Honour for Goldman’s Blankfein “ridiculous and repugnant”
December 28th, 2009
The Financial Times has caused outrage in some quarters by naming the Goldman Sachs boss Lloyd Blankfein its “Person of the Year“.
The reasons for the reaction are fairly obvious. The New York-based investment bank, known to some as a “vampire squid wrapped around the face of humanity”, has shown precious little remorse for past transgressions and limited gratitude for the largesse heaped upon it by US taxpayers and by central banks around the world (even though Blankfein forewent his 2008 bonus).
Instead the bank is thumbing its nose at such generosty by paying even mediocre staff average annual pay of $700,000 — even though they would all probably all be out of a job without taxpayer bailouts, notably that of flawed insurer AIG.
Christopher Whalen, founder of Institutional Risk Analytics is so appalled by the FT’s decision to hand Blankfein this honour, he has cancelled his subscription to the newspaper.
In a letter to the FT Whalen wrote:
“Mr Blankfein and his colleagues at Goldman Sachs, in my view, have done more to damage the reputations of global financial professionals than any other organization in 2009, yet you applaud them. Not only is your suggestion ridiculous and repugnant, but it illustrates to me the fact that the FT is part of the problem in global finance, not as one would hope and expect, part of the solution.”
The FT’s decision to award Blankfein the accolade comes despite the fact the investment bank is under investigation by the SEC and Financial Industry Regulatory Authority over allegations it created synthetic collateralized debt obligations (CDOs) which — based on inside knowledge of the state of sub-prime mortgage market in the US — it knew to be toxic, before dumping these on naive and unsuspecting investors such as pension funds and insurance companies.
Charmingly, Goldman Sachs then bet against (short-sold) these opaque derivative instruments in the apparent knowledge that their valuations would plummet, in order to line its own pockets. Goldman Sachs didn’t seem to give a damn if its own clients lost billions in the process.
In an article in the New York Times, Gretchen Morgenson and Louise Story have lifted the lid on how this was achieved. But despite all the negative publicity, one wonders whether there’s any chance of charges being upheld against the Goldman executives responsible.
- For more on Goldman Sachs click here
- To read ‘Inside the Great American Bubble Machine’ by Matt Taibbi, click here
Short URL: http://www.ianfraser.org/?p=1000