Less on the conflict, and more on the screwing-the-client side, the Times finds an excellent anecdote from a nonprofit hospital treasurer who got hosed by Goldman (an Audit funder) in the now-infamous auction-rate-securites market. Those are the instruments that banks like Goldman told clients were “safe as cash” but which shut down—creating huge losses and liquidity problems early in the crisis.

By mid-January 2008, U.P.M.C. was concerned about the viability of the market and asked Goldman if the hospital should get out. Stay the course, Goldman advised U.P.M.C. in a letter, a copy of which Mr. Heppenstall read to a reporter.

On Feb. 12, less than a month after that letter, Goldman withdrew from the market — the first Wall Street firm to do so, according to a Federal Reserve report. Other firms quickly followed suit.

With the market in disarray, the interest rates that U.P.M.C. and other issuers had to pay investors skyrocketed. Rather than pay the rates, U.P.M.C. decided to redeem the securities.

Although Goldman had fled the market, it refused to allow a redemption to proceed, Mr. Heppenstall said, warning that its contract with the hospital barred U.P.M.C. from buying back the securities for at least another month.

This is tremendous work by the Times.

Further Reading:

The Opening Bell on auction-rate securities
as the market collapsed in February 2008.

Goldman’s Forked Tongue: The bank talks out of both sides of its mouth.

Goldman Sachs Fraud Charges Are a Business-Press Win.

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 rc2538@columbia.edu.