Heated exchange as CEO of investment bank testifies, protest
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- čas přidán 23. 07. 2015
- (28 Apr 2010)
TRUE DATE CREATED = 28-04-2010
1. Goldman Sachs CEO Lloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
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Goldman sold mortgage bonds to investors, knowing full well they were rated inaccurately on purpose by the rating agencies. Then behind the scenes, Goldman went to AIG and bought Credit Default Swaps and shorted the very mortgage bonds that they claimed were AAA rated. It's mind boggling how no one went to prison for fraud
Do you purchase car insurance knowing that you're going to crash your cad?
@@Built2kill you dont buy insurance for you crashing. you buy insurance to protect yourself from other drivers
@@Built2kill I found mr. Sparks
@@Built2kill Do you get paid to spew out BS?
@@Built2kill If you buy fire insurance on your home and don't disclose that you know you have a gas leak and a methlab in the basement, guess what, that's illegal. That's fraud. And in 99.9% of cases, you won't get the money anyways when your house eventually does burn down. And not only did these banks get the money from the investors (the "insurance company" in this case), they ALSO got reimbursed for the full cost of the house by the fucking TAX PAYERS. They got paid that money to rebuild the house and instead they pissed on the ashes and bought cocaine and strippers with it like they fucking always do.
It will happen all over again. No one has learned any lesson from this
Pardeep singh well said, when the federal gov baila you out, no one cares about learning. Thousands will get screwed over again
Of course it will one way or another.
Bad news, it's happened again
Not true, it didn't happen again either. This Covid collapse is far more natural and the way things should be.
Nah things like CDO^2 not making a comeback so far
GS was describing the game as it was, but the people who made the bets and lost money did not want to own up the responsibility. The public who was hurt were eager to see heads rolling. GS was unscratched and left standing after the crisis hence the perfect scapegoat. Sensing a great opportunity to be popular with voters, politicians of all colours jumped at the bankers trying to be seen doing something for the average joe, who had no idea who was at fault or had any inclination to learn the details while their tax money is being channelled to the bankers by the politicians. Their systems are so full of conflicts, the bankers, the rating agency, the regulators and politicians. The whole thing has always been a circus and always will be.
Nice how they cut away, when he starts to explain...
Goldman Sachs owns The Government
@@tygaclericuzio4130 then why did the gov come after them and ruin their reputation??
@@habibbialikafe339 ruined whose reputation!? The guy in the govt was Goldman Sachs himself who created these securities!
@@missbond7345 he wasnt part of congress. we talking about congress here
@@habibbialikafe339 thought we were talking about the Govt. This is jus a dog and pony show. In Mark Twain’s words “ we have the best govt money can buy “ 😀
I love how gambling is illegal in some states, but this is legal.
That would be basically every state. It’s illegal to have a poker game at your house with your buddies, if you’re playing for money. But you can easily load up Robinhood and borrow money instantly from them on margin and make insanely risky bets with your entire life savings in about 25 minutes time, and lose everything before the end of the trading day.
@@5urg3x I think you bring up a great point with how they chose to have laws on the book they dont enforce, but will enforce when they want to. If they unlawfully entered someones home who happend to be playing poker and they wanted to trump up charges, they would definately included illegal gmbling in the charges.
No executives got hurt by this. They got bonuses while Americans got their homes taken.
The state should not decide what people use their own money on.
it's because it's too complicated for the peasants, so they dont bother.
It's only wrong if you get caught doing it. If you get "Discovered" later, it was just a mistake.
Goldman Sachs: Invest in Mortgages.
Customer: Yes I'll invest 1 million
Goldman Sacks: I'll bet against that 1 million, so either way, If you win I win, if you lose I still win.
Except a) those divisions are separated and b) they weren't engaging in a risk with their consultancy.
@@maxmustermann8558 People just like having someone to hate on
KN Byam it’s called a hedge fund.
