you know the sec coming after goldman sachs. but, i feel like this is gonna be one of those greece situations. where, you know you initially have this like frenzy at all. the market sells off and any time the market goes down, you have to be a buyer. i inflect goldman sachs. i am short a little bit of volatility. the volatility on friday in may went up about 13 points. and in the back months it spiked about five points. volatility yesterday got crushed. the front month was down about 15 points, and then the back months was down about 2 1/2 points. for people might not understand the volatility game, basically it sounds like you're saying some of the risk is starting to come out of the stock. is that accurate? exactly. i mean goldman is gonna have earnings i think it's this week. and the volatility is going to go even lower after that. for example, the may 160 straddle on friday, i think it closed around $18. and today it's trading around $15. even though the stocks moved a couple of dollars, the straddles inconsiderably. and aft

a rough time for goldman sachs. the company says it will vigorously contest these charges, and as we had, try to defend its reputation, a reputations that's now under siege. erin? >> thanks very much, scott cohen. let's get the market reaction. bob, off the lows for the market for now. >> but not by much. the most interesting thing is over here at the politics and the timing of the announcement. we have a huge financial regulatory reform bill up in the senate, probably in the next couple weeks. senator dodd has been shepherding that. roger freeman, a pretty respected analyst over at barclays had a note out in the middle of the day, which i think crist liesed a lot of people's comments. it was a way to sway some of the on the fence republicans to support a tougher financials bill. the president has said that anybody who votes against this -- so strong rhetoric around here today. the goldman sachs here, a low of about $155, well off that low, huge volume, north of 0 million shares changing hands. citigroup also droppe

they have accused goldman sachs of essentially designing... collaborating with a short sell to design securities that would fail. and then deceiving investors about how these securitys were created. and it is a riveting case because although i had heard tell of such things happening inside the big wall street firms until now i didn't know for sure that it had. and so i feel like for the first time a light is being shrined be into places where it needs to be shineeneded and we all all learn a lot about how these places conducted their business. >> rose: you think this is just the begin? >> oh, yes. i'd be really surprised if goldman sachs was the only firm designing securities with the help of short sellers that were made to fail and i'd be surprised if john paulson was the only hedge fund manager working with the firms to do it. and more generally it points to just the degree of corruption in fixed income markets. i mean, we have... the story gets complicated as you dig into it but goldman sachs was... essentially seems to have been using a se

charges against goldman sachs. scott? >> well, trish, goldman sachs was founded in 1869, a bastion of the financial world, and we can take a look at the headquarters in lower manhattan of a company now under fire, often a lightning rod and never more so than today. the securities and exchange commission filing civil fraud charges against goldman sachs as well as one of its vice presidents involving mortgage-backed securities. the s.e.c. says that goldman structured a portfolio of what turned out the to be toxic mortgages hand picked by a hedge fund manager run by john paulson. and the s.e.c. says that goldman did not disclose that paulson not only had picked the mortgages, but that he was betting against those mortgages in 2007 as the housing market was about to come undone. goldman sachs today says it will vigorously fight the charges and work to restore its reputation, a reputation that today is very much under fire. here is the s.e.c. chief of enforcement speaking today in new orleans. >> there is a fundamental differe

complaint against goldman sachs. he will be joined by david vinier, of course, goldman sachs' chief financial officer who typically runs the earnings conference call. this will be at 8:00. something else worth noting as well, members of the public are invited to listen to the conference call, given the number to do so. and they have scheduled it for 8:00 a.m. typically, of course, vinier has a conference call, not the entire public is always invited, although basically, you can. if you want to get on, you can get on. but goldman sachs coming out and saying they will now hold the call at 8:00 a.m. the call will be open to the public at large. in fact, they're almost inviting the public to join the call. and it will include the company's co-general counsel. interesting to note, goldman's shares did come back a bit, i think, once this release was put out there. the company fighting hard. and apparently caught unawares by the s.e.c.'s decision to file the complaint when it did. you know, there had been wells notices, of

sparks, you never heard of anything like that at goldman sac sachs, right? >> well, i know clients when we're putting deals together the deal teams would work very hard to put together, you know, whatever the loan package was and work with ratings to come up with what the capital structure would be, that includes credit enhancement. so, i don't recall somebody coming to me saying, hey, we're going to barbell this, but there would be a mix of collateral. >> let me ask you a similar question. how about gaming the rating agency. people sitting around trying to figure out what can we get through here, through the rating agencies -- >> ne. >> as far as gaming, no. as far as working with the agencies to come up with a capital structure and, yes, there was constant dialogue and work together for that. >> mr. birnbaum, dealing with rating agencies, did you ever get the feeling that folks were sitting around trying to figure out the best way to put this together for rating agencies so that we can make the most money on these rnb. . you never dealt with that? >> no, i

