Audit Notes: Sorkin Hits Goldman, Agape at Capes, Preemption Doctrine

Andrew Ross Sorkin gets just about as close to saying “Goldman Sachs lied to Congress” as you’re going to see. And he becomes the first person to mention in the Times that Senator Levin wants to refer Goldman Sachs to the Justice Department for possible criminal prosecution.

The findings of the Congressional report are straightforward and damning.

The Senate subcommittee said it found the phrase “net short” some 3,400 times in documents from Goldman related to the mortgage market. For example, the company wrote in a letter to the Securities and Exchange Commission that “during most of 2007, we maintained a net short subprime position and therefore stood to benefit from declining prices in the mortgage market.” In September 2007, Goldman told employees that “we were overall net short the mortgage market and thus had very strong results.”

Now, compare that to a statement from the bank in 2010: “Goldman Sachs did not take a large directional ‘bet’ against the U.S. housing market.”

Reading those quotes back-to-back is the equivalent of hearing someone declaring it is raining when it is a sunny day with clear blue skies. It just doesn’t make sense.

But Sorkin ultimately misses the point when he says Goldman should boast about its housing trade. It’s obfuscating here is because that trade came at great expense to its own clients, whom, the Levin-Coburn Report makes clear, the company screwed.

— The Orlando Sentinel reported this weekend that a state jobs agency is spending $73,000 on a PR campaign to buck up the unemployed.

Hmm, right off you can tell that’s probably not the wisest use of strapped taxpayers’ money right now.

But it gets better:

Dubbed the “Cape-A-Bility Challenge,” a $73,000 public-relations campaign by Workforce Central Florida features a cartoon character named “Dr. Evil Unemployment” and includes handing out about 6,000 red superhero capes to jobless Central Floridians.

The campaign, revealed Saturday in a report in the Orlando Sentinel, was met with derision by many unemployed who questioned spending more than $14,200 on capes and $2,300 on foam cutouts of “Dr. Evil Unemployment.”

That’s immediately followed by this sentence, which is one of those when that old-fashioned, understated journalese really works:

They said the campaign’s tone risked minimizing the severity of the region’s labor problems.

— It’s nice to have Joe Nocera on the op-ed pages of The New York Times twice a week bringing a focus on business issues that had been largely absent there, (even if I disagree with his stances on things like how fracking for natural gas is awesome).

For instance, today he writes a column about the Office of the Comptroller of the Currency, the awful bank regulator that has done more to shield the banks from regulation for their bad behavior than to actually regulate them. Nocera puts it better:

Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.

He takes the OCC to task for its settlement with the big banks, many of whom committed or had agents who committed widespread fraud in the foreclosure scandal. And he draws an interesting analogy to the preemption doctrine the OCC used during the Bush administration to protect big banks from state regulators who wanted to rein in subprime lending abuses.

Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.

Good stuff.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,