You got served

Posted by Ray on July 30, 2009 under Main | Be the First to Comment

Goldman Sachs and Deutsche Bank got served by the US Senate which is investigating fraud in the mortgage meltdown last year. Several other financial institutions may also have received subpoenas from the sub-committee that is headed by Senator Carl Levin.

WSJ said the focus of the investigation is on whether internal communications show executives at the banks had private doubts on the soundness of the mortgage-related securities they were putting together. Anyone want to take a guess on what they will find?

I am sure there are plenty of emails and other electronic messages floating around to get someone in trouble. I never understand how people have not realized that email is forever. Regardless, they will clearly find something, but they should look at the trading in their accounts versus what was being sold to their clients, that is the real evidence.

We all know Goldman traded against sub-prime mortgages, I do not know about Deutsche Bank. Now, if Goldman traded $20 billion against these securities, but their institutional side sold these same products the firm was short then I think there will be a problem. If the committee does their homework and actually investigates this thing then we might have our first “perp walk” for the carnage these lovely people brought upon us.

However, there could be nothing here, but if I were a betting man I would take the other side of that trade.