as much as today was about goldman sachs, to me it really was not about goldman sachs, frankly, as crazy as that might sound. i've been waiting for the exogenous event to take place that might put a top on this market. you never know what it is but when you see it you can sort of identify it. today might be that event. joe talked about financial reform. remember last time in january it was about a week after jpmorgan reported earnings. coincidence or not, here we are a few days after jpmorgan. all the financials making basically the same high as we made back in october. touching up against those levels, selling off. it's very interesting. it's very hard for me at least to think about being long this market right now. >> volatility in the overall market spiked dramatically. no surprise. volatility amongst the individual stocks, the goldman sachs, morgan stanley, that also spiked dramatically. karen, if you're taking a look at a possibility of these stocks moving lower and the ability to establish a position at lower prices than we saw today later on, how do you establish those positions?

it's goldman sachs and mr. tourre, as if there's no one in between. >> i can tell you based on my experience at the s.e.c. when we worked on matters of significant size, we tended to coordinate or investigation alongside the fbi, and also in this case i would imagine the new york state attorney general, connecticut, their attorney general verbalize that they're looking into this. they want to understand whether it was tied to just goldman. with regard to fabrice, assuming he was guilty, it's hard to believe he acted alone. >> if it's true that he represented that -- this guy is going to jail, i don't know about that, and i've heard conflicting opinions. >> goldman i don't believe believes he misrepresented things. otherwise he would have been fired. >> i think they'll put a lot of pressure on him, the s.e.c. and possibly the justice department. it's amazing the kind of pressure they can put on somebody like that. if he goes over and cooperates with them, clearly they're going to want him to give up other people

goldman sachs reported huge first quarter profits. on the other hand, their stock dropped another 2%. michelle cabrera has the details. >>> and later on, should synthetic cdos be banned? we'll talk to david goldman and peter morici. there is a debate. you're watching cnbc, first in business worldwide. >>> all right. fresh off s.e.c. fraud charges, goldman sachs reported huge first quarter earnings today. cnbc's michelle cabrera joins us. hello. >> three and a half billion dollars they made in profits, much better than a year ago. nearly double what they made a year ago. look at the numbers. turned out to be 5.59 per share, much better than expected. there's the chart. what the stock did today. we'll explain why it was down toward the end here. once again, the first thing we wanted to show you were the actual earnings which were much better than expected. revenue came in better than expected. nearly $13 billion in revenue. there you see the actual income. 98% better. there we see revenue. $12.8 billion. a year ago they made only $1.4 b

goldman sachs. goldman sachs, lloyd says we're doing god's work, it was probably a joke.o real response from goldman sachs. after that was quoted in the paper. communication when you're a public enterprise and a publicly nobody enterprise. paulson is a private company, but he's an internationally known figure. and i think he's getting very good advice here to communicate with these people. >> we showed a list of some of paulson's top holdings, some of which have seen some liquidation in the stocks, that is, on fears there are redemptions in paulson funds. but anthony, you actually like one of his holdings. which one? >> yeah. it's time for the hedge fund trade of the week. and this is cit, which is in paulson's portfolio. it's also in avenue's portfolio. and the way these guys got this stock is that they owned the debt in cit and they got this stock and warrants out of the bankruptcy. cit has a brand new management team in john thain. it's trading below book value. and it's a warrant on the middle market lending recovery that we should see as the economy recovers. so this

does it have anything to do with goldman sachs? >> i think that a lot of people feel like anytime there's like an end of the world call -- and by the way, if you're between 10:30 and 11:30 and the market had that end of the world feel, then you start seeing, well, hold it, what does goldman own? maybe they own old. because maybe goldman's in trouble. let's go to safety, let's get out of risk situations, go buy some treasuries. these are the rhythms, the ebbs and flows of panic. we're well familiar with them on "mad money" because we've been at this game for more than 30 years. nothing shocks us. this was garden variety panic and you know what? i'm going to do some gardening this weekend. it's going to be more productive. here's the bottom line. the game is not rigged. the bottom line is i'm also planting cucumbers and tomatoes this weekend. could be too early. it's coming up. the way to play, this you know what, i'm going to give you a game plan. right in an open hand. "mad money" will be right back. >> announcer: goldman turmoil.

