Goldman Sachs is the only firm so far to face SEC charges for structuring CDOs that allowed customers to bet for and against the housing market, but the practice was widespread, reports Bloomberg: "More than half a dozen of the world's biggest banks underwrote CDOs involving hedge-fund firms with bets against mortgage bonds, including Citigroup, UBS, Bank of America, JPMorgan Chase & Co, Wells Fargo & Co.'s Wachovia Corp. unit, Deutsche Bank AG and Credit Agricole SA, according to data compiled by Bloomberg."

Michael Barone's latest column:

Seeing our political divisions as a battle between the culture of dependence and the culture of independence helps to make sense of the divisions seen in the 2008 election. Barack Obama carried voters with incomes under $50,000 and those with incomes over $200,000, and lost those with incomes in between. He won large margins from those who never graduated from high school and from those with graduate school degrees, and barely exceeded 50 percent among those in between.

The top-and-bottom Obama coalition was in effect a coalition of those dependent on government transfers and benefits and those in what David Brooks calls "the educated class," who administer or believe that their kind of people administer those transactions. They are the natural constituency for the culture of dependence.

The director of enforcement at the SEC, Robert Khuzami, spent from 2002 to 2009 as a top in-house lawyer at Deutsche Bank, according to his SEC biography. The Wall Street Journal's Gregory Zuckerman, in his book on John Paulson, The Greatest Trade Ever, reports that when Mr. Paulson approached banks with the idea of creating CDOs to bet against, Bear Stearns turned him down. Writes Mr. Zuckerman: "Other bankers, including those at Deutsche Bank and Goldman Sachs, didn't see anything wrong with Mr. Paulson's request and agreed to work with his team."

Some additional links may be of interest for readers following the charges that the Securities and Exchange Commission has filed against Goldman Sachs and "Fabulous" Fabrice Tourre.

Goldman has put out a lengthier press release giving its side of the story, including the claim that while Goldman made a $15 million fee on the deal, it also "lost more than $90 million." The release also emphasizes that those who took the long side of this trade weren't a bunch of naifs: "IKB, a large German Bank and sophisticated CDO market participant and ACA Capital Management, the two investors, were provided extensive information about the underlying mortgage securities. The risk associated with the securities was known to these investors, who were among the most sophisticated mortgage investors in the world. These investors also understood that a synthetic CDO transaction necessarily included both a long and short side."

Leo Hindery Jr., last noticed here for penning an op-ed piece in the Financial Times headlined, "Obama Must Act to Curb Executive Greed," recently surfaced as a figure in the dealings of the New York State pension fund that are being investigated by the New York State attorney general. The New York Times article is dense to the point of being difficult to penetrate, but here are a few highlights: "The state pension fund increased its investment in Intermedia in early 2007, shortly after Mr. DiNapoli, a former assemblyman, was chosen by the Legislature to replace Mr. Hevesi. The increase came after a meeting between Mr. DiNapoli and Intermedia's chief executive, Leo Hindery Jr., that was arranged by Global and Roberto Ramirez, an executive at Mirram Group and a prominent former assemblyman."

And:

Was what Goldman did with Paulson & Co. on the Abacus synthetic CDO that is the subject of the SEC complaint all that different from what Merrill Lynch and JP Morgan Chase did with the Magnetar hedge fund on CDOs called Norma and Squared? And at a certain point, does an industry practice become so common that it's ordinary and customary in the trade, so it's a little weird for a regulator to retrospectively call it fraud?

Propublica.org has a very good story about how lobbyists and lawmakers were fundraising in the luxury boxes of the Verizon Center in Washington during two Bruce Springsteen concerts. Some of the congressmen seem to have gotten the luxury boxes at below market rates. Both Republicans and Democrats were involved.

Two more updates regarding the SEC case against Goldman Sachs and Fabrice Tourre, which we commented on earlier here and here. First, Reuters has a statement from Goldman: "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation."

Second, a reader observes that, as a general matter, it's not entirely surprising that the SEC would charge Goldman but not John Paulson or Paulson and Co., which paid Goldman to do what it did. The SEC is in a certain way bought into the short-seller's view of the world as one full of scams waiting to be exposed or punctured, and the shorts have for the most part been brilliant at using the SEC, the press, and even the ratings agencies (which can be overly bearish as well as overly bullish) to advance their interests.