Victor Östlund it’s jealousy of anyone with more than them! The irony is that they think they’re fuckin Robin Hood, going after Blankfein (who grew up in public housing and made something of himself), like they’re gonna take from the rich to give to the poor...not only does that ignore how much wealth Blankfein and Goldman have created for other individuals but entire nations that have been lifted up by Wall Street investment banks. It also misconstrues the tale of Robin Hood. Robin Hood didn’t create class warfare and take from the rich villagers to give it to the villagers that didn’t work. He robbed the king (government) and the tax collector and gave the people their hard earned money back! In today’s world and when it comes to this badly edited, out of context video, what concerns me the most are the people willing to raise taxes on us all (any taxes, even if everyone says they’re on the rich only will hit the poor and hit them the hardest) and hand over unlimited power to government scumbags! Just because those politicians sit there self righteously grilling CEO’s doesn’t change the fact that it’s the government who has never created wealth, only stolen it under threat of jail and force! Fuck that!!!!!
@@logicalconceptofficial I agree with you bro
This video is edited in a very manipulative way. Why don't you post the full footage where Blankfein explains that the essence of the market making business is taking the opposite sides of a bet.
Mihail ILIEV, Amen!
Betting against your clients, whose interests you represent, is CRIMINAL FRAUD, especially when you purposely, deliberately and systematically misled them on their investments.
Robgoren there are two very separate sides of the business (private vs public). They, whether you believe it or not, are not allowed to talk to each other for the very reason you’re describing
luvdriven540i no it’s not because they are not fiduciaries in the market making context, this is why no one went to jail
@@robgoren8628 Here's an example of the GS approach to selling securities: "Looks Good on You!" czcams.com/video/phagxOal7_A/video.html
Yes they provided a security for the housing market, but that is not the issue, the ISSUE is that they made it seem like a good security, but in reality it was GARBAGE. They committed fraud plain and simple.
Finally a comment that makes sense... people here are deffending G&S forgetting that they payed S&P to hold the ratings on CDO's while dumping them...
phatkaveh60 somebody finally gets it, this is a crime and the people responsible for it should be held accountable
Brett Sylvester well you are Right about the Securities, But they did advertise their product wrong ( in this case the advertised them with a tripple A Rating when in fact They were utter shit ( which was just possible because of the bribing of the finincial service authorities )). It definitey was a fraud. But i do as well agree with you that you should know about the product you buy, especially when there is so much Money involved, you should know about what you are buying. But that does Not under any circumstances relieve the banks Position in that scenario. Sory for my english, Not my mother tongue
@@matthiaszajc4594 But they don't rate them, the credit agencies do. The problem was not only IB but Credit ratings and Underwriters and local banks making these absolute garbage Mortgages.
Aldemar Aburto Aldemar Aburto yea you are Right, as i said english is Not my mothertongue, i was not sure what the proper term for these agencies were :) my main point was just referring to our boy sylvester for stating that the buyers were Not misled and that it was there fault :)
It amazes me how Americans let corporations operate the way they do.
Not only do we allow corporations to do this, we elected trump who convinced America to do more of this and take back the laws and regulations preventing this. Oh yeah, we also gave the rich (like trump) a huge tax break from 35% to 29%, as if those corporations needed a tax break.
@@rabbit251still outrageous that people want him back too,
@@doct0rnic I love the line from "The American President" movie: "People are so thirsty for the truth they will crawl through the desert in search of it, and when they don't find it they'll drink the sand" (or something like that). That is what we have today.
Most Americans are just a few hundred dollars shy of being totally financially blown out. They've got medical debt and college debt they can't afford, kids to feed, a job they have to work overtime at to make ends meet and unresolved physical and mental health issues from a medical system that isn't built for prevention but profit. They don't "allow" corporations to do anything, they can't rise up and revolt because they can't fucking afford to. Revolt and miss work? And get my electricity shut off? Are you high?
I mean look at January 6th, what a shit show that was. That was all of, what, 7000 people? Out of millions of Americans that actually believe the election was rigged (to this day, a full third of Americans believe this). If *half* of those 110 million had been there that day, a full 1 out of 2 people that honestly feel Biden stole the election had showed out, we'd be living in a different country right now. They didn't. For as hyped up and zealotus as that crowd is, they went and clocked in like regular-ass people that day. I'd love to know how many of those people stayed home because they couldn't get the day off or couldn't afford it.