the goldman sachs didn't just make money.e of its clients' reasonable expectation that it would not sell products that it did not want to succeed. and that there was no conflict of economic interest between the firm and the customers that it had pledged to serve. those were reasonable expectations of its customers. but goldman's actions demonstrate that it often saw its clients not as valuable customers, but as objects for its own profit. this matters because instead of doing well when its clients did well, goldman sachs did well when its clients lost money. >> i do not think that we did anything wrong. >> okay. >> there's things that we wish we could have done better, in hindsight, but at the times we made the decisions, i don't think we did anything wrong. >> now, regret to me means something like you feel that you did wrong, and i don't have that. what i do have, though, is, you know, we made mistakes in our business, like i think any business does. and we made some poor business decisions in hindsight. >> so do you think

goldlman sachs helped him to do that. allegations on behalf of him they created the security that they then sold to investors who believed the housing market would continue to go up. and he benefited from this, although, the s.e.c. has clearly said today he didn't play a role in any kind of fraud leapt actions. so he thought-- he is not being charged or facing allegations of wrongdoing. it's goldlman sachs that is facing those allegations. >> lehrer: and the word there, of course, is that paulson saw the collapse coming and went with that bet on his own, and goldlman sachs just simply bought into that bet , correct, without tell telling people they were doing it? >> right. goldman was paid $15 to create this exotic financial instrument-- it's very complicated-- that paulson was able to use to bet against the mark. at the same time, they were promoting it as a positive thing to their investors without telling them paulson played a role in creating the product. that's the allegation. >> lehrer: why civil charges instead of

goldman sachs faces congress. all your favorite characters will be there from fab fab all the way up to lloyd blankfein. but holes already being poked in the s.e.c.'s case. will it be smooth sailing for the financials after tomorrow's three-ring circus? on the fast line right now anthony scaramucci of skybridge capital. anthony, after tomorrow is the coast clear? we're getting some static here. >> i'll tell you i'm not so sure about the coast being clear for goldman. but here is what's going to happen in this slugfest tomorrow, and here's the backdrop. number one, goldman is clearly losing in the court of public opinion. you can see the stock continuing to trade lower. the central thesis being this uncertainty will be a cloud over its stock and other financial services stocks. number two, they have whistleblower rhys many. an angry spouse, somebody in there leaking another bad situation for goldman. and lastly, if they win, it's sort of a pyrrhic victory. look for the s.e.c. to really gear up and continue to look

>> goldman sachs. >> right, goldman sachs. what were you going to ask? >> i was going to say do you think there is anything inherently wrong or there should be any admission by the companies and a lot of the profits are coming because of the federal government. are you fine with the way the announcements have come? >> look, i -- there should be some admission of that. and before they all pat themselves on the back for the great job they did and get a big bonus based on their profits, somebody ought to recognize a great deal of that profit came from interventions from the government saving their bae the >> let's talk about too big to fail. that's a bone of contention. we had kay bailey hutchison on yesterday talking about it. i was under the impression -- by the way, i am an a-political kind of animal. i was always under the impression that too big to fail was more of an economic condition or situation than a government policy. if you're big enough to cause a problem with the system, then you are, by definition, too big to fail. and don't we need some mec

says was a victim of goldman sachs. and poors, those rating agency told king county its were aaa safe. as for jack's house? it failed to generate any bidder at monday's foreclosure auction. it go back to another german firm, deutsche bank. and the big gamblers in the mortgage mess, ikb lost so much money that german taxpayers had to bail it out. and back here at home, the american taxpayers provided the nation's biggest banks with bailout money including $10 billion with goldman sachs which has been repaid. ali? >> all right, allan, thank you forea very good explanation of why we're all connected to this thing and why i'm here reporting on this today. >>> hey, listen, for some people life begins at 100. i'll tell you about a woman who proves the old saying that you're never too old. right now, there's a nurse saving a life in baltimore. 20 minutes later, she'll bring one into the world in seattle. later today, she'll help an accident victim in kansas. how can one nurse be in all these places? through the nurses she taug

goldman sachs which has rightly earned that moniker, government sachs has had tentacles in administrationsoth republican and democrat it is a bipartisan problem that you've had these politicians enable failing institutions, corrupt institutions. those politicians are every bit as responsible as the wall street money menç that they are now department going. it would be wise for -- demo -- demo goinging about. it would be wise this big haranguing by obama to have a parade of all of the faces ginsler during his congressional nomination hearing was asked about his own specific role in failing to support oversight of credit defaults. ì%q worked for tax cheat geithner and apparently for ginsler. with where is the accountability for this bad behavior? >> sean: president is asked about the donations he got almost a million dollars in this case. his answer was i got a lot of money from a lot of people. he says vast majority i got were from dough forces. the question is, in this -- were from small donors. the question is, i thought this was a new era, new time. heç dismisses it, everybody else do

