Goldman Sachs Pay $550 Million Fine - Big Deal.

You may have heard about Goldman Sachs paying a $550 million fine to the Feds for fraud — on the condition they admit to no wrongdoing. For you and me, $550 million is a lot of money. For Goldman, that's three-days income.

You may also know why they were fined. It seems they were selling collateralized debt obligations (CDOs) as an asset to clients like big banks, pension funds, and governments.

At the same time, another client named Paulson, not related to Treasury Secretary Paulson, was creating another so-called "asset" betting against the CDOs. Here's the problem: Goldman allowed Paulson to select the so-called "assets" that were included in the CDOs he was betting against. Goldman allowed Paulson to literally stack the deck with losers.

Now, if this is confusing, let me simplify. It would be similar to you going to Las Vegas, walking up to the black jack table, and begin playing with only one other player at the table. For an hour, all you get are losing cards. Meanwhile, the other player is winning every hand. Later on you find out that the other player paid the dealer to deal you only losing cards.

How would you feel about being cheated and about the dealer? What if your losses were your life savings and your retirement? Would you be OK with the dealer paying three-days wages to the gambling commission and being allowed to continue working?

Personally, I think Goldman's $550 million fine is a joke. It hardly begins to reflect the pain these large banks have caused throughout the world. Think of the millions of people who've lost their homes, their jobs, their businesses, their savings, and their
retirement. $550 million is a drop in the bucket when compared to the trillions in debt taxpayers will have to pay back via higher taxes.

If the world knew that Las Vegas dealers were cheating, Las Vegas would close. But in the world of banking, crooked dealers are only fined, not shut down.

There is something very rotten going on at the highest echelons of global financial power. This is why I'm an advocate for financial education so that you can protect yourself from crooked dealers.

Source: RichDad