• Lisa Simpson
• May 8,2010
• In: Finance

Wall Street and the Financial Crisis

The dirty linen from Wall Street is fluttering from the clothes line on the rooftops. It has been a tense drama depicting how Wall Street pulled down the financial crisis on its own head. The cast of the drama runs into thousands ranging from those who were most guilty to those who were the greatest celebrities.
The financial stars of Wall Street are like the bankers of the gods who make money going up and make money falling down. But their stand is blasé as one of them said that they never made the “mortgage mess.” They too endured losses but then made more by making up for these shorts.
The star players are summoned each week by the Financial Crisis Inquiry Commission and the US Senate Sub-committee Investigating Financial Crisis.

Carl Levin the chairperson of the Senate Sub-committee said, “Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis. They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities, and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients.”
Goldman Sachs contended that the company did not make huge net revenues by betting on the house mortgages. But Levin said that e-mails show the opposite “Goldman made a lot of money by betting against the mortgage market.”
America has to be credit for its transparency levels and its readiness to take on the big shots. These hearings are revealing the amount of lust for profits and the depths of fraud that characterize Wall Street. It has impacted the entire international community.

The investors blindly trusted these priests of finance to point to market trends but too late they are beginning to understand that these gods had two faces talked one way and acted in another. While those who trusted them and purchased the market on the up scale, these two faced monsters were selling in the down scale. Technically this is referred to as “risk hedging.”
But who suffers when the market falls? It is the taxpayer that bails out these investment entities. Unfazed the latter are laughing up their sleeves as they overeat on fat bonuses.

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