I’ve blogged earlier about Goldman Sachs, Paulson, Abacus and Fabrice Tourre; today, Goldman has done a deal with the SEC to clear the slate.
And a very good deal it was too, for Goldman.
The more you look at what Goldman were doing with the Abacus instrument, the clearer it is that it was fraud. But it was what everyone else in the market was doing. Goldman just did it – and does it – better than anyone else. They are all crooks, and Goldman Sachs is the master-crook.
But the SEC was the referee. It called a foul, and it has awarded an indirect free kick against Goldman. Not even a yellow card. Objectively, what they did was full red-card stuff, but everyone else was at it, and the SEC had been turning a blind eye. If it red carded everyone, the whole game would be off.
At the same time, Obama has got his reforms through Congress. Will they be anything like strong enough? Of course not. The clue is in the length of the legislation. The necessary reforms could be done in one page – perhaps even one line:
“if you do not publish and tell the counterparty everything that you do, should or could know about the deal in question, it is void”.