Us Europeans are starting to do the same. We let them slip up over and over again. And each time their "mistakes" are growing bigger.
They're testing the waters to see if people will protest. When they don't they repeat the offense.
Blankfein clearly said those two parts of the business don't know about each other. This is actually mandated by laws signed by these clowns. But who cares, he just keeps going.
How many times does the investment bank's equity research house put a BUY rec on a company that approached the investment bank to raise capital?
yes, senators, a market maker both buys and sells and it is gambling, which the participants know and choose anyway...ask a better question: "are you selling products you know to be flawed in their representation?"
They asked that, watch the full testimony
Why do senators talk as if they know these things
Ahnaf Ahmad You don't need to be Economist to understand these shitty deals & credit default swap purchased by these banks on their own product!
They pretend to care and need a public scape-goat to direct the anger of the people away from themselves. Who is guilty of mortgage collapse you ask? Oh that is Jews.
Faceboo Idio >claims the senators are just vying for an easy scapegoat
>Proceeds to blame the Jews for the financial crisis (not an unusual idea for a lot of the 20th century).
Logic?
Wow Jack, you are one more link in a long chain of stupid ancestors that preceded you...I hope in the next 300 years you descendants will evolve a bit to add more brain cells to the two you already have.
P.S. Your post has so much stupid, hillbilly 'wisdom' that I am truly uncertain if you could be called a homo sapiens.
You don't have to be that smart to know this, you aren't a genius calm down.
Imagine being a senator in this hearing and not understanding how market making or Chinese walls work.
And it’s these idiots who are trying to “regulate” our markets.
Imagine being a Senator.
Looks like you’ve totally misinterpreted the senator’s remarks (in this particular clip). It’s as clear as day; GS was selling securities to ill-informed investors that they themselves bet against. What’s that got to do with the senator’s knowledge of market making and Chinese walls?
@@NomadLovesUs you are likely as knowledge as the senator
@@Ologramma96 you are likely as knowledgeable as a smug investor calibrated to a stupid fucking system of imaginary money. Fuck ya'll lmao
Why is this clip cut at 1:43? It was jsut about to get good
all of this looks crazy to me . Am 25 yo living in Greece . i Just discovered that the economic collapse we had was due to Goldman Sachs AND our Goverment . Like literally a bunch of people in a period of 10 years (2000-2010) decided that 10 million people are gonna get screwed up just for their own profit . I;ve seen my father loosing his job ,my family from having a normal life goin to not even have milk in the fridge , our house getting rented because we didnt have money to do shit etc etc . Am still living in my Grandmas house , currently not being able to afford a house on my own . Prices are almost the same as America (slightly lower) while the minimum wage is 650$ . Greek goverment and its people (partly) are to blame as well . But when it comes to my generation , we the ones paying damages we didnt cause . I didnt vote for non of these disgusting politicians , nor took any black money for my own profit . By the age of 18 i was swimming in a society where even if you were a doctor you would get paid 1000$/mo . And am not a doctor . Am not trynna be negative in any way or whine about things , and i will keep on trying / working hard until am financial independent . Is just sad man , like i woke up today and my brain could not accept the fact that a bunch of CEOs were the ones that choose that the quality of life in Greece is gonna be similar to a 3rd world country just because they wanted couple of billions .
It’s the same as selling a Lemon Car. If you’re selling a Lemon, you must disclose it!
How come we never get to reverse the seats and ask how these politicians became millionaires?
Usury should be banned and all userers thrown in jail.
I love how nobody important actually got punished for this fucking clown game. Keep it in mind.
