Poor Maria

I’m quite sure Ms. Bartiromo was anxious to have her interview support the political campaign CNBC has been running, the campaign that seeks to defeat or defang any attempt to regulate the derivatives that were the real reason our economy was nearly destroyed.

The guest (Jeff Greene) was described as the first individual (not a hedge fund) who bet his own money against the subprime market.

Maria lobbed him a political softball right over the plate by asking what he thought of the Goldman lawsuit.

Her disappointment was obvious when he said it reflected the worst of Wall Street’s shenanigans.

Maria tried to get him back on track, but he went on to say it was like going to a restaurant owned by a dear friend and having dinner, all the while unaware that the chef had a bottle of arsenic with him and owned a life insurance policy on your life.

She became visibly distressed that a billionaire who made $800 million on subprime CDS would say that the icon of Wall Street smarts had been sleazy, and may well have committed fraud.  I’m sure the script was to have him join her and the muppets in their theme of the day that Goldman didn’t commit any crimes, and the filing of the suit was just a partisan political stunt.

As I said before, what really needs fixing is what is perfectly legal – the hidden exposure to the taxpayer of trillions of dollars of bets against companies and other borrowers.

For that reason, I hope the lawsuit isn’t a winner.  It will provide cover for those who want the secretive game to keep on going, with no rules.  They’ll be able to say “See, we don’t need more regulations, we just need to enforce what we already have.”

Make no mistake about it, the goal of the editorial stance of CNBC, the Wall Street Journal, and IBD is to protect the system, a “system” with  no one knowing who is behind the bets, or even how many bets have been placed.

Even at the track they tell you how big the the “handle” is.  As an unwilling and uncompensated player in this poker game, the taxpayer should at least know how big the bets are that they might end up paying off.

But, back to Goldman.  Part of the shock of all this is how far out of character (a carefully curried reputation) this is for Goldman.  Of course, those of us with an ounce of research capabilities know that some of the most egregious pool operations in the 1929 bubble and crash were the Goldman Sachs trusts, which fell from their offering price to just two cents on the dollar.

It took Goldman a really long time to overcome the shadow from those blatant ripoffs.

All of which reminds me of the old Goldman saying when they were a partnership — “we are long term greedy.”  I first heard the phrase sitting next to Mike Mortara (RIP) at an industry dinner shortly after his move to Goldman.  He was the legendary head of Salomon’s mortgage desk under Lew Ranieri before moving directly into a partnership over at Goldman.

I’m inclined to think that when the partnership became a public company, Goldman started being “short term greedy,” just like the rest of Wall Street, where every deal is measured in terms of the next bonus check.



4 Responses to Poor Maria

  1. W.Kinsolving says:

    This is going to VF unless I hear from you in 30 seconds!


  2. Fred says:

    Howard, every brokerage firm has a compliance officer. What was the compliance officer at Goldman doing before the flit hit the shan, or did they even have a compliance officer?

    • hhill51 says:

      CDS are over-the-counter private contracts protected from prying regulatory eyes, so they get oversight from Legal, but not from Compliance. Compliance also has a very light touch on Private Placements. Virtually all CDO’s (most definitely these) were PP’s, in all likelihood officially domiciled in Grand Cayman or similar jurisdiction mostly beyond US securities laws.
      No doubt the Compliance guys were busy dealing with the high frequency trading and preferential access GS was giving their largest hedge fund stock trading customers, or maybe they were looking at the public MBS with the misrepresented piggyback second liens shown by “mistake” as 20 LTV, or any of a number of other issues.

  3. GeorgeR says:

    Maria was a big defender of Hank “Ace” Greenberg too. Her world is all about access to and interviews with the top shelf. She knows she can not be a critical journalist and maintain that access.

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