Today, Thursday, the top editorial in the NY Times tells us, "President Obama, Reinvigorated," and opens with the following sentence...
The man America elected president has re-emerged...
My first reaction was, "Wow! After dealing with 26 months of corporatist, kleptocratic memes from Larry Summers and Tim Geithner, the President finally starts parsing some Joe Stiglitz, and, lo and behold, he hits it out of the freakin' park!"
Now, that's what I'm talkin' about!
Then I turned the web pages over to that paper's business lead and followed that up with the lead over at the Financial Times.
By 1:00 AM (EDT), this morning, I had to pinch myself to make sure I wasn't dreaming.
From Thursday's Financial Times...
Goldman criticised in US Senate report
By Tom Braithwaite in Washington and Francesco Guerrera and Justin Baer in New York
Financial Times
Published: April 14 2011 00:15 | Last updated: April 14 2011 00:15
US Senate investigators probing the financial crisis will refer evidence about Wall Street institutions including Goldman Sachs and Deutsche Bank to the justice department for possible criminal investigations, officials said on Wednesday.
Carl Levin, Democratic chairman of the powerful Senate permanent subcommittee on investigations, said a two-year probe found that banks mis-sold mortgage-backed securities and misled investors and lawmakers.
“We will be referring this matter to the justice department and to the SEC [Securities and Exchange Commission],” he said. “In my judgment, Goldman clearly misled their clients and they misled Congress.”
Last year, Goldman paid $550m to settle SEC allegations that it defrauded investors in Abacus, a complex security linked to subprime mortgages.
The folks at the FT tell us the Senate's Permanent Subcommittee On Investigations' report, which was released late Wednesday, points to ..."'a variety of troubling and sometimes abusive practices' by banks, such as Goldman and Deutsche, involved in the creation and sale of collateralised debt obligations."
Collateralized debt obligations, or "CDOs," are securities/investment vehicles comprised of a variety of assets, such as residential and commercial mortgages.
The FT article also notes that: "Mr Levin criticised the SEC for being slow and not bringing more charges and claimed that the Abacus deal did not mean Goldman had no other cases to answer."
“The report tells the inside story of an economic assault that cost millions of Americans their jobs and their homes while wiping out investors, good businesses and markets,” said Mr Levin. “The threads that run through all the chapters in the sordid story are conflicts of interest and extreme greed.”
I've posted quite a few pieces about this story over the past 18-24 months, referring to the Abacus deal as recently as early Wednesday morning, in THIS diary. In yesterday's post, I focused primarily upon potential civil charges that may soon be filed by the SEC against JPMorgan Chase's top "structured products" executive (the term used to describe collateralized debt obligations [CDO's] and similar investment products) Michael Llodra. Today's FT article briefly mentions the Llodra investigation, as well.
Here's more from Gretchen Morgenson and Louise Story in their lead article from the business section of today's NY Times...
Naming Culprits in the Financial Crisis
By GRETCHEN MORGENSON and LOUISE STORY
New York Times
April 14, 2011
A voluminous report on the financial crisis by the United States Senate — citing internal documents and private communications of bank executives, regulators, credit ratings agencies and investors — describes business practices that were rife with conflicts during the mortgage mania and reckless activities that were ignored inside the banks and among their federal regulators.
The 650-page report, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” was released Wednesday by the Senate Permanent Subcommittee on Investigations...
...
...The result of two years’ work, the report focuses on an array of institutions with central roles in the mortgage crisis: Washington Mutual, an aggressive mortgage lender that collapsed in 2008; the Office of Thrift Supervision, a regulator; the credit ratings agencies Standard & Poor’s and Moody’s Investors Service; and the investment banks Goldman Sachs and Deutsche Bank.
“The report pulls back the curtain on shoddy, risky, deceptive practices on the part of a lot of major financial institutions,” Mr. Levin said in an interview. “The overwhelming evidence is that those institutions deceived their clients and deceived the public, and they were aided and abetted by deferential regulators and credit ratings agencies who had conflicts of interest.”
Morgenson and Story tell us the report contains "...19 recommendations for changes to regulatory and industry practices. These include creating strong conflict-of-interest policies at the nation’s banks...The report also asks federal regulators to examine its findings for violations of laws."
The report adds significant new evidence to previously disclosed material showing that a wide swath of the financial industry chose profits over propriety during the mortgage lending spree. It also casts a harsh light on what the report calls regulatory failures, which helped deepen the crisis.
Morgenson's and Story's article is loaded with information and quotable quotes and well worth the read!
I've been a registered Democrat for almost 35 years. Today, I feel more proud about that fact than I have since January 2009. And, yes, while I sincerely hope otherwise, I realize this moment may only be fleeting; but, damn, it sure feels good.