One thing we learned on day one of the Financial Crisis Inquiry Hearings: the heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Bank of America may not be good at managing risk or avoiding crashes, but they are good at dodging questions and sidestepping responsibility. Les Leopold has been following and blogging about the hearings. Here’s his first report.
From the Huffington Post:
The heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Bank of America came to testify and said… just about nothing.
Yes, they made mistakes. But gee, they had learned a great deal and they certainly didn’t cause the crash. They promised they are managing risk better, even though they claimed always to have done so. Also, they insist they are not too big too fail and they are reforming compensation so we shouldn’t worry about their sky-high compensation packages.
After these predictable pronouncements, Phil Angelides — the former Democratic California State Treasurer and Chairman of the Financial Crisis Inquiry Commission (FCIC) — came out swinging at Lloyd Blankfein, CEO of Goldman Sachs. But he ended up shadow-boxing.
Angelides threw his best punches at Goldman Sachs concerning reports that it provided toxic assets to customers while it was betting against them. “It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars,” said Angelides.
Blankfein easily parried the punches by explaining that that’s what market makers are supposed to do. He then diverted the conversation into technical language that few of the public can understand. Meanwhile, the big questions weren’t asked.