he says we got mugged by goldman sachs. and today congress rips into that firm, accused of ripping you off. >> you knew it was a [ bleep ] deal. >> larry: plus, moore's take on arizona's controversial immigration law and sarah palin, and the american auto industry's comeback. michael moore, his opinions for the hour next, on "larry king live." >> larry: like him or dislike him, he is never dull. we welcome michael moore. >> try to like him if you can, please. >> larry: we welcome michael moore back to "larry king live." the oscar-winning documentary filmmaker, best-selling author, most recent film "capitalism: a love story." kind of prophetic today. we're going to talk about goldman sachs. and i think he is going to take them to task. the firm's executives past and present were on the hot seat on capitol hill hill today. hearings just ended. members of the permanent subcommittee on investigation accused them of unbridled greed in helping push the u.s. economy into a tailspin. the final witness goldman chairman and ceo lloyd

of goldman sachs. there is no question about that. >> yes, sir. >> you set the tone. >> yes, sir. >> i have asked a lot of questions about ethics. i have a question for you. why did goldman sachs decide to release the personal e-mails of mr. tourre and not everybody else in this hearing? it had no investigative purpose. we did not expose any of that. we were not exposing it. was that the right decision? is it fair to your employee? is that a political ploy or a defense ploy? why would you do that to one of your own employees? >> you know, i was not closed to the decision -- close to the decision. i was not specific about that. we wanted to get, and i was not thinking about that -- we also provided information from e- mails it respect to the business and there were elements here that spoke badly of the firm and we just wanted to come of breast -- abreast. there was nothing to my understanding about mr. tourre's e-mails that were evidence of the mills that were already out. i did not think we were adding

this is goldman sachs' political habits.s i stretch this out which party gets most of the company's money. you see the contributions in the early '90s relatively modest. more than $2 million. the blue is democrats. $1.5 million to the republicans there. the 2002 campaign, the 2004 campaign crossed the $4 million park in contributions. in 2008 in part because of big support of the president we'll show you that way, way up here. so goldman sachs money most of it you get the picture goes to the democrats. let's all look at something else about its annual lobbying spending. it's not just giving money to campaigns but spending a lot on lobbyis lobbyists. way back here in 1998 modest amount below a million dollars. 2003 crossed the million mark. recent years down here especially here as we've had the problems on wall street and the issues here. way up the lobbying money. way up in 2008, up in 2009 and we're in the first quarter just into the second quarter of 2010. we don't have those numbers yet in the middle of this debate. the

i don't carry any water for goldman-sachs.e recipients of government welfare which in my view, they voshouldn't have gotn and the constitution doesn't authorize. this is a novel lawsuit with a novel cause of action. whenever you sell something, you have to tell the buyer everything you know about it even when the buyer is a bank as sophisticated as you. there's no such rule right now. >> all right. judge andrew napolitano, we'll be listening to you and "brian & the judge" on the radio in two hours and four minutes. >> we'll find something to disagree about. >> and the judge will be wrong to disagree agreeably. >> coming up, breaking news overnight about that volcano in iceland. there are reports that eruptions are strengthening. we'll be live at j.f.k. airport with the very latest. >> then ponch and the hulk joining up. joining us live in studio next hour. smart...you're staying at this resort for free? how? welcomerewards from hotels.com. see when i accumulate 10 nights, i get one free. and...they let me choose where to use t

goldman sachs just is being goldman sachs. >> for the people that want to try the political side to this whole deal and what's coming down the pike in washington, people are also talking about mary schapiro, head of the s.e.c., this is the second time she's been -- the independent's cast the deciding vote on the settlement on the back of the america, merrill lynch settlement too. people are worried this is part of an attack on the entire sector and there's other names to follow, still feel nervous. and if you look at what the s.e.c.'s doing here, it's hard to separate that from what the administration -- although they are absolutely independent. but the timing is uncanny. >> i can tell you this. the read from the options market speshlth, when you look at goldman sachs, you look at the volatility, they traded four times normal volume. almost 500,000 contracts today. volatility came in throughout the day. by the end of the day. we had peaked out last friday somewhere near that mid 40s sort of an area, 43%, 45% volatility. now it's around 37%, 38%, the at the money calls and puts. those str

you have gotten $4,500 from goldman sachs p.a.c. and goldman sachs employees.t back? >> no. i think the larger point here is that whatever that contribution was -- and i have had multiple contributions from lots of different places, from agricultural entities, other business entities, $4 million from our kansans, the point here is, is that the contribution doesn't make any difference, because i've still presented one of the toughest reform bills that has been presented. the idea here is, certainly you listen to everyone, and that's exactly what i did in ut. ing this bill together. but, more importantly, that you're working hard to get something done for the american people, and in my case, the people of arkansas. people want transmarnssy and accountability in their government and in their financial system and that's what we do in this bill. >> senator blanche lincoln of arkansas, thank you for being with us. >> thank you, candy. >>> next, calls for a crackdown on salt. we'll tell you who wants to have limits on the amount of salt we neat. it doesn't cover every

