At the beginning of this month I did a blog entry looking at Matt Taibbi's piece in Rolling Stone asking whether Goldman Sachs had been behind every market manipulation since the Great Depression.
Now The Wall Street Journal reports that the US Senate is probing Goldman Sachs and Deutsche Bank in relation to possible fraud connected to the market meltdown. The WSJ reports: "The congressional investigation appears to focus on whether internal communications, such as email, show bankers had private doubts about whether mortgage-related securities they were putting together were as financially sound as their public pronouncements suggested. Collapsing values for many of those securities played a big role in precipitating last year's financial crisis. According to people familiar with the matter, the Senate Permanent Subcommittee on Investigations also has issued a subpoena to Washington Mutual Inc., a Seattle thrift that was seized by regulators in last year's financial crisis and is now largely owned by J.P. Morgan Chase & Co. It appears likely that several other financial institutions also have received subpoenas. Subcommittee investigators declined to comment. A Goldman Sachs spokesman declined to comment on the subpoena. Deutsche Bank didn't immediately respond to a request for comment."
With its mega profits, Goldman Sachs is now a popular target in Washington. No one know what the end game is. To help us work it out, it's worth reading the take that Michael Lewis has on Goldman Sachs where he explains, tongue in cheek, how the investment bank works.
And he takes issue with Taibbi's assertion that that Goldman Sachs is a vampire squid feeding on human flesh. Lewis writes: "For starters, the vampire squid doesn't feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs — nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does —ever happens by accident."
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