The never-ending story known as the persecution of the CDS market has taken a truly incredible turn. After a lifetime’s worth of bitching and moaning from Washington about the opacity of the market, the Justice Department has decided to take aim at one of the few sources of CDS pricing data, Markit, for its diabolical role in the credit crisis. The conspiracy theory contends that Markit’s major shareholders (JPM, BAC, RBS, and GS) may have benefited from unfair access to price information through the portal. Of all the things to focus the witch hunt on, trying to determine whether or not single name traders at some of the largest players in the CDS market squeezed an extra half bp out of a counterparty who used only Markit quotes for their credit derivatives business is an interesting choice.
Credit Swaps Investigated by U.S. Justice Department [Bloomberg]

11:00 Music hold. Classical, with a hint of Lil Jon, which is LB’s fave, and has been getting tons of play in his Top 25.
11:01 Dane Holmes, head of investor relations welcomes you, invites everyone to help themselves to a hundo.
11:02 Reading of the press release
Let this be a lesson to you all: Goldman’s second quarter earnings “reflect the importance of diversifying.”
11:07 Real estate hurt, kinda bad.
11:12 Compensation expenses came out to $6.6 billion-ish; headcount was down 1 percent to 29,100. Each and every one of you are missed, but LB and his bitches gotta get paid.
Q&A
Guy Moszkowski, BAC, is up first, because he pays off the operators and is up first on every call: It seems your bid offers have improved, is that fair?
GS: They were flat-ish.
Glenn Schorr, UBS: You’ve been able to issue at tight spreads but not tight enough spreads.
GS: We’re not forced to issue debt if we don’t want to. We’ll do it at small amounts over time, we’ll get tighter as the world gets better. Don’t push us.
Glenn: Are you nervous about regulations and whatnot?
GS: No, you know we own every bitch’s ass in DC. You know that, boy.
Um, the next question was supposed to be from Meredith Whitney but it’s from some dude named Howard at Credit Suisse. What’s the hold up with Big Momma?
I miss Howie’s question, something about OTC derivatives, because I’m legitimately nervous/excited about what happened to the lady of the hour/what she’s got planned.
Big Momma is back, claiming the technical difficulty is that she had herself on mute which, I’m not sure who she thinks she’s dealing with, but we don’t buy for a second.
Meredith Whitney, Meredith Whitney Advisors: I initiated my first buy call in the history of Meredith Whitney Advisors yesterday, and I initiated it on your ass. How did that make you feel?
GS: It was good, uh, you know we always like people to like GS–
Whitney: NO– how did it make you feel? Did it move you? Did it groove you?
GS: Meredith, I’m not sure–
Whitney: Whatever, I know you liked it, next question. Did you get the signed headshot I sent you? Have you decided the best location to place it in the building? I’m thinking Lloyd’s office, or the main lobby. For those of you at home, here’s a free one. Print it out, paste it up. You’ll be the envy of all your friends and colleagues:

Mike Mayo, Calyon Securities: Can you quantify the change in backlogs from Q1 to Q2?
GS: It was down.
Chris Kotowski of Oppenheimer is trying to ask a question but someone on the Opp end of the call is cracking himself up and making it hard to hear. If this has anything to do with former colleague Mer Whit, you can all S-a-D.
Douglas Sipkin of Pali Capital (actually) wants to know when Goldman is moving into its new building, and if they need any boxes or bubble-wrap, which is better for moving bodies, cause he knows a guy. Apparently it’s going to be Q4 of this year, so plan to be busy that day because you can be sure they’re gonna ask.
11:50 Is L-Blanks thinking the same thing as us? That unless someone’s going to man up and let Max Waters take his place on the line it’s time to whip out the:

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CNBC reports that everyone’s favorite Ponzier is en route to North Carolina,* having spent the night in an Atlanta penitentiary. No word on what route his handlers are taking, but odds are they’ll be stopping off at a biker bar or two along the way, so if you happen to run into them let us know. As for Bernie’s new digs, and more specifically, when and how you’ll be allowed to visit him there, some helpful ground rules have been laid out here. Notable among them are guidelines for what’s considered appropriate attire, in case any of you (Ken Lewis) were planning on skanking it up.

*Officials would not confirm that Butner, NC is Ponzi-Boy’s final destination. Obviously it’s entirely possible they’re just trying to throw us off the trail, and that Big B could be half way to Fiji, or the Catskills, at this point..

The Representative from Massachusetts would prefer the ‘stimulus’ plan, positive connotations and all that jazz.

Also, he wasn’t for homeownership. I don’t know where you got that from. He was for affordability. And, gettin’ personal, BF says his BF, Jimmy, often doesn’t know whether to hug him or flip out on him, in case any (all) of you were wondering what it’s like to date Barney Frank.