A FutureOfCapitalism.com reader writes in response to today's annnouncement of SEC charges against Goldman Sachs to suggest that Goldman is a useful scapegoat for the financial crisis. It's easier for the Obama administration to blame Goldman in part because it's harder to blame the Federal Reserve (Mr. Obama retained Chairman Bernanke and promoted NY Fed president Timothy Geithner to Treasury secretary), or to go after a firm, like Bank of America or Citi, that has a lot of voters as customers, or one like Deutsche Bank that is closely linked to a foreign government. The other thing the SEC charge could do is help weaken Goldman's position as it tries to lobby for its interests in the financial "reform" legislation. The SEC charge could also soften Goldman up enough that it could open a door for Treasury, or AIG, or the Fed, to try to claw back from Goldman through some kind of retroactive haircut some of the more than $10 billion it took as an AIG counterparty.

The Securities and Exchange Commission securities fraud complaint against Goldman Sachs and Fabrice Tourre makes for some fascinating reading. In essence, it says that Mr. Tourre, a Goldman employee who is now 31, back in 2007 helped John Paulson's hedge fund set up a "synthetic collateralized debt obligation" so that Mr. Paulson's hedge fund could short it -- and then went out and sold the long side of the security to other investors without adequately disclosing that the whole security had been designed with Mr. Paulson's cooperation for Mr. Paulson to short.

Says the complaint: "GS & Co and Tourre knew that it would be difficult, if not impossible, to place the liabilities of a synthetic CDO if they disclosed to investors that a short investor, such as Paulson, played a significant role in the collateral selection process."

From a New York Times article on Google's earnings announcement yesterday:

The company topped published forecasts on Thursday, reporting that its net income in the first quarter jumped more than 37 percent from the recession-mired quarter a year ago. Sales grew 23 percent from the period a year earlier.

But the stock was down nearly 5 percent in after-hours trading because the results were lower than the "whisper number" of analysts, the unpublished estimate that some analysts give clients....

On average, Wall Street analysts surveyed by Thomson Reuters expected Google to report profit, excluding items like the cost of stock options, of $6.60 a share and net revenue of $4.95 billion. The per-share whisper number was about 15 cents higher, according to whispernumber.com.

The White House has posted President Obama's tax return (pdf) for 2009 on its Web site. Mr. Obama collected $317 in interest from an account at "JP Morgan," suggesting that he hasn't (or hadn't at the beginning of 2009) followed the advice of the "move your money" crowd to get out of the big bailed-out banks and move his money to a smaller community bank or credit union. It's also the case that while Mr. Obama is calling for increased taxes on "the rich" he did what he could to minimize his own tax bill, using strategies such as investing in tax-exempt government bonds, giving cash gifts to his children (who are taxed at lower rates than he is), and contributing to a tax-exempt retirement account. He also keeps a mortgage on his house (leverage!) and takes the home mortage tax deduction, even though if he wanted to he could certainly afford to pay the mortgage off.

Economist and television personality Larry Kudlow has a good column on the Tea Party's "Contract From America," which focuses on the Constitution and on economic issues: "What's so significant to me about this tea-party Contract from America is the strong emphasis on constitutional limits and restraints on legislation, spending, taxing, and government control of the economy. Undoubtedly, the emphasis is there because no one trusts Washington."

The crowd of more than 1,000 that turned out for a Tax Day Tea Party in New York had the last laugh on the smattering of left-wing counterprotesters accusing them of racism.

"We're supposed to be a bunch of racists. The guy in charge is an African American," said KT McFarland, a Nixon, Ford, and Reagan administration official who ran for Senate in New York as a Republican in 2006. She was referring to the Tea Party's organizer, David Webb.

In case the audience missed the point when Ms. McFarland made it, Mr. Webb, a radio host, reiterated it later during the rally, which lasted from 7 p.m. to 9 p.m. and took place on 8^th Avenue just south of the Farley Post Office where taxpayers were filing their returns. "There are black Republicans and I am one of them," Mr. Webb announced.

The event did convey other themes besides "we're not racists."

Philadelphia – More than 150 marked Tax Day here with a "Tea Party" invoking the principles of the American Revolution to express dismay at the growth of government in Washington.

The lunchtime rally had a strong focus on transferring the Tea Party rally energy into electoral activism.

Waving yellow "Don't Tread on Me" flags and carrying signs that said "Taxed Enough Already," "Keep American Exceptional Not European" and "Socialism: Your Tax Dollars at Work for Those Who Don't," demonstrators gathered at Love Park and heard speakers urge them to get more involved in politics.

"Things will not get better unless you get involved," the Pennsylvania state coordinator of the Tea Party Patriots, Diana Reimer, told the crowd. "Join a group. If you're not registered to vote, register."