Critics have long charged that Goldman Sachs profited by betting against the housing bubble after playing a key role in inflating it. For its part, the bank has maintained that all bets against housing were just hedges to prevent devastating losses. But newly released documents suggest that Goldman Sachs' senior employees were, in fact, profit-minded about the housing crash. "Sounds like we will make some serious money," executive Donald Mullen boasted in an e-mail as the credit rating of mortgage securities was downgraded. CEO Lloyd Blankfein noted that the firm was making far more than they were losing in the crash. But what do the e-mails prove? (Watch a CBS report about Goldman Sachs' discovered emails)
This does not prove wrongdoing: These e-mails are no smoking gun, says Felix Salmon in Reuters. They just show "Goldman people going about their line of work, doing what Goldman people do." Betting against a risky market is a sensible move. The "populist charges" that doing so is "inherently evil" are just plain wrong.
"The Goldman wars continue"
But it proves endemic greed: "Gordon Gekko lives," says mcjoan in the Daily Kos. Truly, the greed of Wall Street's banking titans knows no bounds. Even though the "entire economy could be crashing around" them, they still figure out a way to make money from it. Illegal or not, these e-mails will hardly help Goldman "in its PR efforts."
"Widows and Orphans"
The real scandal is the broken system: Goldman's bragging "didn't amount to wrongdoing," writes Paul Krugman in The New York Times. The real scandalous e-mails here are the ones from credit-rating agencies, which "bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets." These got overlooked in the headlines — but they show how "corrupt" the overall financial system was.
"Berating the Credit Agencies"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How academia's liberal bias is killing social science
- Hey, bosses: Stop giving bonuses to your employees
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Why the Sony hack changes everything
- Why torture doesn't work: A definitive guide
- 43 TV shows to watch in 2014
- You should be furious about Hollywood's gutless retreat on The Interview
- Capitalism isn't a cure-all for Cuba
- Diagnosing the Home Alone burglars' injuries: A professional weighs in
- One girl's extraordinarily wild world
Subscribe to the Week