It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.Read the rest here.
The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.
Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.
I contacted Morgan Lewis, the firm that represents Goldman in this matter, earlier today, but they haven’t commented as of yet. I wonder if the poor lawyer who FUBARred this thing has already had his organs harvested; his panic is almost palpable in the air. It is both terrible and hilarious to contemplate. The bank has spent a fortune in legal fees trying to keep this material out of the public eye, and here one of their own lawyers goes and dumps it out on the street.
The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.
Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.
Banks are the enemy.
Again with this "banks are the enemy" trash. This kind of simplicity is at the level of a "Dick & Jane" primer. No doubt the large institutions are creating significant problems. I've said this before but if it's too big to fail - it's too big. Under our economic system the only way to maintain its health is to allow poor performers to pay for their mistakes and fail. Along that line commercial and retail banking (i.e "traditional banking")must be seperated from investment banking.
ReplyDeleteBut to blame banks alone and expect the government to come to the rescue is like putting a drug dealer in charge of the Betty Ford Clinic. The federal government has allowed banks to grow obese and become addicted to high risk activities. Now to expect politicians (i.e. men & women not motivated by sound economics) to fix the problems they created is nonsense. Credit and investing involve risk you cannot - and should not - remove risk from the system.
I will accept your premise that "banks are the enemy" only if you will accept that the government is their partner in these crimes.
Nikolaus