
Q: so what we see is that you weren't any smarter than the banks that bought the garbage. You knew which side to place your bet because you knew the collateral was bogus but you made the mistake of using a bookie who couldn't pay. But, of course, your company has a revolving door in the federal treasury, so what we learn from this is you're not so smart, you don't believe in free markets really, but you're really, really connected.
A: [unintelligible]