The following article in Bloomberg quotes Professor Robert Hillman saying about Goldman Sachs, "how much pain they're going to have to endure with the public spotlight for these revelations...." Well, we should remind ourselves that the real pain lies with the investors who lost their savings and pensions and with the homeowners who were foreclosed on. These are the people who don't have millions of dollars in bonuses to assuage their pain!
I'll save my jubilation for justice when the first GS executive is prosecuted for fraud and jailed rather than fined.
Goldman Probed by U. S. Agencies After Senate Refers Mortgage-Bond Findings
By Phil Mattingly, Robert Schmidt and Justin Blum - Bloomberg
U.S. senators formally referred to the Justice Department and the Securities and Exchange Commission an investigative report that found Goldman Sachs Group Inc. (GS) misled clients about mortgage-linked securities.
Senators Carl Levin of Michigan, the Democratic chairman of the Permanent Subcommittee on Investigations, Tom Coburn of Oklahoma, the senior Republican, signed a letter asking the agencies to examine the panel’s report, Levin said in an interview yesterday. The results of the investigation, made public by the committee April 13, lay much of the blame for the credit crisis on Wall Street banks that earned billions by enticing clients to buy the risky bond deals.
“If something comes up that needs to be reviewed by some agency, it gets referred,” said Levin. “That’s the way we do it.”
The scrutiny is a setback for Goldman Sachs, which hired lawyers, lobbyists and public relations specialists to monitor the two-year Senate probe and tamp down any controversy that arose from the subcommittee’s conclusions.
John Hart, Coburn’s spokesman, did not respond to a request for comment. SEC spokesman John Nester declined to comment.
Levin said in the interview that the referral sends the entire report, rather than specific facts, to the agencies. The Senate inquiry also examined the role of credit-rating firms in the meltdown, lax oversight by regulators and the decline in lending standards at banks including Washington Mutual Inc. that fueled the mortgage bubble.
Top of List
A formal referral from the Senate is “much more than a symbolic gesture” because it would prompt an agency to put the matter “at the top of its list,” said Robert Hillman, a professor at the University of California, Davis, School of Law.
For Goldman Sachs, “the question is how much pain they’re going to have to endure with the public spotlight for these revelations, and that depends in part how long the government’s willing to drag this out,” said James Cox, a securities law professor at Duke University School of Law.
Still, Cox said he is “very skeptical” that the examinations by the agencies will ultimately lead to new claims against Goldman Sachs, which last year paid $550 million to settle SEC claims related to its marketing of the complex securities known as collateralized debt obligations.
Attorney General Eric Holder, testifying before the House Judiciary Committee yesterday, confirmed that his department is scrutinizing the report. Two people briefed on the matter confirmed that the SEC enforcement division is also studying it.
Holder, in his comments, didn’t offer any specifics though he did single out the New York-based bank in his remarks.
“The department is looking right now at the report prepared by Senator Levin’s subcommittee that deals with Goldman Sachs,” Holder said.
When the report was released, Levin said he wanted the Justice Department and the SEC to examine whether Goldman Sachs violated the law by misleading clients who bought CDOs without knowing the firm would benefit if they fell in value.
Levin also said at the time that federal prosecutors should review whether to bring perjury charges against Goldman Sachs Chairman and Chief Executive Officer Lloyd Blankfein and other current and former employees who testified to Congress last year. Levin said they denied under oath that Goldman Sachs took a financial position against the mortgage market solely for its own profit, statements the senator said were untrue.
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