Comments on: Fabrice Tourre, Scapegoat

By: Louie Billotte

Louie Billotte — Thu, 12 May 2011 01:09:51 +0000

Hi just wanted to give you a quick heads up and let you know a few of the images aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different web browsers and both show the same outcome.

By: MichaelC

MichaelC — Thu, 22 Apr 2010 18:01:37 +0000

Well, Rule 10b-5 includes: (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, …. It seems to me all the government has to do is bring in some ABACUS investors that swear under oath “I bought these synthetic CDOs using the prospectus as a guide, and, I would have done something different had I known the truth”. I suspect Fabrice is probably not a scapegoat; he is probably the beginning.

By: Mike

Mike — Wed, 21 Apr 2010 09:15:26 +0000

Absolutely agree with both points above — Goldman scammed the ABACUS buyers. I’m just not qualified to say whether it was technically fraudulent to not disclose Paulson’s short interest.

And yes, the major crime is of course the bailouts. Without the moral hazard of government backing, banks would never have gotten as reckless as they did. Now that they have been bailed out, they clearly have no incentive to ever be careful again. Heads they win, tails we lose.

By: Independent

Independent — Tue, 20 Apr 2010 18:19:14 +0000

The real crime in all this is that the Fed bailed out private companies that were, in effect, trying to game each other. The Fed had no business wiping out the AIG shareholders and paying off the bad bets. The Fed also did not have the authority to turn GS into a bank overnight. If anyone should be prosecuted it should be Bernanke, Geithner and Hank Paulson. I would like to see Holder appoint a special prosecutor to investigate these three and bring charges. The whole mess should have been dealt with in bankruptcy court.

The most telling thing about this is that Obama continues to protect Bernanke and Geithner. The system is still alive and well, this SEC suit is just window dressing for the November election. If the SEC wants to bring fraud charges, it should look at the products that were sold to local governments who are not “sophisticated investors” and relied on the investment banks for advise. That clearly was a breach of fiduciary duty.

By: MichaelC

MichaelC — Tue, 20 Apr 2010 18:10:07 +0000

Fabrice Tourre represented that John Paulson was investing $200 million into Abacus 2007. In fact, he was doing the opposite, and Goldman Sachs knew it. That is material misrepresentation.

By: Mike

Mike — Sat, 17 Apr 2010 09:54:47 +0000

kk, I didn’t say that Goldman didn’t commit fraud. They certainly failed to disclose some highly relevant information, and if that constitutes fraud, then they are guilty. It is just not clear to me that they were required to disclose Paulson’s interest, since ACA was supposed to be expert at credit analysis and technically had ultimate authority over the RMBS selection process.

In sum, these charges seem manageable since Goldman itself suffered losses in ABACUS and ACA was negligent.

By: gunner451

gunner451 — Sat, 17 Apr 2010 03:33:23 +0000

I kind of figured that was the case that these were phony charges that would disappear after the November elections. The one thing that might happen though is that this will inspire a lot of dissatisfied GS customers to sue if they got screwed for a similar set-up. That could be worth billions but will probably take decades to go through the courts.

By: kk

kk — Sat, 17 Apr 2010 01:33:28 +0000

are u kidding? So, the fraud charges against the firm, Goldman Sachs, are not material because the Goldman employee who was leading this particular transaction was only 27 years old and French. You would actually appear intelligent if you rebutted specific items in the complaint. But, I am confident you have not even read the complaint based on this post. This is like the CNBC sideshow today. The issue is not whether Goldman committed fraud; the issue is whether politics played a role in the timing of the complaint or whether a 27 year old Frenchman is a scapegoat. Give me a break. Grow up.

By: Chris

Chris — Sat, 17 Apr 2010 01:12:49 +0000

meant beat but beast works well too.

By: Chris

Chris — Sat, 17 Apr 2010 01:12:13 +0000

yea, they had to do something to assuage the rage but this seems like a fairly transparent ploy. Ho-hum, the beast goes on.