http://finance.yahoo.com/tech-ticker/goldman-greek-deal-%22completely-scandalous%22-...-and-legal-432750.html?tickers=GS,JPM,XLF,FAZ,SKF,FAS,C&sec=topStories&pos=9&asset=&ccode=
At Goldman Sachs these days, it must seem like you can't sneeze without causing a scandal. The latest controversy centers around currency swaps Goldman brokered for Greece back in 2002.
U.S. and EU regulators are probing the transactions, which critics say helped Greece hide the size of its deficits. Bloomberg reports Goldman made $1 billion underwriting Greek debt after the 2002 swap, which often wasn't disclosed to potential investors.
Regulators are further investigating whether Goldman also sought to take advantage of its knowledge of Greece's true financial status by betting on credit default swaps, which have risen in value amid concerns about Greece's ability to pay its debts. Congress will hold hearings on the matter, House Financial Services Chairman Barney Frank has declared.
The reality is "Goldman didn't break the law," says Martin Wolf, chief economics correspondent at The Financial Times. "People knew what they were doing and it wasn't a big deal...it was allowed." (EU regulators have claimed they only just learned of the swaps although it was profiled by Risk Magazine in 2003.)
What is "completely scandalous" is that the Goldman-Greece currency swap was legit under the rules of the day, Wolf says. "It's another indication of ways in which governments connived with the financial sector all over the world to do things they really shouldn't have allowed to happen
A debate could be made that governments just do what they are conditioned to do by "the banks". .
