Benzinga Radio: Goldman Media Blitz Aimed at Convincing You It Isn't the Devil

Goldman Sachs GS is pretty good at hedging its bets. The investment giant emerged from the banking/housing meltdown of the late-Bush years with a huge profit, but has faced questions into its practices ever since. Senator Carl Levin, Democrat from Michigan, has accused Goldman of perjury in its denials before his subcommittee that the firm engaged in certain unethical practices. Considering the firm managed to rake in billions of dollars at the same time that its competitors got absolutely smoked by the housing dip, it's a question worth asking. How Goldman made its money through the crisis is nothing short of appallingly disgusting. Goldman took short positions on the housing market while at the same time selling housing investments to its clients — essentially betting against its clients without telling the clients that it was doing so. The entire sordid affair was doubly awful when it came known that some of the bailout funds — $14 billion, to be exact — would be funneled to Goldman via AIG, who had insured some of Goldman's positions. American taxpayers, already displeased with having to bail out the very banks who caused the crisis, were near-violent when Goldman managed to turn a profit off the crisis. Left in the wake of the scandal was Goldman's now-tattered reputation. After all, who could ever trust Goldman again after it all but defrauded its clients in pursuing short positions against the very investments they were selling? It would be like your doctor selling you on a cancer drug and then turning around and buying a life insurance policy that he can cash out when you die. Perhaps if the entire government (both parties) were not owned by Goldman Sachs and former Goldman lackeys, the management of Goldman could spend the next 25 to life rotting in a cell next to Raj Rajaratnam and John Edwards. Lately, Goldman has taken to the offensive, trying to convince pundits and financial opinion-makers that it is not the shady, evil entity that it appears to be. It appears to be working, at least in some circles. Some columnists have backtracked from previous statements, including the idea that Goldman purposefully shorted a market, and instead argue that the position was a risk hedge rather than a power play. William D. Cohan spoke with Benzinga radio about this controversial topic, making his case that Goldman is neither wholly innocent nor quite as bad as some have made them out to be. They did, after all, pull out $4 billion in profit from the trading desk that handled the controversial trades. The understanding provided from Cohan is that Goldman took its short positions as a strategic play, and then wrote down the losses from its long positions. This, in turn, drove its competitors to write down their long positions...but without the benefit of a short play to profit off, the competitors all got smoked in the deal, while Goldman came out billions ahead. Don't expect anything to come of this, at least not criminally. Perjury is an incredibly difficult charge to prove, and Goldman can afford the best lawyers in the world. Cohan does see possible civil charges filed against Goldman and its executives, but that's hardly the justice demanded by a multi-billion dollar scam. It's too bad Senator Levin didn't have the foresight to wheel an old guillotine into the room before Goldman's testimony. That might have reminded them exactly the sort of populist uprising that the banksters of the world could face if they ever try to pull something like this again.

Be sure to check out the full audio of the conversation here: Fortune's Cohan discusses Goldman Sachs' response to negative press coverage

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