Lloyd Blankfein Scam Artist?

And, yeah, even Gollum seems surprised.

Well... that seems to be the gist of the SEC allegations against Goldman Sachs and Mr. Blankfein, who led GS during the period in question.

However, I doubt the SEC case is that simple and don't think the SEC can convict.

The problem that the SEC is facing is that GS was not alone in packaging Alt-A with conventional mortgages into mortgage backed securities. Either the entire industry was in collusion, or it occurred to no one that a few bad apples might ruin the bushel.

And that is going to be their primary defense. "Yes, we packaged less qualified mortgages with more conventional mortgages, but at the time the vast majority of mortgages were non-conventional in some way or another, and we were acting in a competitive marketplace where we were compelled to offer a generalized product."

So, yes they knew but, as long as equity values continued to rise, bundling alt-a with conventional loans was a low-risk proposal.

I tend to believe that the SEC is on a fishing expedition with two objectives:

1) Extract a settlement from Goldman Sachs
2) Further distance the Obama Administration from the actors who are held most centrally responsible for the current economic crisis.

And, as far as these two objective are concerned, the SEC may achieve their goals.

I just don't think they have a case.