Rolling Stone's Matt Taibbi: Goldman Sachs Continues Misleading Lawmakers

According to Rolling Stone political reporter Matt Taibbi, financial firm Goldman Sachs is intentionally spreading misinformation through its lobbying practices.

In the upcoming issue of the magazine, Taibbi claims Goldman is misleading senators and their staffers by lobbying in favor of a practice known as "naked short-selling" through showing the market impact of short selling, which is a different practice altogether, asserting that further restrictions would hurt the market. He says conflating the two practices is like "like trying to draw conclusions about the frequency of date rape by looking at the number of weddings held."

From Taibbi's sneak peek at his story yesterday in True/Slant:

Naked short-selling is a kind of counterfeiting scheme in which short-sellers sell shares of stock they either don't have or won't deliver to the buyer. ... The real significance of the naked short-selling issue isn't so much the actual volume of the behavior, i.e. the concrete effect it has on the market and on individual companies -- and that has been significant, don't get me wrong -- but the fact that the practice is absurdly widespread and takes place right under the noses of the regulators, and really nothing is ever done about it.

As with Taibbi's big Goldman story earlier this year, there's plenty of people accusing him of bad reporting.

BusinessInsider says Taibbi has the Goldman-naked short selling story wrong, claiming his view is "based on a misunderstanding of the mechanics and effects of naked shorting."

The practice can, according to BusinessInsider, benefit the broader market giving buyers more efficient pricing on securities.

Since most investors hold diversified portfolios, they win out from having better pricing at the cost of some stocks going down.

The New York Times DealBook Blog reports that data Taibbi used to report on Goldman's lobbying practices is without interpretation and doesn't necessarily show any misleading information was used.

DealBook quotes a Goldman spokesman:

"Yes, we do refute his assertion that we conflated short-selling with naked short-selling," a Goldman spokesman, Ed Canaday, told DealBook. "The document we left with legislators is very clear on that point -- and is considerably longer than the three pages that Mr. Taibbi posted along with his blog."

Mr. Canaday added, "If you read the documents, you will see that we made general comments on market structure, short-selling and highlighted the effectiveness of S.E.C. regulation to curb naked short-selling."

Comments

[Phil Butler]

Well, I would have been surprised if GS had no refuted the allegation, wouldn't you? No one has proven these allegations yet, but their profits, amid receiving taxpayer dollars to prop them up, would seem to be "at least" bad PR.

I did several posts on GS and other WS barons these last few months, and it is almost inconceivable that the American people are not marching on Wall Street. .Bad reporting? Bad form for the winners on WS I say. Much worse than that when the truth is known (if ever).

Forgive the link here, but I can never get past this imagery. If you see a GM exec boarding a corporate jet on his way to beg taxpayer money, what is your impression of GM? Matt offers as much proof as there is at the moment, a burgular leaving the scene of a warehouse hiest with a TV on his shoulder, just might be accused :)

http://www.pamil-visions.net/golman-sachs-vampires/22796/

Yours is a nice article though, objective and proper, as always Jenna.

Always,

Phil

[DHubbard]

Here is another article related to the Rolling Stone Article by Matt

http://www.forex.in.rs/news/2009/10/rolling-stone-interviews-cast-member-of-financial-film-stock-shock-the-short-selling-of-the-american-dream/

Rolling Stone Interviews Cast Member of Financial Film "Stock Shock-The Short Selling of the American Dream"

Former DTCC operations manager and star of "Stock Shock" Susanne Trimbath is interviewed by Matt Taibbi for his latest article in Rolling Stone. She blows the whistle on the world's largest central depository by revealing that she warned them 15 years ago of an impending financial crisis.

New York, NY -- Rolling Stone's own Matt Taibbi interviewed industry expert Susanne Trimbath, Chief Economist at STP Advisory Services, LLC in Omaha, for his latest article in the magazine article about financial corruption. The piece spotlights naked short selling and fall of Bear Stearns and Lehman Brothers.

