God's work

Last year Lloyd Blankfein, Goldman Sachs' chair and chief executive, stated that the bank does "God's work". We think that the bank, like most businesses, exists to make money, not to serve God. If a bank's profitable activities are a worthy service to the community then so much the better.

In the case of Goldman Sachs, however, the US Securities and Exchange Commission is alleging the most disgraceful fraud. The SEC is unhappy about Goldman Sachs' role in devising and selling a collateralised debt obligation (CDO) by the name of Abacus 2007-ACI. It is way beyond the scope of this blog to try and describe how this CDO functioned. For that we refer you to Robert Peston's excellent blog post on BBC News.

At best Abacus2007-ACI was invented as a way of making a handsome profit for Goldman Sachs' hedge fund client at the expense of another bank, ABN Amro in this case. At worst this was a criminal deception. The difference lies only in the highly technical rules governing the marketing and sale of such financial instruments. Either way we would prefer to think that God did not have a hand in this.

The most disappointing aspect of this whole tawdry business is that ABN was bought by Royal Bank of Scotland which, in turn, is now substantially owned by British taxpayers like the Accounting and Bookkeeping College and most of its students. If the money that was lost on Abacus2007-ACI was now returned to the British people then that would truly be God's work.