Congress Gives Goldman One More Free Pass
But is still doing nothing to alleviate widespread economic fear.
Congress had the former chairman of Goldman Sachs (GS) on the stand and never once asked about potential conflicts of interest. Months later, they had AIG's (AIG) CEO -- and former Goldman board member -- Ed Liddy before them, and heckled him endlessly over the $160 million in bonuses being paid to the young men and women trying to unwind the hideous mess AIG had become.
None of these highly regarded inquisitors thought to ask how it came to pass that Goldman got paid back 100 cents on the dollar when literally no one else did. Goldman has a marvel of a balance sheet, and its executives were paid many times what the AIG bonuses amounted to -- even though those bonuses were going to young people who'll wear the scarlet letters "AIG" on their suits for the remainder of their careers.
Hank Paulson and Ed Liddy managed to testify for several days without ever answering why Goldman Sachs got favorable deals from the government, what role they played in those negotiations, and why, specifically, we wasted our time harassing kids who'll literally never work in this town again -- despite the fact that $160 million in bonuses is a drop in the Atlantic relative to what Goldman's been paid.
As if that weren't enough, Goldman was the first group to find the mistake in AIG's algorithm -- a mistake that eventually grew so huge that it brought the financial system to the brink of collapse. Goldman took the other side of AIG's flawed trade so far that they moved the price, which brought the trade to the attention of other Wall Street players, who promptly got on board. Cue the meltdown.
Despite this, Goldman's role has gone quietly unnoticed by the same media and legislature that pilloried AIG. Indeed, Goldman ended up paid in full and looking like public servants.
It's Goldman's world, folks. We just live in it (at Goldman's discretion, of course).
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