And none served time behind bars
Wouldn’t selling anything imply the fact that the owner no longer wants it??? This is any idea people usually can’t wrap their head around.... the disclosure was the fact that they were selling them in the first place that is the opposite of a long position
Lol this is a perfect example of things taken out of context. Blankfein is explaining that they are market makers and have no obligation as a fiduciary and this clip just completely cuts it off. Example: Someone owns a house falling apart. A wholesaler comes by and offers a low ball deal on the house and the seller says okay whatever you take the house as is and he accepts. It’s the fault of the owner that they sold that house?
sadly this will go over everyone's heads
That's not what happened here at all. They were essentially unloading their losses because they knew that the underlying securities were complete junk. That's the criminal part. The criminal part is also two pronged. These were the same guys that lent houses to people that could never afford those houses. So when I buy a security that's dropping and it's related to something as stable as the housing market, you expect it to give you some yield over time. These guys knew that the system had completely fallen on its face because of their shitty practices(they're not the only ones to blame but also Bush's policies and the Fed) and they'd gorged themselves while abusing the system. Telling people that this is market making is a fkin joke. It's like they used Govt policy and leverage to their advantage and then normal people were left holding the bag and had to bail them out or else all forms of lending would've come to a halt. It's monumental abuse of power given that banks essential create money out of thin air by creating new loans.
The analogy doesn't work. They didn't just sell houses that were falling apart. They were selling houses that they were actively betting (based on their algorithms) would fall apart to a much greater extent in the future. A better analogy would be selling tickets for a concert when you have strong reason to believe that the concert is going to be canceled without the possibility for refunds, and then not telling purchasers about it. It's fraud through omission of key information.
@@johngrey1074 Yes, and what the the CEO is saying in the video is simply that GS is not responsible for selling those concert tickets to people, because GS were simply just giving people what they want (i.e., a concert ticket). But selling concert tickets while knowing that there won't be a concert is the fraudulent part.
Yeah it’s definitely normal that the people selling the house have huge bets against the value of the house (as sold) or have taken out huge bets against the whole goddamn neighborhood while also using the profits from those bets, to bet against (on a huge scale) that the house will go up in value.
R.I.P Carl Levin the longest serving senator in the U.S.
Yep.. and normally I'm very much for term limits, but Levin was maybe the one example I can think of where he continually did a decent job representing his constituents throughout his career. He was even the author of bills that aimed to increase transparency and reduce the number of 'gifts' congress can receive from lobbyists.
The man had integrity. One of the few.
@@dzelpwr We had that in Canada with Jack Leighton, ever since he passed integrity is harder and harder to find, I wish they didn't pander and stuck by their guns. Even if I disagreed at least I could respect the integrity.
It's normal for a financial institution to be betting against a particular instrument that its also selling as long as there's no collusion between the two different divisions to intentionally short change the buyer. Its called a Chinese wall and is quite common for organisations of this scale to simultaneously engage in two activities that could pose a conflict of interest. As long as there's a Chinese wall and appropriate measures have been put in place to prevent any conflict of interest
Aren’t they all supposed to be in the interest of the business. They sold something they knew was shit, which they have the right to do, at great cost to their reputation but doing so so that they may make the best of a bad situation and not necessarily die completely?
@@tcskips Think of it as if it was a law firm who has clients from two parties from a multi-party case.
The fact that it's normal is a huge issue.
in this circumstance it's fraud. In the sense that they were marketing these securities as investment grade. Thats fraud. The fact that they held a short position was just the icing on the cake.
Politicians trying to shame ANYONE is laughable
nice show where is my popcorn
So the provide a security to their client that Goldman Sachs itself is not but those selling the securities for Goldman won't know that. I agree with this. Their not your financial adviser.
I agree
But they knew which way it's going.. ethics?
Senator Levin can't make the distinction between a broker and a wealth advisor
luke stu there was no regulation against it.
luke stu No, that's like a shop keeper selling an egg that they don't like the taste of, because a customer might. When a firm is selling a security, it is taking a commission for those marketmaking services, not for providing financial advise!
Keep investing in something you know nothing about. It IS gambling.
it's impossible that they are not in prison...unbelievable
Google these guys, Sparks is running a hedge fund, and Swenson still at Goldman.
Why would government imprison their partners?
They have broke no law . So why would they in prison ?
This man will spend more money than *you* will ever see.
