Euphemistic descriptors that do not instill confidence in justice ever being brought to bear on Goldman Sachs will become commonplace because regulators prefer not to use "fraud" or "illegal." Why is that? Instead we have "formal enforcement action" by the Federal Reserve. When someone has done a dastardly deed and you make a "formal enforcement action" against him, it must be a joke, right?
Goldman has to pay penalties (money), answer to civil claims, bring in a consultant to review foreclosures, write down mortgage loan principals to the tune of $53 million (more petty cash), and, apparently, be good in the future. It appears that GS can pay its way out of trouble.
These actions are merely interesting but they do not represent justice for the people who were defrauded out of their pensions, their savings and their home ownership by Goldman Sachs's fraudulent securities. It certainly doesn't seem a proper response to those who brought us this nice recession.
Goldman Sachs Sells Litton Mortgage Unit, With 2 Reprimands From Regulators
By William Alden - HuffPost
NEW YORK -- On Thursday, Goldman Sachs gained the government's blessing to sell off its mortgage unit, but not without a couple of reprimands.
The investment bank, which had been trying for months to exit the retail mortgage business that has been a source of prolonged headaches for other institutions, agreed to forgive a few million dollars in homeowners' debt, and said it would refrain from an illegal practice known as robo-signing -- or approving foreclosure documents without reading them. Goldman also got a stern talking-to from the Federal Reserve, which imposed no monetary penalties at this time.
Some experts professed amazement on Thursday that two government regulators with the power to impose sanctions seemed to go easy on the mortgage unit Litton Loan Servicing, with a couple of letters asking Goldman to abide by the law going forward.
"The body language of it suggests that firms don't have a large worry on the punitive damages of robo-signing," said Joshua Rosner, managing director at the independent research consultancy Graham Fisher & Co, who has blogged for The Huffington Post.
"This is not America," he continued. "We've become a corporatocracy."
A spokesman for Goldman declined to comment.
Goldman, