Goldman Sachs CEO Lloyd Blankfein – Off With His Head

Goldman Sachs CEO Lloyd Blankfein is experiencing a rough week. Goldman Sachs and Blankfien have over the years enjoyed significant political cover due in large part to the significant contributions made to both Democrat and Republican politicians and to the numerous Goldman Sachs alumni that served, and still serve, at the highest levels of government. However, in a midterm election year, and with a majority of voters yelling “off with his head”, his sunny day friends in government are joining in the populist sentiment of “off with all the Wall Street big shot’s heads”.

Public sentiment is now so strong over the reckless, greedy, immoral, behavior of the big swinging dicks Masters of the Universe at a time when Main Sreet America was and still is severely hurting that surely it will be a temptation for vote seeking politicians to let a few heads roll. Who can forget that almost immediately after the government bailed Wall Street out, including Goldman Sachs, with billions of dollars of taxpayers funds that the Wall Street unrepentant tone deaf executives paid themselves multimillions of dollars in bonuses, even after running their firms into near bankruptcy?

Lloyd Blankfein, as the head of the most powerful investment bank in the world, Goldman Sachs, is a prime head to go after. This Tuesday he faced a blistering cross-examination from U.S. lawmakers about the company’s ethics and behavior toward its clients.

In Tuesday’s interrogation by Senator Carl Levin, Blankfein was constantly interrupted, told to answer the question and stick to the point. He often looked extremely disoriented and uncomfortable. He often squinted as if puzzled by the questions. No doubt, a man who makes multimillions of dollars per year, whether his firm or economy is doing well or not, is not used to being interrogated and treated with disrespect.

“You’re going short against the very security (you’re selling) … many of which are described as crap by your own sales force internally.” said Levin, chairman of the Senate Permanent Subcommittee on Investigations.

“How do you expect to deserve the trust of your clients, and is there not an inherent conflict here?”

The SEC has brought fraud charges against Goldman Sachs for the way in which it conducted its business in structuring and marketing of CDO’s during the run-up to and during the housing mortgage crises of 2007 and 2008. The initial charges by the SEC were filed as civil charges only and charged Goldman Sachs and only one employee with fraudulent misrepresentation of the quality and nature of the CDO securities marketed by the firm.

Goldman has also been charged with basically favoring a large hedge fund, Paulson and company, by allowing Paulson to select poor quality mortgages to be included in a CDO offering and then marketing the junk CDO portfolio to less sophisticated Goldman clients. The SEC has charged that the transaction was fraudulent, that basically the CDO was designed to fail, and that Goldman Sachs knew full well that money in effect would be transferred from the “chump” clients to Paulson & Co.

The SEC has now given a clear indication that additional charges will be filed, probably against a number of high-ranking Goldman Sachs executives, including CEO Lloyd Blankfein, by referring its investigation of Goldman to The Justice Department for possible criminal prosecution, according to several media reports, including one by the Wall Street Journal, Thursday night.

In this case, the standard top level executive defense of “a few bad apples” and “gee, we didn’t know” are unlikely to stand up as from the recent Senate hearings it is apparent that the SEC and congressional staffers have quickly assembled volumes of Goldman’s internal e-mails and documents that indicate immoral and possibly illegal behavior on the part of top level Goldman executives.

It appears that Goldman Sachs and its top executives, especially CEO Lloyd Blankfein, are about to find out just how fickle their politician former friends can be when the voting crowd starts shouting “off with his head”.