s fraud case against goldman sachs is about. it's also a perennial problem for our financial system. it's why we have regulations and disclosure requirements, and it's never going to entirely go away. i'm justin fox. >> that's nightly business report for tuesday, april 27. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night susie. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

political analyst david gergen and alexis glick who once worked as an analyst at goldman sachs i should point out. david, how political is this? i mean, is this just a coincidence? this is happening on the eve of, you know, debate over financial regulation? >> i do think it's suspicious. i think the timing is probably not a coincidence. eliot spitzer argued today that it was not a coincidence. and it's going to make a big difference in the senate debate. let me go back to what michael was arguing. anderson, the big question to me tonight is, goldman sachs says, yeah we may work with paulson but we bet against paulson and lost $90 million doing that. michael says i don't think that happened. but it does seem to me that's the most material fact to learn. because it just would be hard to believe that goldman sachs would intentionally defraud itself. >> for me, the layman lesson is don't give yourself a dumb nickname in an e-mail. you know? this guy torre, what did he call himself? the fabulous -- >> yes, yes. look, he's -- you know, one of

laws against goldman sachs when they are in goldman sachs' pocket. i find that the height of hypocrisy when they stand and grandstand and act all indignant when they are the ones taking money. i just find that almost disgusting, to say the least. that is what i want to make a comment on. host: massachusetts, charles on the independent line. caller: i have been in the financial industry the last 40 years and i would just like to make a comment. i would like to pull back out that the senate hearings and all so -- also a number of stations that cover it in the media have generally all missed what i think is the most significant about the financial crisis and about its causes, namely that there were all over the world -- the united states and the rest of the world -- huge number of institutions that had very, very large positions and securities that were all related to mortgages and the housing market and the question is, why did all of these institutions really buy all of these things, why were they so interested in holding these securities? and the thi

on goldman sachs. is that any different than what president obama is doing? >> goldman sachs gave president obama during the election four times more money than they gave john mccain, but what's interesting about the harry reid story, megyn, is how it developed. wednesday of last week, i introak the -- broke the story he had this fund-raiser with goldman sachs, he got the money from them, not only that but he yelled at them for basically, you know, leading the charge on the sort of antiwall street front, basically the democrats have been very critical of wall street, they basically called for that, the next day i broke the story, in which mcconnell and cornyn, the republican side, they were in new york to basically raise money for wall street and talk about financial reform, maybe how to get the -- get some of the aspects out of there that are not good for wall street out of the bill. reid uses that to start attacking cornyn and mcconnell in the republican efforts to derail financial reform. the presid

sachs walked away with $50 billion of fees that were paid to him -- paid to goldman sachs by mr. paulson. now, that is the basis of the f.c.c. complaint filed against goldman sachs for civil fraud. so what is civil fraud you might ask? civil fraud is, it shall be unlawful for any person in the offer or sale of any securities to obtain money or property by means of any untrue statements of a material fact or any omission to state a material fact necessary. so the question is, was it a material fact that they were made up of these mortgage-backed securities, 90% of which were considered no dock mortgages -- mortgages? that mines there was no documentation that the people that got those mortgages could pay for them. there was no documentation of income, no documentation of debt. those were no doc loans and there were history of no doc loans going back. so it was fixed from the very beginning. they were arranged by john paulson, a material fact that was not disclosed to the other buyers. and it was not disclosed to the other buyers that john paulson created this because he wanted to

in june of the previous year, goldman sachs launched a $3 billion rescue package for cit structured as a 20-year swap. here's what's crucial. according to an s.e.c. filing, cit declared bankruptcy. they would be subject to what's called a make whole amount that would be equal to all the future fees goldman thought they were going to get discounted present value, a total of $1 billion, according to later press reports. those familiar with the deal say it was structured such that goldman sachs was much better off if cit went bankrupt. goldman has always defended that deal, saying they gave the company workable financing when no one else would. the broader issue, of course, that goldman sachs faces, is that every time they have to defend themselves against a new allegation, whether it's this charge by the s.e.c., whether it's the situation with cit, aig, they are having to face down the notion that perhaps they have a corporate culture that puts clients second. guys, know they're keenly aware to this, because their letter to shareholders this year referred to clients 56 times and lloyd

