So as it happens, during hearings before a Senate panel last year, Goldman’s Lloyd Blankfein might have lied a little (a lot) about his firm’s position in the mortgage market. We know, we should have asked you to sit down before reading this shocking news. Trust us, we were every bit as surprised (none) as you were. But, and you should sit down for this, there’s an outside chance Lloyd may face perjury charges because of it. Sure, this is a little like Al Capone going to prison for tax evasion, or a lot like it depending on your personal opinion on the $GS CEO, but beggars can’t always be choosers.
Almost a year ago, during the hearings starring trader Fab Tourre, Blankfein strolled in with a prepared statement in which, naturally, he explained in long and detailed terms just how they’re just a simple bank trying to make their way in the world and no way would they ever do anything shady because that’s not the American way. The key snippet is:
The fact is we were not consistently or significantly net “short the market” in residential mortgage-related products in 2007 and 2008. Our performance in our residential mortgage-related business confirms this.
After putting your tax dollars to work for the past couple of years, the subcomittee has decided that this statement is true, on opposite day. The 639-page (tl;dr) report names other institutions, such as all of them, but Goldman gets the most attention because let’s face it, everybody’s a hater. It’s like when you saw those pictures of Ke$ha in a bikini and you felt better because that girl is shaped WEIRD.
Goldman, for its part, has released a statement saying it fundamentally disagrees with the panel’s findings. This, coincidentally, is my favorite defense: no, you can’t our own words as proof that we were doing anything wrong just because we said we were doing exactly what you accuse us of doing. Despite not doing anything wrong, Goldman has agreed to change the way it does business, but that’s not an admission of guilt or anything.
“We recently issued the results of a comprehensive examination of our business standards and practices and committed to making significant changes that will strengthen relationships with clients, improve transparency and disclosure and enhance standards for the review, approval and suitability of complex instruments.”
Honestly, the odds of Lloyd actually seeing the inside of San Quentin (or, more likely, Englewood, but we can dream) are slimmer than a runway model. But just the thought that we might collectively get our pound of flesh is just so darn thrilling. Why, if a banker goes to prison for this, our homes will recover their values, the unemployed will find jobs again, business will re-open, and all the damage will be undone. So it’s something to get excited about.