The article written by Matt Taibbi in 2009 for the Rolling Stone describing Goldman Sachs seems suitable following fraud allegations this week by the Securities Exchange Commission. The story has come at a perfect time for Finance industry critics, who are on their last legs trying to maintain interest in slandering the fat-cats of Wall-street.
The allegations claim that between January and April 2007 Goldman Sachs created an CDO investment vehicle called Abacus 2007-AC1. According to the marketing documents for Abacus, the mortgages included in the CDO were chosen by a company called ACA Management, which specialises in assessing mortgages for risk - and which was also the largest investor. But the SEC alleges that many of the specific mortgage securities in Abacus were actually chosen by hedge fund Paulson & Co, who at the time had taken a massive 'short position' against Abacus.
The Mail Online has covered the story in true from for its lower-middle class audience, giving them an individual scapegoat at which to direct anger – ‘Fabulous Fab’, also known as Fabrice Tourre. In a release by Sharon Churcher this week, titled “Revealed: British banker 'Fabulous Fab' - the high-flier at centre of huge Goldman ‘fraud’”, the use of words such as high-flier and huge commences the article in typical form. Discussed in the first few paragraphs is the individuals superior wealth and lavish part-boy lifestyle, in juxtaposition to investors that lost more than £645 million. Hidden at the end of the article are the non-loaded facts and the key elements of the SEC investigation.
The official stance by the SEC is currently a ‘complaint with further investigation’, with no concrete charges against the firm or individuals as yet, with the legal process likely to extend from months or years in the blurry area of conflicts of interest. This hate drumming to a financially less educated audience is evident both through Taibbi comments with the Rolling Stone and the Mails release. The FT journalists and headlines took a far more objective stance to the situation, dealing with facts for its economically oriented audience.
Two articles simply titled ‘Goldman Sachs’ and ‘SEC takes off the gloves on Goldman’ paint a far more respectable picture of the firm, one which outlines the grey area of investing banking conflict of interest management, and how important reputational capital is to these institutions. Making only brief members of the associated individuals and discussing the subject on a higher level than the left-winged Mail.
The ramifications of any official charges for the company would be severe, as no institution would want be a trading partner with an entity that has alternate investment motives other than your service. This was evident in the markets reaction to the announcement, with almost £8 million being wiped from the company’s market capitalization, loosely representing the loss of future business for the company.
But hate for this institutions and the individuals behind them is nothing new for the economically lower factions on society, who are still myriad in financial strife following the recover in asset prices (driving business for the aristocracy), but not unemployment (what the working-class care about).
This dichotomy has only fueled more unjustified rage against Investment Banks such as Goldman Sachs, with the key problem being a lack of understanding of what these firms actually do for society. Although Lloyd Blankfein’s views of “God’s work” may be overstated, these companies create a plethora of benefits for society – as a philanthropist, market-maker, capital raiser, and co-investor.
Illegal activity through mismanagement of conflicts of interests should rightfully be punished, both financially and through their reputational capital. However understanding of these institutions, before scrutinizing their actions, is an avenue that must be pursued by media journalists, and not defaming individuals to ill-informed audiences.
The allegations claim that between January and April 2007 Goldman Sachs created an CDO investment vehicle called Abacus 2007-AC1. According to the marketing documents for Abacus, the mortgages included in the CDO were chosen by a company called ACA Management, which specialises in assessing mortgages for risk - and which was also the largest investor. But the SEC alleges that many of the specific mortgage securities in Abacus were actually chosen by hedge fund Paulson & Co, who at the time had taken a massive 'short position' against Abacus.
The Mail Online has covered the story in true from for its lower-middle class audience, giving them an individual scapegoat at which to direct anger – ‘Fabulous Fab’, also known as Fabrice Tourre. In a release by Sharon Churcher this week, titled “Revealed: British banker 'Fabulous Fab' - the high-flier at centre of huge Goldman ‘fraud’”, the use of words such as high-flier and huge commences the article in typical form. Discussed in the first few paragraphs is the individuals superior wealth and lavish part-boy lifestyle, in juxtaposition to investors that lost more than £645 million. Hidden at the end of the article are the non-loaded facts and the key elements of the SEC investigation.
The official stance by the SEC is currently a ‘complaint with further investigation’, with no concrete charges against the firm or individuals as yet, with the legal process likely to extend from months or years in the blurry area of conflicts of interest. This hate drumming to a financially less educated audience is evident both through Taibbi comments with the Rolling Stone and the Mails release. The FT journalists and headlines took a far more objective stance to the situation, dealing with facts for its economically oriented audience.
Two articles simply titled ‘Goldman Sachs’ and ‘SEC takes off the gloves on Goldman’ paint a far more respectable picture of the firm, one which outlines the grey area of investing banking conflict of interest management, and how important reputational capital is to these institutions. Making only brief members of the associated individuals and discussing the subject on a higher level than the left-winged Mail.
The ramifications of any official charges for the company would be severe, as no institution would want be a trading partner with an entity that has alternate investment motives other than your service. This was evident in the markets reaction to the announcement, with almost £8 million being wiped from the company’s market capitalization, loosely representing the loss of future business for the company.
But hate for this institutions and the individuals behind them is nothing new for the economically lower factions on society, who are still myriad in financial strife following the recover in asset prices (driving business for the aristocracy), but not unemployment (what the working-class care about).
This dichotomy has only fueled more unjustified rage against Investment Banks such as Goldman Sachs, with the key problem being a lack of understanding of what these firms actually do for society. Although Lloyd Blankfein’s views of “God’s work” may be overstated, these companies create a plethora of benefits for society – as a philanthropist, market-maker, capital raiser, and co-investor.
Illegal activity through mismanagement of conflicts of interests should rightfully be punished, both financially and through their reputational capital. However understanding of these institutions, before scrutinizing their actions, is an avenue that must be pursued by media journalists, and not defaming individuals to ill-informed audiences.
Excellent. 8/10
ReplyDelete