Latest Posts

  • In Least Shocking Decision Ever, U.S. Won't Prosecute Goldman Sachs

    You know what they say, "First, they came for the sellers of collateralized mortgage obligations, who made bets against the same securities they sold to clients." Oh, they don't say that? Because it never, ever happens?

    The Justice Department says after a "careful review" it has determined there is no basis for bringing a criminal prosecution against Goldman Sachs or its employees in regard to allegations set forth in a congressional report.

    In an unsigned statement from the Justice Department issued Thursday night, it said the department conducted an exhaustive review for more than a year examining allegations in the Levin-Coburn Report.

    Headed by Sen. Carl Levin, D-Michigan, and Sen. Tom Coburn, R-Oklahoma, the 635-page report in 2011 singled out Goldman and Deutsche Bank as examples of Wall Street firms that reaped huge profits by marketing securities backed by subprime mortgages as safe investments to clients, even as the banks bet against these very same securities.

    In fairness to Goldman, it's simply not true that top executives haven't been punished for wrecking millions of livelihoods. Mark Patterson, a former Goldman Sachs V.P., is currently Treasury chief of staff to Treasury Secretary Tim Geithner. The chair of the Commodity Futures Trading Commission is former Goldman partner Gary Gensler.

    Sounds problematic? It's a case of you say tomato, I say tomahto. You say, "revolving door cronyism," Goldman says "creative community service sentencing."

    Photo by Jin Lee/Bloomberg/Getty Images

    Tags: Crime, Department of Justice, Goldman Sachs, SEC
  • Porn, Nothing but Porn at the SEC

    "SEC staffers watched porn as economy crashed." That's the headline, and there's really very little else you need to know about this story: over 30 SEC employees or contractors used government computers to look at naughty websites, all the time, while the econopocalypse was unfolding. One lady visited porn sites 1,800 times in two weeks! One senior attorney spent eight hours a day downloading nudie pics!

    Sure, you can frame this as a "bad thing." Or you could acknowledge that these people have a tremendous amount of dedication. Eight hours is a long time.

    Besides, once the stock markets went all limp and wrinkly, how were they supposed to get their jollies?

    Tags: Economy, Internet, Porn, SEC, Sex
  • Forget SEC Lawsuits: What's in the Goldman Sachs Steam Room?

    Goldman Sachs, once the invincible king of Wall Street, is in a lot of trouble. It is also in a very fancy new headquarters building. Let's examine the latter, because it's Monday morning and you'd probably rather read about "Awesome Abs" fitness classes than John Paulson's evil scheme to short the housing market.

    It's true, the new Goldman HQ has a gym that offers an "Awesome Abs" workout, which is good because the people who invent the next way to screw your 401(k) should at least be sexy the cafeteria serves "French Toast Baba pastries," "a deep panini lineup" and "deadly cupcakes."

    On the bearish side, vice presidents no longer have offices, and are forced to sit at "open-space workbenches" that the Wall Street Journal compares to "a typing pool." If these VPs are lucky they'll get promoted to managing director, which means upgrading to "windowless inside offices."

    No consensus on the steam rooms, though…

    The new steam rooms for men and women are drawing mixed reviews. Some employees find the idea of "steaming" with co-workers objectionable. Others, not so much. "Once you have seen your colleagues naked in the locker room, steaming with them isn't that weird," says one employee.

    Uh-oh! Don't let Rahm Emanuel hear that.

    Tags: Banks, Economy, Goldman Sachs, Money, SEC
  • Tim Geithner Vows Executive Compensation Will Never Not Be the Same Again

    geithner-pay-meetingKiss those seven-zero paychecks goodbye, corporate America. This afternoon Handsome Treasury Elf Tim Geithner held a press conference to kick off a new era of executive compensation, and you are not going to like this one bit…

    The Obama administration announced it will seek new powers for the Securities and Exchange Commission to force firms to let shareholders vote on executive pay and make directors who set compensation more independent, without setting any outright caps.

    Today’s proposal, subject to congressional approval, would cover all U.S. public companies.

    Oh, the SEC will oversee this? Great idea! They've done such a fine job with corporate oversight lately. Nothing gets past those people.

    Anyway, Geithner — using the detailed, non-vague language that has become his trademark — smacked down a list of rules regulations restrictions suggestions for how fat you cats can get

    We are not capping pay. We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive. Instead, we will continue to work to develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives.

    And the nice thing about not setting any precise prescriptions is that Tim Geithner can decide, if he is bored on a Wednesday, that Vikram Pandit (for example) has totally misaligned a bunch of incentives and therefore should be smeared with honey and thrown into a tank of fire ants.

    Have fun with that, guys!

    Tags: Economy, Executive Compensation, SEC, Timothy Geithner
  • Mary Schapiro, Inept Lady, to Run the SEC Ineptly

    This morning Barack Obama announced his pick for chair of the Securities and Exchange Commission: It's Mary Schapiro, who headed the National Association of Securities Dealers (NASD) and its successor, the Financial Industry Regulatory Agency (Finra).

    Ms. Schapiro, 53 years old, will take over an agency beset by problems, from its failure to catch red flags in the alleged $50 billion Madoff fraud to accusations of lax oversight of Wall Street banks.

    Sounds fun!

    Out of the gate, Ms. Schapiro faces potential controversy. In 2001 she appointed Mark Madoff, son of disgraced financier Bernard Madoff, to the board of the National Adjudicatory Council, the national committee that reviews initial decisions rendered in Finra disciplinary and membership proceedings.

    Sounds- um, that sounds like the kind of thing that gets a person dragged back and forth through the mud of public opinion, even if everybody goes hoarse denying wrongdoing. That does not sound fun.

    Becoming SEC chief means a pay cut for Ms. Schapiro, who earned $2.1 million counting deferred compensation at NASD in 2005. The SEC job pays $158,500 a year.

    Nice work, president-elect Obama. Mary Schapiro can't even perform a simple cost-benefit analysis.

    Good thing you put her in charge of the nation's securities markets. She'll fit right in.

    Tags: Barack Obama, SEC