Obama and the 'savvy' bankers

In an interview, the US president described the Goldman Sachs CEO as 'savvy'. So how did he and his crew use their wisdom?

Dean Baker
Monday 15 February 2010 21.30 GMT

Last week, when President Obama was asked about the $9m dollar bonus for Goldman Sachsdescribed Blankfein as a savvy businessman, adding that Americans don't begrudge people being rewarded for success. While the White House later qualified Obama's comment about Blankfein and his fellow bank executives, it's worth examining more closely some of the ways in which Blankfein and the Goldman gang were "savvy". CEO Lloyd Blankfein, he

Perhaps the Goldman gang's best claim to savvy was in buying up hundreds of billions of dollars of mortgages and packaging them into mortgage backed securities, and more complex derivative instruments, and selling them all over the world. Blankfein and Goldman earned tens of billions of dollars on these deals. The great trick was that many of the loans put into these securities were issued by banks filling in phony information so that borrowers could get loans that they would not be able to repay. But this was not Goldman's concern. They made money on the packaging and the selling of the securities.