Gretchen Morgenson, who covers the world financial markets for The New York Times, discusses the investigations into Goldman Sachs by the Securities and Exchange Commission, the Justice Department and a Senate subcommittee — and reflects on the role Goldman Sachs played in the financial crisis.
Goldman Sachs has been accused of defrauding investors by intentionally designing derivatives that Goldman Sachs knew would fail if and when the housing market collapsed — and then selling those derivatives to customers without telling them that these derivatives were designed to fail.
The SEC investigation hinges on whether Goldman should have disclosed more information to its customers, Morgenson says in an interview on Fresh Air.
"Goldman Sachs has strenuously denied that they have done anything wrong. In fact, they say, 'We didn't know the mortgage market was going to collapse and therefore, we could have been wrong. We were not in a position to know with certainty that it was going to collapse. But that's essentially the heart of the matter: Should they have disclosed to their customers who were buying this portfolio that, in fact, it had been almost rigged?" she says.
Listen to the interview here