I don't know if they broke any law, my problem is with their morality. They understood the (corrupt) needs of the Greek politicians (avoid structural reforms and hide the resulting budget deficit for EU partners) and created a product specifically for that. This product was bad for everyone, especially the Greek people. The only one benefitting was GS themselves.
GS seem to have no problem screwing an entire population to make some profit. They don't care that the Greek or EU people ultimately need to pay for it.
This is a product created at the request of the (theoretically) democratically elected government of the Greek people. Sometimes clients ask for silly things, but the customer is always right, no? Nobody is suggesting that GS misrepresented the swap to Greece. What should they have done? Gone around the country asking random people in the street what they thought of the deal? That would be an awkward requirement to impose on companies seeking government business. (Should Lockheed cancel the JSF because the people probably don't need it or want it?)
No indeed! I'm convinced (and was taught in Technical University) that you always have responsibility yourself. Bad things [1] happen if you do anything someone asks of you / pays you for.
GS isn't responsible for Greece's accounting/auditing, are they? They sold Greece a swap. Greece elected not to declare it as debt. It's not like GS has the power to force Greece to carry the debt on their books.
It might not be the case for Greece as I think accounting standards and regulations do not apply to states. But if that was for a company, I am pretty sure that structuring a transaction off-market with the intent to help a client hide its debt to the market would land a banker in jail.
I haven't seen the terms but I believe it is a simple cross currency swap. The problem being less the complexity than the off marketness. I believe that most accounting standards make you realise a loss or a liability if you enter into a significantly off market transaction.
Yes their leg was off-marketed.
At the time, ESA 1995 allowed this kind of transaction (actually most euro countries lobbied for looser rules on swaps as every major treasury was employing CCS (France, Germany and Italy to name a few, at the time those countries were running budget deficits hence they were in no position to argue for fiscal conservatism). Eurostat knew, even if they didn't (which is impossible as those transactions were reported) they could have if they read Risk Magazine.
Also, Goldman was just a piece of the puzzle, most deals were between Greek banks.
Seriously, they did their job, and in fact it' still business as usual (you'd think relationships went sour otherwise)
Jurisdiction is just a technicality. Let's set "Team America World Police" on the case!
To be fair, Americans aren't the only ones that assume US laws apply everywhere. I had a friend in the British Army military police and he said a few times he had squaddies say something to the effect of "I know my rights, I'm pleading the Fifth",'as if the fifth amendment of the US constitution counts for much in UK military justice. That's the power of Holywood for you.
Did the Fed bail out numerous foreign banks to prevent a largely US-engineered derivatives bomb from blowing up the planet? GS is doing the financial equivalent of selling plutonium in the Middle East, financing the purchases, and then hedging against their own plutonium customers with more derivatives.
