What will the FCIC’s Goldman Subpoena Uncover?

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Where’s Goldman’s Waldo?

The Financial Crisis Inquiry Commission was out last night with its list of demands from Goldman. And while I certainly think Goldman was wrong, morally, if not legally, when it purposely created worthless bonds so that hedgie John Paulson and indeed its own trading desk could benefit (Goldman denies this), I do think that this Goldman subpoena shows us once again how difficult a job the FCIC has. Yes, it is great they are trying to get tough. This is the second highly publicized subpoena from the FCIC that we have heard about in so many weeks. Last week, Buffett. This week, Goldman.

But I am not sure the FCIC is focused on the right people, or the right information. Here’s why:

Earlier today the Financial Crisis Inquiry Commission issued a subpoena to Goldman Sachs. Basically, they claimed that Goldman was giving them the run around, dumping billions (!) of pages of documents and asking them to play a certain outdated children’s favorite. My daughter digs Dora, but maybe she’s still too young for Waldo. This from Business Insider

Well now, get this. Commissioner Phil Angelides is angry, according to The Hill, that Goldman dumped on it 2.5 BILLION documents, claiming the bank is forcing the commission to play “Where’s Waldo.”

In other words, Angelides wants the bank to just pick out the documents that make it look like it caused the crisis, and perhaps even highlight the really damning stuff in yellow.

So tonight the FCIC came back and detailed just what it was looking for to show everyone that even an idiot would have known exactly what page of what document they were looking for. No need for renting the dump trunk (or I guess really large hard drive since this stuff is transfered electronically). Here’s the FCIC’s own description of what it wanted:


1. Provide documents and information concerning Goldman’s synthetic and hybrid collateralized debt obligations based on mortgage-backed securities, including CDOs based on residential mortgage backed securities and commercial mortgage backed securities.
2. Provide a key in Excel format by which the Commission can determine Goldman’s customers names from the customer numbers provided in a previous production concerning Goldman derivative transactions.
3. Provide a production log in Excel format of all of Goldman productions to the Senate Permanent Subcommittee on Investigations (PSI) pursuant to PSI Subpoena No. E02879 and all related requests. Also identify the specific Commission requests to which the PSI documents are responsive, as applicable.


1. Designate and produce for interview within ten days at the offices of the
a. The person most knowledgeable about the ABACUS transactions.
b. The person most knowledgeable about the use of credit derivatives at
c. The person most knowledgeable about transactions between AIG and
2. Produce for interviews within ten days at the offices of the Commission Messrs. Broderick, Davilman, Egol, Lehman, Sherwood, Sparks and Ostrem, followed by agreed upon schedules for the interviews of Messrs. Viniar, Cohn and Blankfein.

Is anyone surprised that the FCIC got billions of documents? Check out #1. Not only did they not ask for all the documents pertaining to a specific deal. They asked for all the documents for all the synthetic or hybrid deals Goldman has ever done on residential or commercial mortgages. Goldman did hundreds of those deals. And the offering documents alone for each of those deals would be hundreds of pages. The correspondence between bankers could be thousands of pages.

The real question is what is the FCIC looking for, and does it even know. I know Goldman is enemy #1, but there are a lot of cops on that beat. And hasn’t the SEC already found in Abacus as close to a smoking gun for Goldman as one will probably get. Now I would be all for the FCIC continuing with its Goldman inquiry if they knew of some document that would blow the Goldman case wide open. But from their press release it looks like they are still in fishing expedition mode.

So what should the FCIC spend their time doing. Look where other people aren’t. The credit rating agencies were a good idea. Not enough people are looking at them. Although, I think Buffett was a distraction and didn’t yield that much new info, at least not publicly. Why haven’t they called Angelo Mozilo of Countrywide? Mortgage brokers were where the fraud hit the streets. Finding out how they went unregulated, or got around regulation, would be key to figuring out how to regulate home lending. How about calling up the heads of CDO trading at every other bank? Goldman wasn’t the only bank pitching synthetic CDOs. There are still a lot of issues that have been barely touched, and Phil, baby, its June, there ain’t that much time left.