Huge ass bonuses for all! Conference call at 11, press release from 85 Broad (PDF here):

NEW YORK, Jul 14, 2009 (BUSINESS WIRE)– The Goldman Sachs Group, Inc. today reported net revenues of $13.76 billion and net earnings of $3.44 billion for its second quarter ended June 26, 2009. Diluted earnings per common share were $4.93 compared with $4.58 for the second quarter ended May 30, 2008 and $3.39 for the first quarter ended March 27, 2009. Annualized return on average common shareholders’ equity (ROE) (1) was 23.0% for the second quarter of 2009 and 18.3% for the first half of 2009.
Excluding a one-time preferred dividend of $426 million related to the repurchase of the firm’s TARP preferred stock, diluted earnings per common share were $5.71 (2) for the second quarter of 2009 and annualized ROE was 23.8% (2) for the second quarter of 2009 and 19.2% (2) for the first half of 2009.

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Where The Hell Is Madoff Going To Live? (Bloomberg)
He’s in an Atlanta penitentiary right now, which Bloomberg seems to believe is permanent, while others are thinking it’s just a layover en route to North Carolina.
All Going For Goldman: Dick Bove (CNBC)
“We think it’ll get to $200 by the end of this year, and we think that’s just a weigh station on the way to an all time high of $250 by the end of next year.”
Goldman Executives Sold $700 million of stock (FT)
Do it, Maxine. GET ANGRY: “For the eight-month period for which figures are available, Goldman partners sold more than $691m in company stock, even as the firm expanded its public float from 395m to 503m shares in several capital raises.”
NY Probe May Have Stalled Rattner (NYP)
What’s this you say? SRat’s decision to step down might have had something to do with Andrew Cuomo’s investigation into some shady business on the part of the car czar, and his horrible taste in movies?
Corzine Expected To Pick Apprentice Winner For Lt. Governor (APP)
That’s right, Papa Bear JSC is probably going to name Randal Pinket, winner the fourth season of “The Apprentice” as his number two, with Donald Trump serving as head of grooming and fluffing for the state.
Judge Gives UBS and U.S. Time to Seek a Settlement (NYT)
Karina Byrne, a UBS spokeswoman, called the delay a “positive development” that provided an opportunity “to come to a potential resolution” which will, fingers cross, involve the Swiss going back to business as usual re: tax evasion.

BlackRock to Earn At Least $71 Million To Oversee Maiden Lane (Bloomberg)
Thank you, Bear Stearns and AIG! Couldn’t have done it without you.

$$$ Cody Willard: “Hey, all you idiot thieving liars at Goldman Sachs – maybe you paid back the $10 billion of welfare money you begged for from the TARP bailouts…but before you pay out a single dollar in bonuses to anybody at your welfare-subsidized institution, how about you pay my sister back the $12 billion in welfare that she sent you through AIG?
And hey, SEC, FINRA and the rest of you worthless regulators who pretend you’re protecting us from frauds like Madoff’s and Goldman Sachs….how about prosecuting Lloyd Blankfein for fraud or gross negligence? I mean, Blankfein signed off on documents that say his firm’s in great financial shape and fully meeting all their capital ratios….when in fact, they had so much junk fraudulently overvalued on their balance sheet that they were actually insolvent and so Blankfein had to go beg for welfare.” [MarketWatch]
$$$ Kanjorski Takes Aim at Pay-for-Ratings System [Dealbook]
$$$ French workers threaten to blow up plant [FT]
$$$ Darin DeMizio, Ex-Morgan Stanley Broker, Gets 38 Months for Kickbacks [Bloomberg]
$$$ The World’s Worst Doorman And Neighbors Watch, Ignore Brawl, At 63 Wall Street [The Awl]
$$$ Apollo to Raise $600 Million for Commercial REIT Fund [Bloomberg]
$$$ “U.S. officials are in advanced talks to aid CIT. The discussions are fluid. It remains unclear if a final deal can be brokered and, if so, how expansive it might be.” [WSJ]

CNBC reports that Ponzi-boy is headed south, bound for a Butner, North Carolina federal prison, where he’ll be greeted by approximately 3,400 new roommates (with some marquee names among them: Omar Abdel-Rahman of the WTC bombings, former Adelphia Communications CEO John Rigas, a naval officer who spied for Israel, and a Colombo crime boss). The news is sure to please Ken Lewis, who’s already clearing his schedule to make visits, but sadden Ruth, who was overheard telling a friend she was hoping the hubs would get locked up in Otisville, New York, during what sounds like the most depressing dinner to take place at the California Pizza Kitchen ever.
Update: Apparently Bernie’s headed for a nice little place, which prison experts are describing as a the crème de la crème of prison spreads.