Conrad Moeller
2013-10-25 13:30:51 UTC
By Greg Palast for Vice Magazine
You just knew it had to be one of those brie-biting, Sartre-
spewing, overly-garlicked Frenchmen who pushed the Earth's
finance system over a cliff.
This week, US prosecutors finally began the trial of the only
person on the entire planet whom they have charged with the
financial crimes that sank worldwide stock markets by trillions
in 2008 and left millions homeless and jobless, from Detroit to
Manchester.
Amazingly, say prosecutors, it all came down to a single
Frenchman, Fabrice "Fabulous Fab" Tourre, only 29 years old at
the time. Even Julius Caesar waited until he turned 51 to bring
the known world to its knees.
Here's the story which his defence team does not dispute:
In August 2007, hot-shot hedge fund manager John Paulson walked
into Goldman Sachs with a brilliant plan to cash in on the US
housing crisis.
He paid Goldman to announce that Paulson would invest a big hunk
of his fund's wealth, $200 million, in securities tied to the US
mortgage market's recovery. A few lucky investors would be
allowed to give Goldman their billions to bet with Paulson that
Americans would never default on their home mortgages.
It was a con. Secretly, Paulson would bet against the mortgage
market, hoping it would collapse making sure it would
collapse. All he needed was Goldman to line up the suckers to
put up billions to be his "partners".
It was Goldman's and Paulson's financial version of Mel Brooks'
The Producers, in which a couple of corrupt theatre producers
schemed to suck investors into a deliberate flop.
Throughout 2007 and 2008, Paulson & Co. worked with Goldman to
create the financial equivalent of Springtime for Hitler.
Paulson personally chose the group of mortgages for the fund.
Rather than pick the least risky, he deliberately loaded the
fund with sub-prime losers. To polish this turd, Goldman and
Paulson paid a highly respected risk analysis firm, ACA, to
endorse the selection. Paulson and his vice president met with
ACA to assure them of the value of the crappola never telling
ACA that, in fact, Paulson would profit if the securities failed.
Based on Paulson's pitch, ACA endorsed the value of these
"synthetic derivatives" securities. This led rating agencies
Moody's and S&P recipients of fat fees from Goldman to give
the package an AAA rating that is, marking them as safer than
US Treasury notes.
In just a few weeks, by August 8, 2008, the securities lost 99
percent of their value.
The dupes paid up. One, Royal Bank of Scotland, handed over
nearly a billion dollars ($840,909,090) to Goldman. Goldman then
quietly shifted the loot, minus its fee, to Paulson & Co.
For more on Paulson and what he bought with your money, see
Billionaires & Ballot Bandits.
The payout busted RBS. But don't shed tears. The Bank of England
and British taxpayers took over the bank and covered the loss.
The collapse of RBS and the billions lost by others in the
scheme fuelled a panic which caused banks in the US to shut
their lending windows, refusing to re-finance sub-prime
mortgages. Over two million American families now faced eviction.
Paulson was thrilled. Each default and eviction just made
Paulson & Co. richer, altogether pulling in a profit for his
hedge fund of over $3.5 billion on the Springtime-for-Hitler
game. Paulson's personal earnings on this economic tragedy
exceeded one billion dollars.
I happened to be in Detroit that August, at the home of auto
union member Robert Pratt. He'd already received his eviction
notice. Like almost all black home buyers in the USA, he was
steered to a "sub-prime" mortgage. Under a formula years later
deemed to be "predatory", his payments suddenly doubled. Pratt's
mortgage balance grew to $110,000 on a home worth $30,000. The
bank would not refinance, so Pratt prepared to move into his car
with his wife and four kids.
Government watchdogs hunted for the financial crimes
perpetrators, and, discovering the Goldman/Paulson fraud,
brought charges against... the French kid. Goldman had leant
Fabrice Tourre to Paulson to take on flunky tasks, including
putting together a 28-page "flip book" to lure European banks
into the scam.
In a text message discovered by investigators, Fabrice admitted
to a friend that he couldn't understand the insanely complex
derivatives Paulson had crafted with Tourre's bosses at Goldman.
He did, though, grasp that the strange securities were, he
wrote, "monstrosities". A collapse was coming that would "bring
down the whole house", leaving Fabrice standing in a ruined
planet with a fat bonus.
What did the Feds do to Paulson? He received... a special tax
break.
Am I defending the Fabulous Fabrice, the French-fried scapegoat?
After all, he was just along for the ride. But he was deeply
thrilled to carry water for the Bad Boys. And the charges
against him are merely "civil", meaning he won't get jail time
even if found guilty.
And what about Goldman, whose top brass knew of the entire game?
The Securities and Exchange Commission did fine Goldman for its
duplicity a sum equal to 5 percent of the cash Goldman got
from the US Treasury in bail-out funds.
After Goldman's con became public, its CEO Lloyd Blankfein was
hailed as a visionary for offloading mortgage-backed securities
before the shit hit the finance fan. Blankfein hailed himself
for, he said, "doing God's work". God did well. Blankfein's
bonus in 2007 brought his pay package to $69 million for the
year, a Wall Street record.
Rather than prison or penury, Blankfein was appointed advisor to
both the business and the law school at Harvard University.
So here's the lesson all Harvard students are taught: If you
can't do the time, don't do the crime... unless your booty
exceeds a billion.