It reminds me of The Wolf of Wall Street nobody wanted to snitch until the Captain of the Ship was force to. Our government did absolutely remotely close to nothing to punish or make them suffer consequences, other than added regulations after the damage was deep in the veins of the American Tax Payer. Majority of the debt we will not pay back. Unfortunately, today it has not change at all. Right now their is a stock buble that is roughly 10 times bigger than the last bubble which was the real state buble. Mark my word all of this is just a movie scene. Federal Reserve is responsible for the entire collapse of 2008. They lowered interest rate down and eventually allow banks to borrow money and of course the IRS did absolutely nothing also and SEC plus the FBI. I know the SEC is more civil rather than criminal, but come on men.
It is prudent to hedge your exposure. The faulty underlying securities are what should have been more closely regulated. American politicians do not seem to understand what forms of insurance are, nor do they grasp the mechanics of the instruments that were backed by the assets of their own constituents.
Congress is made up of the WORST crooks of all.
We wouldn't of had this happen...if people were just honest :/ I mean for real. How hard is it to be a decent honest upstanding citizen?
No. We woupdnt have been here if the average american citizen wasn't so damn greedy. Everyone was getting loans they couldnt afford and not even blinking twice about the payments.
@@Built2kill That's definitely a problem too....
Next to impossible when money is involved
Straight out of the movie Tin Men with Danny DeVitto . Uncle Lloyd would have been perfect for his part at the commision-hearing scenes. #Goldman #GoldmanSachs
He should've been locked up but instead he bribed his way out it.
... these hearings were nothing more than a dog and pony show the outcome of which was determined days before behind closed doors ............
Exactly, nothing actually came out of this, all a big show.
2:32 Can we get a picture of how full the bucket under the chair of Mr. Swenson was after pissing his pants?
His jaw was already shaking after saying 5.5 words...
Looked like somebody who was told about how risky this was, but didn’t think it would ever go wrong lol
Blankfein, in saying that his institutional clients wanted "exposure" to "the housing market" basically told Congress: "They wanted to buy a PoS, and that's precisely what we sold 'em! We were under no obligation to tell them that this was a Two-Flush'er!"
completely wrong, the clients asked for safe AAA investment, but what they got was junk investment packaged as AAA, tl;dr it was deception
It's risk transfer ma'am, God's work.
It's called hedging. Betting against a security you sell is very sensible in practice.
@UC-8nrAlcR5ibRTNZhHol3Zg A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. What does that have to do with reducing exposure? Volatility implies more exposure.
@@user-vl5iq8mo1q the problem comes from synthetic cdos that Goldman knew were worthless but sold anyway. It’s not really illegal but it’s definitely immoral
Let's be honest here, for a moment, all these bank CEO s should have been jailed for the rest of their natural lives. Their companies should have been forced to refund the people defrauded. That's how you put an end to the greed. Something tells me that if those ceos went to a hard labor prison they would be totally given a new attitude.
In that case you deserve to be in jail too. People are just as greedy, they just don't operate on such a large scale.
Those are the looks of a heated exchange 😮
Is the bankers responsibility to tell the customer the quality of the securities?
You pretend to be sorry and ill pretend to be mad
Blankfiend clearly said those issuing the securities didn't know that other ppl in Goldman shorted their positions.
Its just hedging their exposure - were anything bad to happen - which is did - thus, they protected themseleves.
+ the banks issued the CDOs they weren't the ones issuing the mortgages directly to the customers and the customers who had 0 - to little income or living beyond their means shouldn't have done so. They could have rented instead of taking a fat house and remortgaging under the wealth illusion.
So one-dimensional.
Weren't those the people the loans were being advertised to though?
I don’t think we did anything wrong. I mean hey, look at how much money we made selling junk!
Really glad that these testimonies lead to sweeping policy changes and the successful prosecution of those responsible for the housing bubble. Oh wait actually, that didn't happen lol
This reminds me of the horse track scene from "a day at the races"
Fuck me, I’d hate to be their lawyer
SCROLL BACK UP
So no one is going to point out how big those files are
Yes, Lloyd. The current costs per BTC mined range depending on costs of hardware and eenergy and staff costs between $7 to $11k per coin, it takes approx. It takes approx 10 minutes to mine 1 BTC. So and now make the math: Energy costs and staff costs won't increase exponential to the price per BTC. Until the next bench mark in 2025 and 2030. So then take the price predictions of 2025 of approax. $240k to $250k and the $5,25 million per BTC. And that applies for all the other coins. So now put this into perspective that in the USA Voila. There you have your profit margin. And you don't need the Fed or any central bank to print your money.