now he's representeding goldman sachs. now he goes to the same people he was doing business with involved in the -- >> supposed to be a two year ban on representing clients -- >> sean: we have tape later. >> no idea accident it is called government sachs. there's an incestuous relationship between the big banks and wall street and the government and they are closely linked. >> craig was forced to leave the white house because of an inability to perform the way the president wanted him to when it came to guantanamo bay. >> sean: the administration i think they are up to their eyeballs in this scandal inasmuch as the president got almost a million dollars from goldman. four or five million from wall treat in toto himself is >> look at how that worked out for goldman. >> sean: blanche lincoln got money she said she is not going to return her money. i would think anybody in washington that received any money from any wall street firm has got to recuse themselves by returning the money, no? >> i think it is a little too far. >>

goldman-sachs itself.eo of goldman-sachs and a lot of interesting folks right down to the "wall street journal" this week tracked down the homeowners who defaulted on mortgages that caused all of this stuff. right down to the homeowners. we're go down to the basics on this story. where it goes from here. contribute be editor of rollingstone and from reuter, talk about the story, guys. every day we're learning more about it. how big of trouble is goldman zachs s zacs? >> goldman-sachs is not a fly-by-night operation. these were the best, the brightest, the smartest. actually goldman-sachs is a big wall street firm, the one that navigated the financial crisis best. they are the big wall street firms actually figured out subprime was going rotten. the reputational damage is more important even than the charges, and i heard from a lot of people on wall street, people saying, you know, goldman used to be historically a firm that prided itself on putting its clients first, and the tricky thing for goldman now is

all eyes on goldman sachs. the investment giant is facing accusations that it bet against the american people and turned a profit on the country's economic collapse. executives will go to the hill today where they're expected to deny investor fraud. rianne carter is live in the newsroom with more on this story. >> good morning. the hearing will get underway at 10:00 this morning on capitol hill. goldman sachs executives are expected to face tough questions. goldman sachs executives could face a grilling on the hill today. >> bemis led the country and were not fair to their customers. >> during the hearing this morning, email dating back to 2007 may be a topic of discussion. those e-mails that show that the bank allegedly positioned itself to make a fortune off the mortgage crisis. the e-mails, the bank says, were cherry pick. >> you can see what goes on beneath goldman sachs and they will have to address that. that is relatively rare. >> it faces charges that it is led declines by selling mortgage investment se

but think about goldman sachs, goldman sachs is a bank holding company and became a bank holding company in september, 2008 as a to save it from collapse. has access to the fed discount window. it's private equity does well i can assure you they will make all like bandits to use a technical term. if it goes badly whose problem is that? is a bank with access to the discount window. we cannot let these banks fail. and goldman sachs says okay we will just not be your bank. supplement guys, they were a rather loose not entirely accurate term the they were not regulated by the federal reserve. and they took a lot of risks and they were on the verge of failing for no fault of their own in the book they would like to defer if you let them out of this size with these characteristics of this relation to the rest of the system and they get in trouble again he will give them access to the federal reserve and you may promise up and down know, we won't do it honestly we promise you can pass as many laws as you want at the end of the day when faced by calamity the government will always have the power

goldman sachs goes short. no disclosure in the prospectus that paulson had anything to do with picking securities. you think about paulson circa march 2007, but no one knew who he was in march 2007. people knew who goldman sachs was. i have to believe ikb, they knew what they were doing, they took on the risk. they had a list of home builders, they had a list of every one of the cdos, could do whatever due diligence they wanted and made the bet they made. >> knowing goldman was short was probably, you know -- >> more significant. >> -- more significant than paulson. >> goldman laid it off on paulson, but they said in the prospectus they may not keep the rick, they may keep some, they may short some to others. and i think it would have been unethical had goldman sachs disclosed who the opposite side of the trade was. i think one of the key -- if the s.e.c. rules is that client confidentiality is paramount. >> why should i know the long fnt the short? >> well -- >> i know who the longs are. >> paulson didn't kno

i mean, any way you look at it goldman sachs comes out of this looking like a big bad guy. a lot of fingers pointed at goldman of course over the course of the last year. it's an easy company for main street america to hate. so now all of a sudden all of this attention on, you know, potentially, allegedly goldman sachs defrauding its investors. and this gets washington angry and rightly so. it gets main street america angry. and people are saying, something has got to be done. that's when the politicians step in. >> i'm trying to do a whole show on the anger is out of control but yet in this instance. okay. i'm a guy paying my bills, paying my credit card bills. as i understand this, billionaire john paulson, okay? who basically gets in bed with goldman sachs and says i'm going to go out and find the worst mortgages i can find. you're going to help me put this product together. i'm going to bet against it. ha ha. by the way other guys at goldman sachs go out and sell it to your customers while i'm shorting it. how do they explain that as anything other than fraud? the fact

