If Goldman (GS) - Get Report owned a piece of Abacus (the mortgage product at the center of the SEC's fraud charges), it is hard for me to believe this case is as open-and-shut as the government is making it.
Yet that is my understanding of the situation. In other words, what is Exhibit A against the government's case? That Goldman believed in the paper itself.
I also think that there is simply an important issue here that the government is leaving out. Goldman does not sell washing machines. They do not sell vacuum cleaners. They sell pieces of paper that are fully disclosed, and you can go long or short them based on the info. There is no guarantee. There never has been.
These are sophisticated clients. They have the ability to look over the material they are shorting or buying. The information is available. They have the ability to do more due diligence than just asking the rating agency.
I think this is very important to consider: if Goldman owned a piece of the paper, as I understand to be the case, and if Goldman did not have discretion over the German bank that bought the paper, and if
didn't pick knowingly fraudulent pieces of paper that Goldman was in on, I just don't think the case is a great one.
But it's a terrific excuse to sell.
At the time of publication, Cramer was long Goldman Sachs.
Jim Cramer, co-founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he co-founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.