Goldman Gets Raked Over the Coals
If you watched the Daily Show or Colbert Report tonight, or any of the Late Night shows, you saw a handful of US Senators berating some bankers. Executives at Goldman Sachs Group had to sit through a hell of a tongue lashing on Tuesday. Worse yet, it was broadcast for all to see and covered by virtually every news show during the day and night. The Senators were essentially looking for an admittance from the banking company that they had acted incorrectly…
During a full day of grilling executives on the investment bank’s high-risk mortgage business, members of the Senate Permanent Subcommittee on Investigations prodded and provoked.
But they couldn’t persuade current or former Goldman executives to say that their business was irresponsible or that it helped push the country into recession.
“I heard nothing today that makes me think anything went wrong,” said Goldman Chief Executive Lloyd Blankfein when asked about transactions that raised hackles among senators.
“Regret to me means something you feel you did wrong—I don’t have that,” said Daniel Sparks, former head of Goldman’s mortgage department.
“Which actions do you think I took that I’m not taking responsibility for?” Joshua Birnbaum, a former Goldman managing director, shot back at one senator.
I’d expect Goldman Sachs executives to get quite a bit more grilling over the next couple of weeks, even if it doesn’t come from Senators anymore, but from the media or their banking competitors.
Obama Spokesman on VAT Tax: Not Under Consideration
This is a business blog, so I do my best to avoid talk of politics. The lone exception to that is when the news seriously effects the future of business in America and worldwide. This is one of those few cases–but I will offer no ideological or partisan commentary whatsoever.
President Obama is not considering any sort of Value Added Tax, his spokesman said today.The Value Added Tax — a form of sales tax that is assessed at each stage of manufacture and distribution — has been much discussed since White House outside adviser Paul Volcker raised the topic recently.
But “this is not something the president has proposed, nor is it under consideration,” spokesman Robert Gibbs said.
A VAT tax is essentially a sales tax and certainly would have an effect on business, for better or for worse. It should be interesting to see what the business sector says about the idea if it IS under consideration.
Toyota in Europe
The iconic Prius is one of Toyota’s best-selling cars in Europe, where Toyota is not much of a factor in the automobile industry. The one foothold Toyota had in environmentally-conscious Europe, however, is suffering from a recall. Some 50,000 vehicles will be recalled–the Prius is part of a global recall by Toyota in order to modify the anti-lock brake system.
Toyota on Jan. 29 issued another much bigger recall in Europe for eight models that have a faulty accelerator, affecting up to 1.8 million cars, — but that action lagged one for the same issue in the United States by a week.
The Italian consumer group Codacons is alertly monitoring to Toyota’s response — and has a new tool that may help it respond if they find it is lacking. Since Jan. 1, Italians can join in class action suits for the first time, thanks to new legislation.
Toyota has a worldwide reputation to uphold and this isn’t going to help things at all. Even in Europe, where Toyota barely had a toe-hold, their reputation is going to suffer irreparable damage.
Throwing Punches
While it might seem to be a political consideration, politics and business are often directly related–especially as it concerns institutions like the Federal Reserve. This is the Central Bank in the United States, which leverages interest rates for the U.S. Government.
Ben Bernanke has been the chairman of the Federal Reserve, in charge of its actions, over the past couple of years and has been both criticized and praised by politicians for his efforts. However, Ben Bernanke has been under fire since the start of the economic recession last year.
Senator Bunning (R-KY), who is retiring in 2010, threw a parting punch at chairman Bernanke when he used a procedural move to delay Bernanke confirmation in the Senate today. Bunning is, then, slowing the process of confirmation. This could have broad ramifications for the business world, who is effected by the Federal Reserve’s leadership.