The remarkable thing is that people still do business with Goldman. Why didn't the CDO debacle undermine people's trust in that firm? Isn't this a complete failure of the market?
The problem is that depending on banks roles, they are supposed to be trustworthy or not. In arms length negotiations, the banks aren't even supposed to have your interests at stake. But if they are managing your money, they are supposed to have a fiduciary duty to you.
Brokers don't owe you shit other than not lying to or defrauding you. But people don't realize this. Brokers are salesmen, pure and simple.
Worse, now brokers often have bullshit titles that hide their nature. For example, financial advisers sound like someone who has a fiduciary duty to you, but really they are just brokers. Trying to sell you on investments.
You should treat anyone who doesn't have an explicit fiduciary duty to you as you would a car salesman.
Partly because this wasn't Goldman specific behaviour. Those participating were systemically important financial institutions. In 2008, credit markets/money markets completely froze up and banks wouldn't lend to one another, precisely because trust had been eroded. No one had a clear view on the extent to which financial counterparties were exposed.
Brokers don't owe you shit other than not lying to or defrauding you. But people don't realize this. Brokers are salesmen, pure and simple.
Worse, now brokers often have bullshit titles that hide their nature. For example, financial advisers sound like someone who has a fiduciary duty to you, but really they are just brokers. Trying to sell you on investments.
You should treat anyone who doesn't have an explicit fiduciary duty to you as you would a car salesman.