The fallout from the SEC’s investigation of Goldman Sachs and one of its VPs, Fabrice Tourre, has already begun to settle.
The winners and losers of the case are already obvious, though more may surface and investigators expand their reviews in the coming months.
But for now, we’ve got a pretty clear idea of who has come out the better.
As the scandal's key name, Fabrice Tourre is the target of the bulk of the SEC's charges. His e-mails, where he called himself 'The Fabulous Fab,' make him look horrible, and seem to implicate him in misleading buyers of the ABACUS deal like ABN Amro and German bank IKB.
The SEC has e-mails from Tourre telling investors that a CDO manager had selected the bonds inside ABACUS. Tourre knew that investor John Paulson had selected some of the bonds and that he was, in fact, short ABACUS. While Tourre revealed to ACA, the structurer for the deal, that Paulson was involved, he did not make this fact public to other investors.
Goldman Sachs is the big name defendant in the SEC's charges. They are being charged for misleading clients buying into the ABACUS deal by not revealing to them the role of Paulson in ACA's structuring arrangements.
The case against Goldman Sachs is considerably more weak than the case against Fabrice Tourre, as its difficult to prove the firm actively sought to deny the public buyers of the ABACUS deal information on its counterparties.
President Obama's financial reform push has just received a major shot in the arm.
Its unlikely Republicans will be able to convince the American public they are on their side in the fight to derail Senator Dodd's bill, when Dodd's party is now actively prosecuting a major bank.
Republicans have already got themselves in a kerfuffle this weekend, with their too big to fail strategy not seeming wholly honest. The Goldman charges fallout seems unlikely to help their cause.
The Republican Party's movement against financial reform looks a likely loser in the fallout.
The key argument of the GOP has been that the Dodd bill fails to fight too big to fail. But the reality is the party's tightening with Wall Street has been public, perhaps too public for them to risk standing up to the democrats' legislation in an election year.
ABN Amro bought ABACUS and lost when the mortgage bonds inside went bad (because the borrowers were unable to pay).
ABN had assumed the credit risk associated with some of ABACUS based on information sent to it from Tourre. Essentially, ABN were long ABACUS based on not all of the information available to Tourre. RBS, which bought part of ABN Amro, may be able to sue Goldman and make some of their money back.
Paolo Pellegrini, John Paulson's former right-hand man at Paulson and Co., is the source for the SEC's information on the case.
Pellegrini was told by his boss, Paulson, to speak to the SEC. So it wasn't as if he crossed his boss.
Even though Pellegrini didn't choose to be honest, he still looks better than his former employer.
AIG could potentially jump on the ABN Amro and IKB bandwagon and strike back at Goldman for misrepresentation of some of the deals they insured.
Government officials are likely to support this initiative, knowing full well how much was spent bailing out the insurance-turned-financial product giant.
Paulson looks bad because he structured the ABACUS deal to his liking and his name is getting slammed in the press.
There's no way he will get in any trouble for this though, because he had no obligation to tell the people on the other side of his trade, 'Hey! I selected some of the mortgage bonds in that CDO you just bought, and I'm about to short it.'
IKB is in a similar position to ABN. They were invested in ABACUS and may have a case against Goldman that they were misled into going long on the CDO.
Essentially, IKB went long ABACUS based on not all of the information available to Tourre. They might have a case against Goldman.
Goldman CEO Lloyd Blankfein is sure to lose over this, and the centre of that loss will be his company's pledge that they don't bet against their own clients.
Goldman bet against Paulson and Co. on the ABACUS deal, indicating that the company did take positions against its own clients.
Blankfein may have a credibility gap to deal with.
JP Morgan and Jamie Dimon come out looking great in this, so long as they don't get investigated for something similar.
In the zero sum game of banking competition, Goldman Sachs lost the day and JP Morgan won.
And, further from that, Jamie Dimon beat his rival Lloyd Blankfein.
Deutsche Bank is being accused of similar activity to Goldman Sachs. The German bank's sizable business in structuring CDOs make it a prime target for U.S. investigators, who are now broadening their search.
The SEC's case might not look complete against Goldman Sachs, but the SEC got a case through against Goldman, and its sure to help their institutional goals of expanding regulation.
It was also revealed through a damning report that the SEC failed to charge ponzi schemer R. Allen Stanford in a timely manner, even though they knew of his corrupt financial dealings. The SEC effectively covered up that Friday news dump with the Goldman charges.
New York Times reporter Gretchen Morgenson has come out the winner in the world of business journalists, breaking the Goldman story and beating the Wall Street Journal for her employer.
Her NYTimes.com rival, Andrew Ross Sorkin, is even getting a shellacking by the star reporter for his support of U.S. Treasury positivity on the bailout bill.
Louise Story worked with Gretchen Morgenson on breaking the Goldman Sachs charges story.
She helped to push her paper ahead of the Wall Street Journal on what's quickly become the biggest story of the moment.
Morgenson is also taking advantage of the opportunity to attack her NYTimes.com rival, Andrew Ross Sorkin.
She's giving him a shellacking for his support of U.S. Treasury positivity on the bailout, but he's surely smarting from not breaking the story himself.
The Wall Street Journal was nowhere on this story, significantly behind the curve and letting their chosen arch-rivals, The New York Times, win the day.
Merrill Lynch, and its parent company Bank of America, are now on the line for their involvement in CDO structuring transactions that may have mimicked those done by Goldman Sachs.
The firm is now sure to see increased pressure, and might be under more duress than Deutsche Bank due to its position in the public discontent over the U.S. banking bailout.
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