Published In CommPRO,biz 2013.12.10

 

The Banksters Walk Free

In a breathtakingly clueless comment last month (2013.11.12 SIFMA) at an industry conference, Lloyd Blankfein, Goldman Sachs CEO, is reported to have expressed regret that they were part of the problem leading up to the recession. Not regret that his company’s actions helped to crash the world economy ruining thousands, putting millions out of work and causing unimaginable suffering. He expressed no regret for that at all. He just wishes they hadn’t engaged in “trading practices” that created an image problem for his firm.

Blankfein is reported to have told the conferees, “I wish the organization hadn't done complex CDOs circa '06 and '07." A CDO (collateralized debt obligation) is a fancy name for bundling up a bunch of mortgages and such and hustling them as investments. Goldman sold them to pension plans, banks and the like. After all, what could go wrong? Housing always goes up; even if the mortgage holders fail to make their payments, the property will cover the loss, right? We all know the answer to that now. It seems that Goldman Sachs knew the answer back then. They knew their CDOs were full of “Crap” (their terminology), and at the same time they were hawking them, Goldman was betting they would fail. Worse, when they failed the American taxpayers paid off on that bet. And all Lloyd Blankfein sees in this is a PR problem? 

The SEC saw fraud and brought civil charges against Goldman. The agency settled for a paltry $500 million, with no admission of guilt. For Goldman Sachs that’s pocket change. According to some reports they cleared well north of $10 billion double-dealing CDOs. Poor Lloyd, Goldman Sachs took a public relations hit while their actions destroyed the lives of millions. If there was any justice Blankfein and a flock of other money-changers like him would be in jail. Considering the suffering their fraudulent actions brought down on millions around the world, they should face prosecution. 

Surprisingly, only a few of these modern day money-changers have faced prosecution over the last few decades. A bunch of minor league hustlers were jailed in the 1980s and early 1990s over the Savings & Loan crisis, alongside closing down close to 800 S&Ls with assets in the $400 billion dollar neighborhood. Since then not much has happened to the banksters, mostly because our Justice Department has some illusion that these crooks are too-big-to-jail. In case after case the DOJ has allowed blatant criminal behavior on the part of big league banksters to go unpunished because they believe that jailing the top guys at these banks might rock the boat and cause problems in our economy. 

That shows an unimaginable lack of business knowhow. Nobody is irreplaceable, that’s especially true when it comes to replacing corporate leaders engaged in illegal activities. There are good people, honest people in most organizations ready to move up and do the right thing. If not, there are topnotch folks ready to come in and put them on the straight and narrow. Folks who understand that the ethical business model is not only the right path; it is the surest path to profitability.