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Facebook executives concluded that the extra cash [from the Goldamn investment] wouldn’t hurt. They left the work of assembling the so-called special-purpose vehicle to Goldman, offering little input on the deal. The two companies signed an agreement and made plans to launch the private offering in January 2011.

The deal was sailing along when Goldman executives began worrying last week that the private offering could be deemed improper by regulators. [One] Goldman client who agreed to invest $2 million said his broker told him: “We don’t feel this is in your best interest with all the attention and issues around this.” The client said he wasn’t told during the conversation that Goldman had decided to block all U.S. investors from the deal.

One starts to think they really are smarter than the rest of us, then something like this comes out. Just to recap, Goldman’s relationship with regulators, and the federal government generally, has been less than utterly blissful for the past few years. Ditto, by the way, its relationship with the media. And yet the people at Goldman only began to realize last week that their proposed IPO-via-loophole–of Facebook–might tick off some people in Washington? They laid in too much cocoonage when they built 200 West Street. . . .