|Goldman Sachs President Gary Cohn|
NEW YORK ( TheStreet) -- You know how when an argument drags on for a while, you sometimes forget what you're arguing about? Sometimes I feel that's how it is with the case of Goldman Sachs ( GS)versus America.
That's why it was hard to get too excited about watching Goldman President Gary Cohn's appearance before the Financial Crisis Inquiry Commission this week to explain his firm's trades with AIG ( AIG). What could possibly be asked that hadn't been asked already? What could Cohn possibly say that would provide any new insight into these absurdly complex transactions? And is that even the goal -- to provide insight into these deals? Or is it to figure out a way to hold Goldman -- or someone, or something -- responsible for the weak state of our economy? While in general I am in favor of greater, rather than less, disclosure, and I am all for holding the feet of rich and powerful people to the fire, I am not sure that digging into these transactions with the idea that they hold some key to Goldman's guilt or innocence is a fruitful exercise any longer. Still, it is hard to fault Erik Shatzker of Bloomberg for doing his job. He brought his cameraman down to Washington and got an interview with Cohn this week, and dutifully asked the kind of tough-but-respectful questions one expects of a high-level mainstream newsman. I have to say, though, watching the back and forth, that I'd much rather see Sacha Baron Cohen or possibly Jon Stewart interview Cohn or, more appropriately, Goldman CEO Lloyd Blankfein. Only then might we begin to get at larger questions that are ultimately more important that the ins and outs of what might the value of this collateral have been at such and such time, or how was this collateralized debt obligation different from that highly similar one. But the Shatzker-Cohn interview is what we have to work with at the moment, and I was struck by the opening exchange. The question of the moment, Shatzker seems to have decided, is Did Goldman Profit By Betting Against Deals It Helped Create? And so Shatzker, in his opening question, asks Cohn about a statement he made before the Commission, that, in Shatzker's phrasing, "most of the
collateralized debt obligation/credit default swap business that Goldman Sachs did with AIG was to facilitate client transactions."
In other words, Cohn was repeating a frequent argument of Goldman's: that it is by and large a go-between, in business to help clients, rather than place bets on its own behalf. But Shatzker seizes upon Cohn's use of the word "most." Does that mean some of the AIG CDO/CDS deals were instances of Goldman trading for its own profit, Shatzker wants to know? "I think the vast, vast majority of it, I can directly trace back to specific client transactions," Cohn replies. "There may be a few transactions in there that I haven't been 100% able to translate back to individual client transactions, so just to make sure, I modified it as 'some.'" Got that? He doesn't know! Gary Cohn, the number two executive at Goldman Sachs, and possibly the person with a more intimate knowledge of Goldman Sachs's trading businesses than anyone in the world, doesn't know if the AIG deals were entirely client-driven, or only mostly so. If this doesn't make it plain that our financial system has grown too complex for its own good, I'm not sure what does. As for how we put the genie back in the bottle, I'm not sure Aristotle, if he were alive today, could answer that one, so I wouldn't expect too much from the Dodd-Frank Wall Street Reform and Consumer Protection Act. -- Written by Dan Freed in New York.