Trade With Dave

What’s it going to take before we listen to what she’s saying and find answers to her questions? 

You hear people talk about being a good judge of character.  That’s certainly a subjective concept and could be considered judging a book by its cover.  Nonetheless I have always been impressed with Brooksley Born.  I’m no fan of an ever-expanding model of government and in particular regulators who arbitrarily apply their authorities for personal gain or self-motivated vendetta – (I can’t imagine her taking a talk show gig on CNN for example).  Isn’t this the type of objective approach and determined will that is exactly what we’re looking for in government?   

Here’s a link to the C-Span video of the testimony at the FCIC hearing.  Some of the best questions from Ms. Born are at about the 1 hour 12 minute mark.  Go to FCIC panel 1 if it doesn’t load automatically:  http://www.c-span.org/Watch/Media/2010/07/01/HP/A/34929/Financial+Crisis+Inquiry+Commission+Hearing+on+Derivatives+Day+2.aspx

Here’s a link to a July 1 posting on ZeroHedge.com that calls into question the testimony of David Viniar, Goldman Sachs CFO, as it relates to his claim of the derivatives and cash businesses being “wholistic” and essentially inseparable.  http://www.zerohedge.com/article/david-viniar-walks-thin-line-between-truth-and-perjury-todays-fcic-hearing

Below is a link to a second July 1 posting on ZeroHedge.com outlining the issues related to Mr. Viniar’s testimony including a link to a January 13 report on the same subject in great detail:

http://www.zerohedge.com/article/some-insights-david-viniars-grilling-brooksley-born-firms-double-profit-aig

If you want to know more about why Brooksley Born is an American hero, in my opinion, you can watch this video documentary from PBS and Frontline titled The Warning:  http://www.pbs.org/wgbh/pages/frontline/warning/view/.  Keep in mind who funds PBS as you watch the documentary released several months ago.   

TradeWithDave commentary:  I have no problem with all the profits that Goldman Sachs has made as a near-exclusive maker in these derivatives markets.  More power to them.  However, I do have a problem when the gig is up and they stonewall and refuse to answer questions truthfully.  Why not just say “We made a lot of money,” and now with financial regulation things are going to change?  Because they want to keep the thing going and it looks like they would have except for Scott Brown’s chess moves against President Obama.  Saying you have votes and actually having votes will never be the same again. 

Isn’t it remarkable that these FCIC hearings were scheduled to occur after the vote on financial reform, but before the President was scheduled to sign the bill.  The timing is amazing.  My guess is that now Goldman Sachs has finally found their fall guy in Viniar.  Viva la Blankfein.  I got to go.  I need to find out what Lucas van Praag has to say about all this.

Here’s an entertaining four minute video from Yahoo and Howard Davidowitz implicating the Barney Frank, Chris Dodd, Larry Summers, Hank Paulson ponzi scheme: http://finance.yahoo.com/tech-ticker/a-gigantic-ponzi-scheme-lies-and-fraud-howard-davidowitz-on-wall-street-514236.html?tickers=XLF,AIG,GS,JPM,BAC,C,FNM

Here’s a link to previous blog posts on Goldman Sachs: http://tradewithdave.com/?p=341

and here: http://tradewithdave.com/?p=428

and here: http://tradewithdave.com/?p=421

and here: http://tradewithdave.com/?p=846

Update:  Goldman’s van Praag Wants The Record Set Straight

Here’s a purported response from Goldman Sach’s head of public relations Mr. Lucas van Praag in response to the ZeroHedge.com analysis.  ZeroHedge calls out Mr. van Praag on the fact that he did not answer their inquiry into whether the firm keeps track of cash and derivative P & L’s by strategy.  This is the issue brought to the forefront by Ms. Born and Mr. van Praag’s attempt to avoid the question only leads to further speculation that Goldman Sachs is withholding this information from the FCIC.  Having run product oriented businesses for nearly thirty years, we call this process “merchandising” and obviously the underlying information is considered confidential and not disclosed to customers as it is essentially a trade secret or competitive advantage.  However, when you are a regulated bank and a congressional committee wants an answer you would expect them to receive an answer.  We’ll see.  Here’s the purported response from Goldman Sachs: 

Dear Tyler Durden:

Your comment on the FCIC’s questions about our derivatives activities is interesting but, as the saying goes, several sandwiches short of a picnic.

The email you reproduce is not a smoking gun.  It is one of the nightly estimate emails sent from Controllers to senior management reflecting the days results broken out consistent with how we manage the business – integrating cash and derivative inventory.

As you can tell from the schedule, it does not differentiate cash from derivative inventory.

For example, the “Residential Credit” section speaks to ABX widening as the pnl driver which was hedges to the subprime and alt a loans held by that business.

The lines highlighted are:

Resi prime/Mortgage derivative – which consists of agency and non agency derivative bonds (not CDS) including IOs and Pos.

Property derivatives – which is trading in total return swaps or forward contracts on specific derivative products (Radar Logic’s RPX and the main index – S&P/Case-Shiller Home Price Indices).

As David Viniar said during the FCIC hearing yesterday, we don’t account for derivatives separately, we manage our combined cash and derivatives exposure because that represents our risk.

You know that risk is risk, no matter what form it comes in. The debate about discrete elements of it is a serious distraction from what should be the real focus.

Please be kind and set the record straight.

Thanks / Lucas

Update: Barbara Ann Radnofsky a candidate for Attorney General for the great state of Texas has sent a letter to the current attorney general for Texas calling for a lawsuit against Wall Street firms to recover loses experienced by the State of Texas.  Here’s a link to her legal brief on the matter: http://www.barbaraann2010.com/node/662

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