he's working on a book on goldman sachs. take us inside goldman sachs today. what is their strategy? how are they going to approach this? how are they feeling about it? >> they're in crisis mode. but you can see by lloyd blankfein's testimony that's been released, he's trying to be conciliatory. he's trying to finally tell the american people that he's grateful for what they did. but they're in a very difficult position. i think david brooks has it exactly right. either they have to look like they were dumb and foolish or smart and sleazy. it just shows again, just because you can do something, george, doesn't mean you should. >> and there's a key, factual issue at play today. you saw the senate chairman, carl levin, say basically, that goldman made $3 billion on the housing bets. lloyd blankfein is saying they lost $1 billion. >> part of what he's doing is he's parsing. part of the firm, the structured products group, did make money betting against the mortgage market. they startsed to go in short aggressively, around january 2007. what lloyd is doing, is net

as the ceo of goldman sachs prepares to sit in congress's hot seat. what the fraud charges against the firm and changes ahead mean for you and the economy. >>> the maverick entrepreneur with a new business plan. virgin founder richard branson and his commitment to reduce carbon from the board room out. >>> a window into the rising popularity of home renovation and how the view may be greener than you think. the "wall street journal report" begins right now. >>> here's a look at what's making news as we head into a new week on wall street. president obama came to new york this week to make his case for financial regulatory overhaul. in a speech at cooper union the president said any legislation he expects to sign should address the following elements -- consumer protection, the size of banks, executive compensation and transparency rules on the trading of controversial securities derivatives. >> some -- and let me be clear not all -- but some on wall street forgot behind every dollar traded or leveraged there's a family looking to buy a house or pay fo

plus, goldman sachs under fire and congress wants answers. a report from the capital tonight only on the "cbs evening news." >> announcer: h this portion of the cbs morning news sponsored by intuit. stay on top of your business with quick looks on line. try it for free at intuit.com. just choose a style, then customize, publish and get found. sweet. get a 30-day free trial at intuit.com. at cousin everett's blueberry farm to talk about our blueberry juice drinks. they're made with my sweet, ripe blueberries, packed with th-those antioxidants that are good for ya. tastes real good, too! to give you an idea, let's whip up a quick sample. or you could just try this. [ chuckles ] yeah. ocean spray blueberry juice drinks. real blueberries, real good. >>> in los angeles, the hollywood sign has been rescued again. the big sign overlooking the city was threatened by construction of near account by estate homes, but "playboy" magazine founder hugh hefner donated $900,000 to complete a $12.5 million fund-raising drive that will keep the land free of de

let's replace goldman sachs and these bonds. let's treat goldman sachs as if it were an antique, october car dealer and they're selling '57 chevys. these got these two '57 chevys in the shop on the left and right. they have a few dings. some of the parts are really good, some are not. let's just say that this paulson and company, this hedge fund company we're talking about walks into that dealership and says, i will take this car as long as you take all the bad parts out of it, put it in the other car and take all the good parts out of the other car and put it in this one. so now what happens is you've got one of these two '57 chevys that's got great parts in it. it's all shiny and new. the other one's battered up and it's got bad parts in it. let's move forward. now the dealership, goldman sachs, this is all what's alleged. nothing's been proven. this is what the sec says. the dealership has sold the one shiny new car. the car with all the bad parts, they shine it up. they make it look like the same car, and they sell it as if

fraud accusations against goldman sachs. it's a pleasure to be seeing you. >> i'm so leap to be here, dylan. >> here's my question for you -- do you believe that the goldman sachs fraud case, forget whether it has merit or not or what its outcome is. is indicative of the type of business practices that were common at merrill lynch? deutsche bank, ubs, lehman brothers, and the rest of goldman sachs, who were the firms that were the most aggressive with this type of trading and security in general? do you believe that there is, if we once we start pulling, we're going to see a lot more of this? >> this is certainly not an isolated example, dylan. i mean i think that some of these securities that were underwritten by all the firms that you mentioned, might be different in little nuanced ways. but what we're talking about is, yes, a really overarching effort to figure out a way to short the mortgage market. to bet against the mortgage market. not only for their customers in some cases, like mr. paulson, who was the hedge fund ma

we saw tons of options activity in goldman sachs. it was just over 800,000 open interest coming into today, and about halfway through the day we already saw about 400,000 options trading. it was about 220,000 or 230,000 call buyers to, you know, probably about 20% less put buyers. by about 1:00 in the afternoon. >> how does a spike in volatility change the way you approach using options to initiate a trade or protect yourself against it? are we expected to see next week volatility simmer down a bit so that's your opportunity to buy -- >> it could. i wouldn't be surprised one bit. because when the news comes out that's when everyone's in panic mode. that generally is going to start being reflected both in very rapidly escalating options prices and also the way that stocks behave. obviously, over time when people have the opportunity to try to sift through this information and figure out what it really means you're going to see that come in. you're going to see both the realized volatility, how much everything's -- >> that said, in the

