How the GAME is played.

[tw]

First post in this thread defines what was considered routine and legal on Wall Street. How finance companies 'invented' money. Yesterday, the government filed charges against Goldman Sachs, one of the more transparent investment banks, for outright fraud. To understand it, grasp that first post.

Goldman threw together mortgages that were doomed to fail. Did so at the request of a largest customer who was betting on a complete meltdown of the American mortgage industry. No such financial instrument existed. So Goldman created it. Then, as the underwriter, represented and sold it to others as a perfectly safe investment. Did exactly what is normal behavior on Wall Street. (See many previous cautions to those who pay for expensive stock brokers to invest for them.)

Goldman so knew this mortgage backed security would fail as to take out insurance from AIG. AIG wrote the insurance policy so that it would not be insurance. Would not be subject to oversight or scrutiny. And so more parties doing what was necessary to protect the fraud - what was now openly encouraged after 2000.

Goldman's reply? Customers that were duped should have known Goldman was fraudulently selling an intentionally manipulated security. They should have known better. And since information was withheld, rating agencies also could not see through the scam (and may not have wanted to since profits - not ratings - was also the new philosophy).

Now, Goldman was one of the more honest banks. Goldman was only doing what was acceptable business especially after SEC chairman Harvey Pitts refused to let Congress even increase his budget. This was only a $15 million deal. Government charges are really not about that deal. The government is saying to every American that these scams from the investment banks are routine. Fraud - especially in the past decade - was the new business model. Enron accounting is alive and well. We know know that non-existant government regulation in the 2000s is why Lehman Bros was doing the exact same thing. Moving bad debts into other companies. Then claiming those companies on the books as assets. Typical example of what Wall Street does especially in the past ten years. What is now considered acceptable business practice by brokers and investment bankers.

Many new service commentators have been editorializing (and accurately so) that these routine business dealings are major reasons why so many Americans are unemployed, why ARMs were so routinely promoted, why a housing bubble was openly encouraged, why financial spread sheets could not report the impending financial disaster. And why so many extremist politicians will attack Obama rather than address an across the board major regulation of the entire finance industry.

Top of the list. All those securities and derivatives must be traded only on open markets where transparency would have made those scams obvious and where punishment includes banning the bank (or investment house) from any trading.

They literally underwrote a financial instrument that all but had to fail. Even bought insurance so that they could reap profits from the failure. They literally and intentionally lied about that security to their own customers because a business school philosophy says the only purpose of a business is profit. Especially since 2000, this has been business as usual.

Purpose of every finance company: to provide superior financial services. Contrary to the philosophy in most every major American financial institution. They are only doing what it taught in business schools. Take profits by any means no matter who might be hurt. As long as the government does not prosecute, then it is good.

The Senior Vice President of Merrill Lynch warned of the impending disaster years previously. So O'Neal had him fired. Honestly might hurt profits. He was thinking in terms of 'customer service' rather than the business school philosophy of 'profits no matter what'. AIG executives ignored those warnings take any deal no matter how risky it might be. Wrote contracts that were thousands of pages long so that it would not be subject to government oversight.

And so we begin the next major endeavor - the regulation of the financial industry so that all such deals can only occur in transparent markets. Wacko Democrats and Republicans will go to war. Then the party whips will line everyone up according to party politics. America's interests - especially transparency everywhere in Wall Street - would not make Obama fail. The wacko agenda is to protect people who most paid to own them. That means we will again see more of "We want Obama to fail" which means we want finance companies to continue to destroy America.

Washington is finally addressing issues made so obvious by LTCM, Enron accounting, GM money games, and ... who is your banker and stock broker really working for? Goldman Sachs is one of the more honest investment bankers. Even in GS, this fraud has long been normal business.

Why were investment banks even exempt for Basel II banking standards? Purpose of Wall Street is not profits and bonuses. Wackos will now start a campaign to keep finance business out of transparent markets – because that fraud is what made K Street and other corruptions so profitable. And because they want Obama to fail.

At this point, everything in that first post should be understood by everyone. It’s a major reason why (ie according to Singapore’s President) we almost lost the entire economy.