WSJ’s (Soon CNBC’s) Kelly Advances the Goldman Story

Boy, losing Kate Kelly is a big blow to The Wall Street Journal.

She’s had a hand in a disproportionate number of the paper’s best stories during the crisis. Now she’s going to CNBC, which while not the proverbial “dark side” for print journalists, comes close. We trust she’ll class the joint up.

Meanwhile, the Journal loses one of its top two or three reporters, one who broke the awesome story on Jimmy Cayne smoking pot and playing bridge while his company burned), was way early—December 2007—on the Goldman Sachs playing both sides of the mortgage trade, and a great series on the fall of Bear Stearns, and took down New York Fed Chairman and Goldman board member Stephen Friedman for buying Goldman shares with non-public information—a huge conflict and potential insider trading violation.

Today, Kelly advances the Goldman Sachs story with a report on how a mortgage committee of a dozen senior executives approved the now-infamous Abacus CDOs with explicit knowledge of hedge-fund manager John Paulson’s involvement.

Just as interesting or more is that she calls Goldman (an Audit funder) out on a lie about its investment in Abacus. The bank has used the fact that it lost $90 million as exculpatory evidence. It said:

Goldman Sachs, itself, lost more than $90 million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that was designed to lose money.


But Goldman invested the money only because sales of the deal didn’t play out as planned, forcing Goldman to step up with its own money, people familiar with the matter say.

It’s become increasingly hard to take anything Goldman Sachs says at face value. They speak with forked tongue. It’s probably a tic when you play both sides of a situation as often as it does.

As for Kelly and the Journal, they’ve got the same good instincts the Times had on Sunday: Get into the C-suite. They advance the ball here, while exposing a misleading Goldman excuse.

Nicely done.

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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.