SEC's Charges of Fraud Against Goldman Sachs - Meaningful or Not?
“We certainly did not know the future of the residential housing market in the first half of 2007 anymore than we can predict the future of markets today,” Goldman wrote. “We also did not know whether the value of the instruments we sold would increase or decrease.”This is a statement made by GS in their recent Annual Report filed with the SEC and is - BS from GS. As with many of their public statements, they deny any wrongdoing, knowledge or participation. This is the same position they are taking now after the SEC announcement. Not surprising and expected. But the reality is - as I have been saying for almost three years now - THEY KNEW. And knowing makes their crimes premeditated and intentional. Not only criminally wrong but morally wrong as well.
In response to the charges filed by the SEC, Goldman referred to the SEC accusations as
“completely unfounded in law and fact”and said
they will “vigorously contest" the charges "and defend the firm and its reputation.” (emphasis added)This civil action by the SEC will do little to punish the accused. However, this action should open the door for many to investigate and pursue criminal charges not only here but abroad as well. (See, Germany, UK demand Goldman Sachs probe...Reuters). The Attorney General of Connecticut, in a television appearance, said that they will certainly begin looking into any criminal wrongdoing with the possibility of bringing formal charges if wrongdoing is found. Others around the country may do the same.
What does all of this mean now that the SEC has placed formal civil charges against GS? Probably not very much. Not much in that this being a civil case there can be no criminal penalties. Civil actions result in monetary fines and sanctions. The masterminds of "The Greatest Fraud in the History of The World" will never see a day of jail time and live out their lives in extreme luxury with their ill gotten obscene amounts of money.
This case may never see the inside of a court room. Typically cases like this are settled out of court with no admission of guilt or innocence.
I am reminded of the case against the President and other top executives of Fannie Mae who were found guilty of cooking the books - a felony crime for most anyone running a public company - but not for them (the privileged). They were simply slapped on the wrist with a fine and allowed to go away with all the millions in salaries they received while committing FRAUD. Isn't life great?
Don't hold your breath on this SEC charge of fraud against GS in our two tiered justice system. When all is said and done - in or out of court - the fines and sanctions will be meaningless. Yes, there may be an executive or two who will lose their job, but rest assured they will not be standing in the unemployment lines and applying for food stamps. Who ever said crime doesn't pay?
How did they know? A look back
The admissions of wrong doing (fraud) on Wall Street that helped cause the economic crisis has come from many people involved with the creation and sale of mortgage loan programs as well as those involved in the creation and sale of Mortgage Backed Securities (MBS) and Credit Default Swaps (CDS). I wrote about this in a recent post but let's quickly review some of what we all know as a result of insider reports.
- Rating agencies (Moody's, Fitch and S&P) gave false AAA ratings to these MBS packages without ever inspecting them. They were just automatically rubber stamped AAA. This was disclosed by a former exec at one of these agencies and aired on a network news program.
- Underwriting guidelines - as liberal as they became - were not followed and in fact were overlooked completely to approve and fund many loans. This information has been disclosed by many underwriters that worked for some of the major lenders/banks. I also know from first hand experience when my processing department found fraud in a deal, called the underwriter whose supervisor said he didn't care, "they approved the loan and were going to close it". FYI, I pulled the loan, refused to close it and reported it to State Regulators.
- The recent WAMU exec's admission of knowing there was fraud in a great majority of the loans they were underwriting and funding. They needed product (Mortgage Notes) to sell to Wall Street who had an endless pit of investors waiting to buy.
- All four of the major Wall Street firms (Goldman, Bear, Merrill and Lehman) were not only securitizers of these bond pools, they all also owned mortgage lenders that created the mortgage products and the underwriting guidelines. These wholly owned mortgage lenders of the top 4 Wall Street firms operated both on a wholesale level - selling their loan programs to brokers - and on a retail level - selling their loan programs direct to the public.
- Last but not at all least, I, as a mortgage broker, new the bubble was bursting and the market collapsing in March of 2007. I knew because suddenly programs were being eliminated, lenders were not closing certain loans and mortgage companies - wholesale and retail - were beginning to go out of business and closing their doors.
Property values were beginning to fall, home buyers were walking from their contracts as many realized they could not break even on their purchases for some time to come in the future. Indeed, 90 percent of our business dried up and mortgage company failures began to total in the hundreds.
Basically, as I have been saying for years now, if I knew - and I was at the bottom of the food chain - then surely the creators and enablers of the bubble had to know. Goldman Sachs, I contend, knew exactly what they were doing and I believe they were the key to the success and failure of the bubble. Why else - a last bullet point - would they have gone to AIG and ask them to insure (take bets on) the MBS packages to fail and convincing them to do so by not looking at any of the"pools" to see what their real worth and quality was. They Knew!
Can there be any true justice here?
Yes, there can. This is the WAKE UP AMERICA call we here at GS666 have been calling for. Whether this case is settled in or out of court matters not. What does matter is that it will and already has opened the eyes of others to look deeper into these actions. It has opened the door for law makers and prosecutors around the country - if not the world - to investigate, expose, criminally charge and bring to trial all those implicated in The Great Fraud - the largest fraud ever in the history of the world - resulting in The Greatest Transfer of Wealth known to mankind.
The public outrage against Goldman Sachs and their Wall Street cronies has been loud and clear. Now, the official door has been open by our look the other way government. All the outraged, victimized people of the world -can and should - now come together and demand that justice be served. "Together We Can Make A Difference".
Now is also the time for our major world media to begin doing their jobs of true, good old investigative reporting reminiscent of Watergate. I, for one, would offer my services in this type of an effort to expose the truth and bring the guilty to justice.
The truth must be known and justice served. The healing process for our economy and people cannot begin until it is. Let us not miss this opportunity.
With over 40% of the world's wealth destroyed and/or transferred to a handful of "elite criminals", millions of people are suffering as a result. We must once and for all stop this economic tyranny.
Goldman Sachs and their executives must be held accountable for their participation as must all of their accomplices (banks) in this world wide economic cartel. Break them up, put them out of business, the world would be a better place without these economic drug lords. Our financial system will survive contrary to the Too Big Too Fail philosophy preached by others involved in this scam like Bernanke, Paulson, Geithner and Rubin to name just a few.
This is bigger then Enron, Madoff and Michael Milkin put together and they were all found criminally guilty and the individual sentenced to jail.
I urge all Americans and victims worldwide to demand we put the JUST back into JUSTICE.