Wednesday, April 28, 2010

Did Goldman Sachs Win or Lose?

It is a safe bet that the cards are stacked against any company summoned to appear before a U.S. Congressional Committee.

Each member of the Committee has a half-dozen, or more, staffers researching and writing opening and closing statements intended to stir up constituents, and preparing questions that make their Senate boss look tough on whatever the issue is before the Committee.

All the company executives can do, with their legions of support staff, including lawyers and PR people, is anticipate the questions and figure out which ones they can properly answer and how to avoid the rest.

If you were expecting understandable explanations from Goldman executives in Tuesday's hearings, you are either naive or an eternal optimist. If you were expecting civil discourse from grandstanding Senators, ditto.

One of the bright moments in the hearing followed numerous charges that Goldman was running a casino operation stacked against their clients. Senator John Ensign, a Republican from Nevada, spoke up to defend his home state and its primary industry -- gambling. He said people who go to Las Vegas know the odds are against them, but, "on Wall Street, they manipulate the odds while you're playing the game."

Some of the Senators turned viewers and constituents off when they repeatedly quoted from a vulgar and profanity laced e-mail.

Goldman executives didn't score many if any favorable points, but they didn't do or say anything new or reveal a "smoking gun" either.

I agree with market analyst Edward Yardeni, there was nothing to create a more damaging perception than already existed, and the Senate VS Goldman PR battle was fought to a draw.

It is hard to feel sorry for many of the so-called "clients" that lost money in deals with Goldman. Most of the clients that invested millions of dollars in risky deals with Goldman were gambling they would get lucky and Goldman would be unlucky.

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