The Levin Report hits pay dirt as Lloyd Blankfein lawyers up.

by: jsalera

Thu Aug 25, 2011 at 19:10:28 PM EDT

But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008. 

Matt Taibbi: The people vs. Goldman Sachs

Before I get into the topic today I’d like to explain that the quote at the top is from Matt Taibbi’s May Rolling Stone article is illustrative of a lot more than it seems on the surface. On the surface, you have Senator Levin’s competent and well-disciplined staff of a mere “15-desk office of investigators” taking on the behemoth vampire squid formally known as Goldman Sach’s.

GS, as we all know, has infinite resources of one of the premier pigs feeding at the trough of the federal government’s resources vs. the small slim-and-trim fighting machine formally known as Senator Levin’s civil service staff, with Senator Levin’s staff besting the fat-bankers at every turn. Senator Levin’s staff is deserving of a hearty round of applause from all of America.

Senator Levin's staff also offers an analogy that is s indicative of the entrepreneurial spirit, the tremendous creativity and productivity found in small business in America compared to the pigs at the trough fat-cat banking system that has its tentacles wrapped around the US Treasury.

Former Federal Reserve Chairman Paul Volcker ventured not too long ago that:

The most important financial innovation that I have seen the past 20 years is the automatic teller machine, that really helps people and prevents visits to the bank and it is a real convenience. How many other innovations can you tell me of that have been as important to the individual as the automatic teller machine, which is more of a mechanical innovation than a financial one?

Compare that statement to the overall creativity and productivity that America’s small business has produced and what it could do in the future if it could free itself from the parasitic banking system of Wall Street.

On to today’s topic. Nomi Prins: Could Blankfein Face Prison?

There’s a saying that loose lips sink ships. So can dead weight.

Goldman Sachs CEO Lloyd Blankfein, who just got himself a lawyer, may be facing the possibility of sinking, either because of his own words in April 2010 before the Senate Permanent Subcommittee on Investigations (PSI) or because his shipmates are distancing themselves in a legal version of every man for himself. Or both.

Recall that Blankfein emphatically told the subcommittee, “We didn’t have a massive short against the housing market, and we certainly did not bet against our clients.” The 650-page subcommittee report (PDF) presented on April 13, 2011, which cites Blankfein 79 times, begs to differ.

The report accused Goldman of trading against its clients by simultaneously shorting certain subprime mortgage securities (a.k.a. “cats and dogs”) while stuffing them into the collateralized debt obligations it sold. It also suggested that Goldman executives, including Blankfein, misled Congress in testimony surrounding the Abacus CDO, Hudson, Timberwolf, and other deals, by saying it didn’t have a big short.

...

The executives running Goldman are exceedingly wealthy, not least because when the firm faced its darkest hour and lowest stock price in years during the bank-created crisis of fall 2008, the government provided it billions of dollars in the form of cheap loans, FDIC debt guarantees, TARP, AIG make-wholes, and a late-night moniker change from investment bank to bank holding company, giving the firm access to excessive Federal Reserve aid.

...

You could look at Blankfein hiring external counsel as a normal prudent, legal move. But that’s naive, given the attorney he selected. Hiring a major criminal-defense lawyer is about more than the fear of a $550 million SEC wrist slap for bad documentation in the Abacus CDO. It’s about the real possibility of doing time.

There you have it. The Levin report packed a wallop and now Lord Blankfein is a bit distracted from God’s work. Are there more criminal lawyers on Wall Street who are about to reap the rewards of the Levin Report? Time will tell. 

While the outcome still isn’t clear, what we do know that Senator Levin and his staff have taken the heat and financial terror tactics and have done their civic duty. Now, if we could only get the same effort from President Obama.