You just knew it had to be one of those brie-biting, Sartre-
spewing, overly-garlicked Frenchmen who pushed the Earth's
finance system over a cliff.
This week, US prosecutors finally began the trial of the only
person on the entire planet whom they have charged with the
financial crimes that sank worldwide stock markets by trillions
in 2008 and left millions homeless and jobless, from Detroit to
Manchester.
Amazingly, say prosecutors, it all came down to a single
Frenchman, Fabrice "Fabulous Fab" Tourre, only 29 years old at
the time. Even Julius Caesar waited until he turned 51 to bring
the known world to its knees.
Here's the story which his defence team does not dispute:
In August 2007, hot-shot hedge fund manager John Paulson walked
into Goldman Sachs with a brilliant plan to cash in on the US
housing crisis.
He paid Goldman to announce that Paulson would invest a big hunk
of his fund's wealth, $200 million, in securities tied to the US
mortgage market's recovery. A few lucky investors would be
allowed to give Goldman their billions to bet with Paulson that
Americans would never default on their home mortgages.
It was a con. Secretly, Paulson would bet against the mortgage
market, hoping it would collapse making sure it would
collapse. All he needed was Goldman to line up the suckers to
put up billions to be his "partners".
It was Goldman's and Paulson's financial version of Mel Brooks'
The Producers, in which a couple of corrupt theatre producers
schemed to suck investors into a deliberate flop.
Throughout 2007 and 2008, Paulson & Co. worked with Goldman to
create the financial equivalent of Springtime for Hitler.
Paulson personally chose the group of mortgages for the fund.
Rather than pick the least risky, he deliberately loaded the
fund with sub-prime losers. To polish this turd, Goldman and
Paulson paid a highly respected risk analysis firm, ACA, to
endorse the selection. Paulson and his vice president met with
ACA to assure them of the value of the crappola never telling
ACA that, in fact, Paulson would profit if the securities failed.
Based on Paulson's pitch, ACA endorsed the value of these
"synthetic derivatives" securities. This led rating agencies
Moody's and S&P recipients of fat fees from Goldman to give
the package an AAA rating that is, marking them as safer than
US Treasury notes.
In just a few weeks, by August 8, 2008, the securities lost 99
percent of their value.
The dupes paid up. One, Royal Bank of Scotland, handed over
nearly a billion dollars ($840,909,090) to Goldman. Goldman then
quietly shifted the loot, minus its fee, to Paulson & Co.
For more on Paulson and what he bought with your money, see
Billionaires & Ballot Bandits.
The payout busted RBS. But don't shed tears. The Bank of England
and British taxpayers took over the bank and covered the loss.
The collapse of RBS and the billions lost by others in the
scheme fuelled a panic which caused banks in the US to shut
their lending windows, refusing to re-finance sub-prime
mortgages. Over two million American families now faced eviction.
Paulson was thrilled. Each default and eviction just made
Paulson & Co. richer, altogether pulling in a profit for his
hedge fund of over $3.5 billion on the Springtime-for-Hitler
game. Paulson's personal earnings on this economic tragedy
exceeded one billion dollars.
I happened to be in Detroit that August, at the home of auto
union member Robert Pratt. He'd already received his eviction
notice. Like almost all black home buyers in the USA, he was
steered to a "sub-prime" mortgage. Under a formula years later
deemed to be "predatory", his payments suddenly doubled. Pratt's
mortgage balance grew to $110,000 on a home worth $30,000. The
bank would not refinance, so Pratt prepared to move into his car
with his wife and four kids.
Government watchdogs hunted for the financial crimes
perpetrators, and, discovering the Goldman/Paulson fraud,
brought charges against... the French kid. Goldman had leant
Fabrice Tourre to Paulson to take on flunky tasks, including
putting together a 28-page "flip book" to lure European banks
into the scam.
In a text message discovered by investigators, Fabrice admitted
to a friend that he couldn't understand the insanely complex
derivatives Paulson had crafted with Tourre's bosses at Goldman.
He did, though, grasp that the strange securities were, he
wrote, "monstrosities". A collapse was coming that would "bring
down the whole house", leaving Fabrice standing in a ruined
planet with a fat bonus.
What did the Feds do to Paulson? He received... a special tax
break.
Am I defending the Fabulous Fabrice, the French-fried scapegoat?
After all, he was just along for the ride. But he was deeply
thrilled to carry water for the Bad Boys. And the charges
against him are merely "civil", meaning he won't get jail time
even if found guilty.
And what about Goldman, whose top brass knew of the entire game?
The Securities and Exchange Commission did fine Goldman for its
duplicity a sum equal to 5 percent of the cash Goldman got
from the US Treasury in bail-out funds.
After Goldman's con became public, its CEO Lloyd Blankfein was
hailed as a visionary for offloading mortgage-backed securities
before the shit hit the finance fan. Blankfein hailed himself
for, he said, "doing God's work". God did well. Blankfein's
bonus in 2007 brought his pay package to $69 million for the
year, a Wall Street record.
Rather than prison or penury, Blankfein was appointed advisor to
both the business and the law school at Harvard University.
So here's the lesson all Harvard students are taught: If you
can't do the time, don't do the crime... unless your booty
exceeds a billion.