[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]
William Cohan is one of the nation’s foremost chroniclers of the most devastating financial crisis the nation has had since the early 1930s. He has told us in depth of the crisis that undid Bear Stearns. He has written many excellent pieces for Vanity Fair and elsewhere on the wide variety of Wall Street shenanigans. In the book we are discussing today, he has tackled the story of the firm that has come to symbolize all of Wall Street, Goldman Sachs—the most envied, most prestigious and now most criticized financial firm in the world.
What is Goldman Sachs all about? Why have so many of its bankers gone on to work in government? Are they really the best? And if so, what are they best at?
But now a bigger question looms. If Wall Street did so much that was unethical, why have there been no major prosecutions on Wall Street? The justice Department has shied away from making any major cases since the two hedged funds at Bear Stearns were found not guilty. And the Securities and Exchange Commission has cited no leading private investment bankers in the civil cases it has brought, only junior employees. It has settled for what are minor fines for these giants, wealth firms; $550 million at Goldman Sachs, $154 million at Merrill , and $285 million at Citigroup. A federal judge dismissed the settlement with Citigroup as is inadequate. Indeed, in none of these cases did the defendants have to plead guilty to any wrongdoing at all.
Was the Wall Street disaster really a matter of well-meaning men and women making very bad decisions? William Cohan can shed more light on these issues than most commentators.
Perhaps we should begin with an offering from Goldman Sachs he covered closely, the Abacus deal, for which Goldman was fined. Mr. Cohan, please explain whether you believe Goldman was guilty of unethical or illegal activity in the sale of Abacus. Ultimately, I hope we get your views on why there have been no convictions.