Opinion Columns & Blogs

Goldman's death fight

If we are to take Lloyd Blankfein's word for it, and that's always a big "if," then there must be a lot worse behavior by Goldman Sachs that has yet to be discovered, beyond what was publicly unearthed at this week's Senate hearing.

Here's what Goldman's chief executive officer told Sen. Tom Coburn, R-Okla., the ranking Republican on the Senate Permanent Subcommittee on Investigations, when asked if he had any "legal, ethical or reputational" concerns about any of the activities undertaken by Goldman employees that were described during the daylong hearing. "I heard nothing today that makes me think anything went wrong," Blankfein said.

Now flash back to November 2009, when Blankfein spoke at a New York conference sponsored by Directorship magazine, which named him its CEO of the year. "We participated in things that were clearly wrong and we have reason to regret, and we apologize for them," Blankfein said then, referring to Goldman's role in the financial crisis, without mentioning any specifics.

So, using simple algebra, we can deduce from those two statements by Blankfein that he must have been referring to some "things" back in November that didn't come up for discussion at the April 27 Senate hearing. What were these things? Only Blankfein knows, it seems. What we do know, though, is that they must have been far more unseemly than anything we heard about in the Senate hearing, at least by Blankfein's fuzzy definition of right and wrong.

In Blankfein's morally hazardous world, it would seem that there's nothing wrong with selling harebrained subprime-mortgage schemes of the bank's own invention to Goldman clients, while disparaging the same deals in e-mails to colleagues as "crap" and other more vulgar terms for human waste.

From Goldman's perspective, there was nothing wrong with helping John Paulson's hedge fund devise a synthetic collateralized debt obligation to meet his designed-to-fail specifications, and then selling $150 million of the notes to a German bank without telling the bank about Paulson's identity or role — notwithstanding that the Securities and Exchange Commission has said Goldman's actions were fraudulent.

There was also nothing wrong with telling the German bank that the investment portfolio underlying Abacus 2007-AC1 was selected by an independent company called ACA Management, while telling Goldman employees internally that the portfolio was selected by ACA and Paulson.

And it wasn't technically wrong for Goldman co-defendant Fabrice Tourre to write this in an e-mail, while Abacus was being hatched: "Only potential survivor, the fabulous Fab... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!"

It makes you wonder: What did the Senate investigators miss?

Blankfein had a chance in January to publicly explain what it was he had apologized for, when Financial Crisis Inquiry Commission chairman Phil Angelides asked him at a hearing to elaborate in detail. Blankfein dodged the question.

The good news now, though, is that Goldie, Fab and Lubricious Lloyd are fighting back. To which we, a grateful public, should lift our voices and shout: Please, Goldman, keep fighting to the death, even if it's not the good fight.

And please — please! —don't settle the SEC's lawsuit. Take it to trial. Go for vindication. Appeal all the way to the U.S. Supreme Court if you have to. We want to see everything that comes out during discovery. All the deposition transcripts. All the embarrassing e-mails. The whole story.

And, please, Sen. Carl Levin, D-Mich., chairman of the Senate panel that gave us this week's delightful hearing, how about some more? How about two years more? The 1930s had the Pecora Commission. We could have a full-fledged Lloydapalooza. Turn loose the millions of pages of documents you got out of Goldman — and all the other banks you sent subpoenas to, as well. We saw the 901 pages of exhibits from the Goldman hearing on your website. It wasn't enough. Nothing will be, until we get to see precisely what it was Goldman did during the credit bubble that was so horrible, and so offensive, that Blankfein felt compelled to publicly and vaguely apologize for it.

Or maybe Blankfein didn't really mean what he said back in November, in which case he should take his apology back. Not that it would matter much now. Nobody believed him when he said he was sorry anyway.