Here is one of the Monsters I’ve talked about in other videos. Part of the Evil Empire.
Any Jedi Knights out there that can stop him and millions like him?
WHERE IS THE HEAT ?????
this is not entirely accurate, these investment banks just create another product that linked to the mortgage market and it is regarded as low risk because it is mortgage. to sell this products they have to hold a tonnes of mortgage loans in their books in order to put them into the MBS. Once they realized everyone is going to default on their mortgage and the mortgage loans they are holding are in fact worthless, they just quickly put them into MBS and CDO and they are rated AAA essentially risk free so people will buy them. once this products are cleared from their books, they go on the other side and short the stuff they just unload to their clients since they know they are going to zero. so yea they win both way.
You know that face a child makes, when they get caught but they're only sorry because they got caught? Yeah, that.
The senator is the most senator-looking senator
How can you bet against your own investment!!! Guess that senator never heard about hedging before, they are just trying to reduce their risk on the initial investment
I don't think you understand what hedging is, hedging is betting against your current investment ,for example if you are long on a stock , you hedge by simultaneously shorting , the long position is still MORE than the short position, you are supposed to reduce losses. in the CDOs case what they did was they fraudulently packaged toxic investments ,sold them as safe to another party, then they went to the other side and BET AGAINST IT! that is NOT hedging. that's selling crappy investment as a good one and going around and betting against it.
Back when "hedging" was never heard of..omg. I`m not siding with the sachs guys, but it hurts when a clueless politician thinks he has some moral highground, doesn`t even do his homework and comes to the wrong conclusions.
@Robgoren It's called hedging your position. They sold a product and hedged their position by betting against it. The problem here is that they hedged against a product which is, according to them, safe. These people hedged against AAA securities, that's like hedging against T-bills almost. It's like a car dealer sold you a car and tells you "this car will never break down, guaranteed" and the moment you buy it, he makes a bet that your car will break down.
@@bradcooper2059 They never told their clients that the products were safe. The credit rating agencies and the clients came to that independent conclusion based on previous data. The problem is that the past data never included any subprime mortgages because those people could not previously get credit.
@@RobertSmurda they knew what they were selling and knew why they shorted it
At the height of the mortgage meltdown, when the big banks realised that these CDOs were complete rubbish, they started unloading these CDOs onto unsuspecting clients and going to other banks to buy swaps on the same shit that they just sold. That's not hedging. Hedging is when youre long and short at the same time. What big banks did was similar to, say a fund house dumping their stake in a company while selling calls and buying puts because they know this liquidation is gonna drive the stock price down. The only reason, why the banks took losses was because they held the contracts to some of these bonds, CDOs and swaps.
The best part of this clip is that the two democratic senators are grandstanding the most but they're ALSO the ones who would demand that the banks be prevented from denying anyone a loan. Can't have it both ways
But republicans claim to be for America but 2000-2008 China grew because republicans allowed more corporations to take businesses and productions overseas to China and other Asian regions steel and coal saw huge reductions under republicans
I don't see a problem in itself with a bank betting against one of their products. They sell CDO's for all kinds of markets. If they sell a CDO for the potato market, and they believe the potato crop will be ruined next year, of course they can bet against the potato market. That doesn't mean they have to alert all customers who wanna bet on the potato market.
To me, this line of questioning was not a good way to incriminate the bankers.
The real crime was their inflated ratings! (Several poorly rated loans bundled together into a CDO could somehow make that CDO get a AAA-rating)
The problem is not that the stock market has become gambling rather than investment. (That's not something new. Ever since the bull/bear options were introduced, you could bet on markets rather than invest in companies) and the problem is not that banks are allowed to bet against some markets.
It's that they created false ratings.
Until you find out that Abacus-2007ac1 was a CDO that was created with assets chosen such that it was expected to default which Goldman helped construct & then allowed Paulson to short
@@yourname1869 True! The obscured packaging is a big issue, which makes it less transparent how insane the bets have become.
