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Grand Theft Paycheck

April 30, 2010
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Ryan Chittum of the Columbia Journalism Review ran through the Goldman coverage and  unearthed a few nuggets on a theme: The banker bosses lied to Congress. Whether this actually matters remains to be seen, of course. But it’s worth noting anyway, for the record.

The first liar in Chittum’s parade is Dick Fuld, not of Goldman but late of Lehman Bros (the Bloomberg link he posts is broken). Fuld told Congress he earned $310 million as Lehman’s chief in the eight years before the company collapsed, and said he didn’t sell his Lehman stock. Bloomberg’s source, a former Lehman lawyer who supposedly quit over the deception, says Fuld actually reaped about $469 million between 2000 and 2007, just in stock sales.

This kind of fraud was so rampant during the last decade (and remains so) that it’s hard to wrap one’s mind around it. I always wonder about the thinking of folks who amass so much money they can’t possibly imagine a way to spend it. Why under-report? Is it because you’re cheating on your taxes? (And we know a lot of people in this bracket do that, despite the fact that their tax burdens have been reduced by huge amounts in the past two or three decades.) Is it because you’re simply embarrassed? An embarrassment of riches? Or is it—and I doubt this one, but why not give them the benefit of the doubt?—so-called “guilty conscience?” That is, deep down in their cold, reptilian hearts, even these assholes understand that what they do, every day, is grand theft. So, like a drug addict who tells his wife or counselor he’s “only doing a little” cocaine, the Wall Street guy tells himself that if he only took $300 million out of his Potemkin enterprise, that was somehow “fair,” while realizing that the $500 million they actually pinched was not.

By the way: $469 million in eight years is only $58 million a year; just $1.12 million per week. That’s barely more than Rush Limbaugh makes as chief PR man for the Asshole Class. In Wall Street World, a-mil-a-week is not quite embarrassing, but it’s not serious money. Remember, John Paulson, the big winner in the Goldman ABACUS deal, made $5.7 billion in just two years. That’s like $55 million per week—more than 50 times Fuld’s meager compensation.

(To put this in perspective, in 2009 the FBI investigated 5,316 bank robberies, recovering approximately $8 million out of a total of $46 million that had been stolen—less than a week’s pay for Paulson.)

But I digress. Chittum cites stories in the Wall Street Journal and Mother Jones that noticed some holes in Fabrice Touree’s testimony and that of Daniel Sparks, an ex-Goldman mortgage guy. Central to this line of inquiry is the question of when did Goldman’s people know the housing market was doomed, versus when did they advise their clients of that—as opposed to selling them rigged-up betting slips entitling them to pay John Paulson everything they had.

“At the time we did those deals, we expected those deals to perform,” is what Sparks told the nation’s lawmakers. But, as MoJo’s Andy Kroll reports:

Numerous documents released by the subcommittee, however, indicate that Sparks, who left Goldman in the spring of 2008, and his former employer knew otherwise. And his testimony raises a serious question: whether he lied to Congress under oath.

Lying to Congress, of course, can be a criminal offense. But it can also be a sporting proposition, depending on the direction of the political winds. The same appears to be true of white-collar crime generally, which has apparently exploded during the past two or three decades, but which—either for lack of prosecutorial resources or for some other reason—has been consistently overlooked by federal authorities. (Here is the FBI’s 2008 report on mortgage fraud, compare with TRAC’s decade-long graph showing a steady decline in white-collar prosecutions.

One should not, as the Sun’s usually astute Jay Hancock seems to have done, confuse “tough to prove” with “unwilling to prosecute.”

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