Rolling Stone’s reporter Matt Taibbi talks with Bloomberg TV’s Carol Massar where he discusses SEC’s lawsuit against Goldman Sachs (GS).
Excerpts Below: Courtesy of Bloomberg Television
On whether he’s surprised about the Goldman lawsuit:
“No it doesn’t. But you know what’s interesting is that I heard whiffs of this story going back as far as a year and you know I’m one of the harshest critics of Goldman Sachs and I actually backed off the story because I didn’t really believe it. I thought it was too outlandish. So that tells you exactly how crazy this story is coming out now.”
On the timing of the lawsuit:
“That was the first thing I thought of. That the timing of this is extremely unusual. This story has been out there for awhile. The [NEW YORK] Times first broke it really in December. So why are they doing this now? Cleary it could have been because this bill is about to hit, crucial period in Washington, this financial regulatory reform bill, maybe this, you can look at this as a shot across Wall St’s bow during that period.”
On whether there is a whistle blower:
“That is hard to say. When I read Gretchen Morgenson’s piece in December it was not all clear to me who her sources were. I think she had several of them. So I don’t think this is something where there is a single whistle blower. I think that there are a number of parties who came forward with this story.”
On how solid the SEC case is:
“Yes. I don’t think the facts are really in dispute here and I’m sure it’s not going to be difficult for them to demonstrate what took place. I think what’s probably going to be more difficult is what happens after the civil suit. I talked to a former prosecutor for the justice department this morning who said that these sort of ‘failures to disclose cases’ don’t turn into criminal cases. So, maybe Goldman ends up paying a lot of money in a fine but I would doubt anyone goes to jail over this.”
On where does Goldman go from here:
“Well this is a massive blow to Goldman Sachs because you know it’s one thing to have some sort of left leaning reporter going after them, it’s another thing to have people, you know complaining that they are bilking the government out of money during the bailout, but this is a story about Goldman ripping off their own clients and this is going to resonate loud and clear across Wall St and across their entire client base. I can’t imagine who would want to do business with this bank after they’ve learned about this story and I think it’s going to be very damaging.”
On Blankfein:
“Lloyd Blankfein is in a tough spot right now. I was thinking about this this morning. Who is less popular the Pope or Lloyd Blankfein? It’s really a race for the finish right now. You know I almost think it would be too easy for Goldman if the solution was to get rid of Lloyd Blankfein. That would probably be the easy PR response for the company to remove him but I think there needs to be a deeper examination of how this company does business.”
On whether he has heard of other firms having similar relationships:
“No. I was working on a story about Goldman at the time when I started hearing about this. And here I have to confess that I am not a financial reporter. I was coming from a place where I didn’t even know what a CDO was until a year ago. So when I first heard about this stuff, it seemed like it was too complicated for me to take on at the time and didn’t want to make a mistake on it. But I did not hear about any other firms. This was strictly a Goldman Sachs story.”
On whether Goldman culture has changed since the crisis:
“I don’t think so. I think that when Lloyd Blankfein was responding to criticism how big the bonuses were at the beginning of last year and he said ‘well performance is the ultimate narrative,’ basically meaning that that we deserve this money because we work so hard, that tells you that they still really don’t get it. They still think they actually earned all this money and I don’t see any evidence that there has been a culture change at the company.”