. >> if i had a mortgage -- the likes goldman sachs sales it to ikb. they think they are being really smart. >> all along, i am starting to not be able to pay at some point. three years into it, i go from 2% to 12%. >> i cannot refinance and all of a sudden i default. >> we are sitting there watching this and betting that it will all collapsed. let me finish this paragraph. the paragraph -- >> don't say it is all too complicated, because it isn't. >> it is not because it is complicated, but i will read the rest of it and try to figure all this out. here is what i am getting at. the party against -it was at thi saw that, i said there was $180 billion from aig that subsequently went to bail out goldman sachs. >> yes, for vets. there were bets. what's in repulsive and been bernanke, why did the two of them -- milan >> >> because all of the wall street firms were on the other side of those bets. if aig did not pay off the debts, the firms would have seen the law spirit goldman sachs had lost on its debt -- the firms would have seen the loss. goldman sachs

should goldman sachs be prosecuted? i'm not sure.t. >>> is health care reform fiscally irresponsible? not quite sure. >>> should we torture terrorists for information if it makes us safer? not sure again. >>> is president obama doing a great job? i got to say, it is too early to tell. >>> should we legalize marriage? not sure. okay. i'd like to introduce you to a new media critter. i am donny deutsche. guess what. i will admit it. i'm just not sure about a lot of stuff. there, i said it. i think i'm a pretty smart guy. i built a big business. always full of opinions. let me say, there's just not a lot of stuff i'm sure about today. maybe if we could all come clean on that, we could take some of the steam out of the anger that's suffocating us. i'm going to wrote a new book, "sometimes wrong, often in doubt." maybe, just maybe, we can do a little anger management by admitting we've got some rubix cube problems here. there's the blue state of mind. there's the red state of mind. let me introduce you to purple. that's where i think most

this morning on john paulson's first comments since charges were filed against his trade with goldman sachs. he obviously was not a part of the charges, but he's going on the offense. and steve liesman just broke a big story on the charges against goldman. so, let's start with you, steve. >> erin, thanks very much. cnbc has learned that the government has testimony from a former top paulson official appearing to contradict a part of its own case, specifically, cnbc has reviewed documents that questions the government's contention in its case against goldman sachs that the wall street firm misled the insurance company aca about paulson & company's intentions to short the deal. the government's complaint reads "unbeknownst to aca at the time, paulson intended to effectively short the rmbs portfolio it helped select." however, cnbc has learned that a top paulson official, paolo pellegrini, told executives that they intended to short the portfolio. they asked him about a meeting with laura schwartz -- "did you tell her that you were

goldman sachs is going to fight this.ust point out something, they took $10 million in initial bailout money, right? on friday, the market took $12 billion away from goldman's market cap. the market is saying something here. they have really punished this company on friday. futures are expected to be lower again this morning. it has really rattled wall street. >> the second question is, would any regulation stop this and will this help with the obama administration trying to push the current -- >> the answer to the second part of that question is yes. >> christine, thanks so much. >> we do have a romans numeral but we'll get to that later as well. >>> we'll introduce you to a group of soldiers that announce their allegiance to the constitution is what is front and center, not necessarily their allegiance to the president. >> i think i know something about that story. >> you did the story. >> the oath keepers. and it's a group that founded itself on april 19th, which happens to be today. >> we look forward to seeing more a

think about goldman sachs and the goldman sachs says. goldman sachs is event. became a bank holding company in september 2008 as a way to save it from collapse. it has access to the fed discount window. if it's private equity investments do well, i can or should you they will make out like bandits. to use a technical term. [laughter] >> if it goes badly, whose problem is that? is a bank. it's a bank with access to the fed discount window. we do not let these banks fail. we cannot let them fail. and goldmans is okay, if that's your attitude, they give a much, we are no longer a bank. you became a bank in order to save you. they were an investment bank before, a rather loose not entirely accurate term but they were not regulate by the federal reserve. and it took a lot of risk and they were on the verge of failing. they say through no fault of their own. again in the book we beg to differ. if you let them out at this size, with these characteristics with this relationship to the rest of the financial system and they get into trouble again, you let them become a b