Senators aren’t that dumb, or are they?

Dear Senator Levin:

Just to help you out here on some definitions:

Institution Investor:

Entity with large amounts to invest, such as investment companies, mutual funds, brokerages, insurance companies, pension funds, investment banks and endowment funds. Institutional investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

Market Maker:

A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. A market maker can take short or long positions, purchase and then sell. Therefore a market maker can make money in both rising and falling markets, as long as they correctly predict which way a stock’s price will move.

The idea that GS sold CDO’s that they bet against is not uncommon; should there have been transparency to the buyers on these? You could argue yes, and some (not all) of Goldman’s peers will disclose their positions on a bond or security during the sale process. Should the institutional investors asked more questions? Yes. Should they have researched the ABS deals in the CDO better? You hope so.

I am certain Goldman put lipstick on that pig and sold it, but did they break the law? No. Is this worth the attention of the US Senate? NO! Sure it takes the focus off of Obama-Care, the Senate’s poor handling of getting Obama-Care approved, Obama’s low approval rating, and the 12 Trillion dollar deficit (hmmmmm).

But did Goldman’s actions affect the US Economy and put it in a recession? No. Can Goldman really read the future? No Senator. Was Goldman’s actions on the sale of a CDO the reason that most people’s 401K dropped 30% at the market low? Hard to say, likely to many American’s no. Maybe we should ask the investors who sought after and bought these risky synthetic CDO’s from a Market Maker why they aren’t accountable?

Yes, there was likely contagion within the market based on these actions, and should the rules change? I guess and there will likely be legislation, but aren’t there more pressing issues to focus on?

Goldman did not break the law, they may have broken the trust of some of their clients, and they will need to deal with that in the market, but this sideshow was grandstanding to take the focus off of the Senate’s ridiculous maneuvering to approve socialist health care.

Ok haters, let’s hear it. You guys still have some fuel in your tank…until of course the Bush tax cuts end next year…then your spouse is going to ask why in the hell did you vote for Obama, and why are we making more and we are getting MUCH less? You can tell them it’s that Change-E-thingy.