In his new article, Trimbath tells Taibbi the story of how, in 1993, she tried to get senior management at the world's largest central depository (Depository Trust Company) to stop allowing shares of stock in US companies to be multiplied through stock lending and excessive short selling. "You can't balance the world," was the response she got from regulators.

Trimbath is also featured in the financial film, "Stock Shock: The Short Selling of the American Dream" which documents the alleged massive short selling of Sirius XM radio stock.

"Stock Shock" is on DVD and has received good reviews. www.stockshockmovie.com.

[Nelson Jacobsen]

At this point in time it is pretty safe to bet that bank's like GS are running our country and pretty much anything that happens in congress is to benefit them and not the people. Consider that GS is still front loading trades and NO ONE HAS STOPPED THEM.nor are they. Not sure how many ways people need to get screwed before this begins to set in as the ways things are done in DC.

[comicpro]

Goldman sachs is a blood sucking leech of a firm with too many alumni in places of decision making that benefit them. They need to be taken down.

[Smegbot100]

Hail the proletariat !

[AcitizenNJ]

I'll go with Matt Taibbi without reading the story. I wouldn't buy the GS unless I had a very good lawyer go over the fine print first.

[shivasquest]

I trust the Goldman guys dont you?

[lightningbolt]

The only reason Goldman and the other big banks are still alive and getting away with stealing more money is because bribery (aka private campaign financing) is legal in this country. Congress must make bribery illegal. Otherwise, elections don't matter, since politicians will do whatever their largest campaign donors tell them.

[lightningbolt]

When is the government going to grow a pair of balls and stand up to the corporations that seek to control it? Are we ever going to get democracy back? I doubt it. Goldman Sachs has bribed both parties and the current and former Presidents during their campaigns.

[00Ruth7]

We dont have intelligent senators and they dont understand economics. so banks can easily fool them with cash.

[PaulPete]

We need more Taibbi and Roubini ..they are the ones who speak on behalf of REAL americans; not Beck, Hannity and Palin

good articles; http://www.iamned.com

The f0x news 1diot box is ruining America

[PaulPete]

We need more Taibbi and Roubini ..they are the ones who speak on behalf of REAL americans; not Beck, Hannity and Palin

[flamenfiddle]

First lets not kid ourselves. Goldman Sachs, et al, incur NO RISK at all, as evidenced by the generous bailouts of late. When things are good they do enjoy ALL the rewards however.
The markets are in fact efficient - especially when things go south and it tries to rid us of the losers. But we won't let it, based on the too big to fail financial .t.err.orists who are actually in control of this administration.

[berkamore]

Exactly right.

I have no problem with risk as long as whoever takes the risk understands that they can also lose, otherwise it is not a risk.

If one is willing to reap profits when the going is good, they should also take the losses when they make bad bets.

There is a problem when government is expected to step in when things go bad because those "financial wizards" didn't know what they were doing.

BTW, some hedge funds guys (John Paulson) made money in the financial collapse. It means that those Goldman guys are not even very good at what they do (despite what they want us to believe) because they were completely blindsided by the market collapse.

[blackmouth]

The real enemies of our country and the world are the Goldman Sachs of the world and their practice of conning the tax payer to give them anything they want by telling us that is for our own good so that we will not go bankrupt and our country spiral into financial oblivion. We can now know that it's all lies and that they only want to hold us up and take as much money as they can. When will they be stopped? Never, because they control everything and everybody.

[plaidsportcoat]

"Since most investors hold diversified portfolios, they win out from having better pricing at the cost of some stocks going down."

Right. Like this really happened last year!

[bayviking]

PRIMEX trading company, a joint venture between Bernie Madoff, Goldman-Sachs, Merrill-Lynch, Morgan-Stanley & Smith Barney, ran on the the NASDAQ exchange for one year before being shut down by the SEC. They pocketed billions, so the $26 million fine imposed by the SEC was a green light for more of the same. And that's what Goldman-Sachs does until their former boss at Treasury, Paulson hands them billions more. That giveaway, no doubt, proves he loves free markets.