Goldman Sachs Denies Betting Against Its Mortgage Clients

Top Goldman Sachs executives said Wednesday they didn't bet against its own mortgage securities clients, defended the firm's relationship with AIG and said they were "grateful" for the bailout money they received.

The infamous vampire squid made a killing betting against the subprime mortgage market in 2007 while continuing to sell mortgage securities to its clients. But Goldman CEO Lloyd Blankfein and President Gary Cohn said they don't see the connection.

"The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated," Blankfein and Cohn wrote in a letter to shareholders introducing the firm's annual report. "Although Goldman Sachs held various positions in residential mortgage-related products in 2007, our short positions were not a 'bet against' our clients."

Blankfein and Cohn did acknowledge one bet that paid off -- their assumption that they would be deemed "too big to fail" by the federal government. The Goldman execs said the firm is "grateful for the indispensible role" of government in their salvation. They downplayed their firm's role in AIG's collapse, however, and did not address the windfall payoff they received as a result of the AIG bailout.

Comments

[Lauteur Calme]

11:31 PM on 04/08/2010

As a distant observer, it is astonishing U.S. tax payers have been fooled into thinking the failure of AIG would have been catastophic by undermining confidence in the financial system. In essence, this veil of deception allowed a Coup d'etat of the U.S. Government and Treasury by the banking system elite to pay off GS.

It is undeniable that politicians in Washington D.C. have been bought and sold for years by financial lobbyists in favor of Wall Street's interests at the expense of U.S. tax payers for many generations to come.

A most glaring abdication of duty by U.S. politicians indeed! (i.e.,.Paulson, Richard Shelby, Chris Dodd, Barney Frank, Geitner, Bernake, and both the Clinton and Bush Administrations, etc...).

One must ask the question who was responsible for supervising and overseeing the behavior of AIG and Wall St. firms while U.S. politicians basically rolled the dice in providing subsidized housing (i.e., Fannie/Freddie via Clinton's State of the Union Address)?

From the U.S. tax payer viewpoint, the actions of U.S. politicians and Wall St. are totally indefensible and is the apotheosis of utter incompetence, greed, and arrogance!

The smell of this egregious behavior by Wall St. and the U.S. permeates from Shanghai to Dubai!

[pjwrites]

01:36 PM on 04/08/2010

Since when do we give credence to the lies of common criminals?

[hypnotoad72]

04:45 PM on 04/07/2010

When can the middle class feel grateful as well?

I mean, the more we hear how innovative Americans aren't, we read stuff like:

http://techcrunch.com/2010/04/04/cut-paste-innovation-groupon-gets-cloned-in-russia/

But most of us know it's taking from Paul (us) and giving it to some Peter.

[2garen]

03:09 PM on 04/07/2010

They did not try to correct the situation when the S and L rip off occurred and the Congress will not correct this situation with this financial malfeasance.
Too much money to be used to bribe or I mean for campaign contributions...

[mrbarolo]

01:31 PM on 04/07/2010

I'm not terribly sophisticated about these issues, but I had understood that a "short" position was, by definition, a bet against someone else's position.
If your'e the one who sells the product or option to that other person, then shorts that position, how can you not be betting against your customer, i.e positioning yourself to benefit from the failure of your customer?

[tbone99]

01:16 PM on 04/07/2010

Wonder if they are financing the new Israeli settlements ... thru credit default swaps

[ladcrp]

01:14 PM on 04/07/2010

Look, another jacka=$$ crook.

[whitemale08]

01:14 PM on 04/07/2010

A RECEIVER has to be found for Goldman Sachs asap.

And somebody needs to start the countdown to when Goldman Sachs is SHUT DOWN.

Everyday this criminal operation is allowed to exist America goes further down the tubes.

[zlohcuc]

01:07 PM on 04/07/2010

We are all of course, ready to believe them! After all, what do they have to hide for their tiny role in these developments. Is there a forensic accountant in the house!

[GravitonX]

01:07 PM on 04/07/2010

These guys are so mafia it's hilarious.

[magibrotherhood]

01:11 PM on 04/07/2010

russianisreali mafia

[thinking4]

01:05 PM on 04/07/2010

Blanfein is living very well and he would not recognize the damage his little cohort at GS did to the average American. Thanks for the bailout but we have no intention of changing our ways, too profitable for our clients, which are NOT average Americans.

[ethearch]

12:58 PM on 04/07/2010

What? Gambling in the Sach's Casino?

Oh my heavens, no!

[EdwardUlyssesCate]

12:51 PM on 04/07/2010

One must lie in order to steal without confrontation. Few folks would knowingly enter into a transaction of "Heads they win, tails I lose." The alumni of GS, with their positions at key choke points in the world's credit flows, would easily know in advance when they were going to turn off the credit tap. That's why some of their clients were told, and the others were not. The real problem for their clients is they never know in advance to which group they actually belong. They only find out after the fact. No wonder GS said they were "doing God's work." In choosing who wins and who loses among their clients, they're playing God. It isn't that such folks have not always existed, it's that the other 99% do business with them. You'd think folks would be smarter than that.

[jaslyn]

12:44 PM on 04/07/2010

Could Blankfein look anymore like a weasel? They're good at weaseling out of anything that gets thrown at them even in the face of the obvious failures on their parts. Time for an exterminator.

[goodfoot]

12:49 PM on 04/07/2010

Only if he had fuzzy hair all over his body!! His comments aren't even "nuanced" that much in this hearing...they are outright LIES!!

POINT BLANK, "yes" or "no", question. Did Goldman at ANY time during the mortgage crisis enter and exit ANY short positions on SPECIFIC CDS's or CDO's that ANY of their clients owned? Of course they did!!

[MiHi]

01:02 PM on 04/07/2010

I'd say he looks like a Ferengi, but even Ferengi have "Rules of Acquisition" to abide by.

[Carl Caroli]

12:40 PM on 04/07/2010

I wouldn't believe anything coming out of the mouth of that sociopath. You lie!