The consistent stream of stories about disturbing behavior at Goldman Sachs is unbelievable to say the least. Is this the type of society we wish to embrace? One where financial elites can do whatever they want regardless of the impact to society? And, in a great bout of irony, use our money to create bets that cost us more money? Where is our government? Oh, I forgot. They created the legislative environment that allowed this mess to develop into disaster.
After making millions selling New Jersey bonds to investors, Wall Street giant Goldman Sachs told other wealthy clients they could profit by betting the Garden State may not be able to pay off its bonds as scheduled, according to a confidential presentation made two months ago.
The advice would cost state taxpayers if investors believe New Jersey bonds appear riskier than they actually are -- and force the state to pay higher interest rates on future bonds.
While not illegal, it is troubling Goldman Sachs almost simultaneously marketed New Jersey bonds to one set of investors, while suggesting to others they would be smart to buy insurance from the investment bank because those bonds may not be repaid, according to Geoffrey M. Heal, professor of public policy and business responsibility at Columbia University.
"That's not a good way to do business," he said. "They've got a conflict of interest and they're acting against the interest of their customers.
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