Also the fact that they knowingly gave out adjustable rate loans to people who didn’t have any income, which were 99% going to default. So it’s not only that they messed with the ratings of a bad loan, the fact that they made such loans and then betted that they would fail (which they will) that is the issue. And then the fact that they did that a million times and AIG wasn’t able to pay them back, this caused all the banks to lose a ton of money and some needed bailing, etc. And at the end, it all goes back to lack of regulation.
@@Sara-ik5po Good point.
If they would simply offer a bad product which was 100% transparent and not "harmful to society" (like as if they would allow people to bet on potato prices going down despite an obvious record breaking harvest) that's one thing. But when they bet on their shitty loan policies causing people to lose homes en masse that's on a new level.
so he sold something... but bought another thing expecting it to fail
0:54 the very act of selling is betting against...
@@scoobydoo3322 It's called hedging. It happens still. Learn the financial markets before opening trap.
As I said I want to distance myself from Goldman Sachs , Blackrock, Blackstone - bc it’s going down
Was this what the movie margin call was about?
throw all these crooked ceos in prison and drain their bank account and give back to taxpayers
They didn't cause it (the subprime loan originators did), but they did facilitate it by taking that risk off the subprime loan originators' books, packaging it up, and selling it to pension funds. Risk cannot be created or destroyed but it can be disguised!
Millions lost homes!
A bunch of crooks!! What a disgrace!
Those options are an insurance product. This senator needs some education.
We investigated ourselves and found no wrongdoing
Ahh, the elegant sophistry of a banker!
No one went to jail
McCaskill nailed it, we don't really need these instruments. Goldman Sachs, JPM and others need these to collect their commission and that's it. They couldn't care less about the quality of their CDOs
There should have been legislation regarding CDO that you cannot buy them if you don't own the underlying asset you are protecting.
Buying a CDO is like buying a fire insurance on the house of your neighbour
2 minutes 50 whos the bald guy with glasses behind him? ive seen him before
The Goldman Sachs
A brokerage could sell a stock that their own investment division is shorting.
Is it just me or do All the bankers look like snakes.
No one went to jail. Our world is so upside down.
So how many people went to prison ?? Zero , you steal a sandwich from corner store judge gives you 5 years so we need to reestablish law and order
Everybody better get ready for part 2 of this it's coming soon
Easy economics in trial : when you make tons of money it's because you are good. When you loose a ton it's all market fault.
That's not accurate. Companies' results are compared on the basis of the economic situation during their term. If a hedge fund makes a 7% return but the S&P had a 10% increase, the fund performed below average.
Not one of these people went to jail
That Mcascal woman is so harsh on the ears naginaginagi....
He's a lying S.O.B., they took both sides of the deal and could not lose.
Regardless of whether you don't like these practices, this did not cause the financial crisis and you should focus on more important things.
Blankfein is real tight with the mob.
He is not taking a position. It's like you can go long or short on a stock, depending on where you think the stock will do better or not. It is the individual's responsibility to do the due diligence with their own money.
Regulation without enforcement isn’t regulation at all
George Carlin had a great bit where he excoriated business people.
longer video - www.c-span.org/video/?293196-3/investment-banks-financial-crisis-goldman-sachs-chair-ceo&start=37
I think people forget that business is business and it’s not a sympathetic world. That’s reality and that’s how businessmen/women become rich.
Evan Handler nailed this guy in Too Big To Fail..lol
So that's a real life Tuddle ? Not as a smooth or british as Irons portraited him to be.
You go buy a watermelon, the guy selling it thinks the watermelon looks a little bruised, he sells it, is he being fraudulent?
Samuel PItchkhadze bad analogy mate. In this case the watermelon was actually rotten and the guy is actually meant to be a "watermelon adviser"
These bankers all belong in jail.
Back when AP seemed like a real journalistic entity..
If you only you knew which side these firms investors vote for
Okay next time don't do it... 'm I clear.
Yes Senator
..cause I'm very angry now.
Sooorryy Sennaaatooorrr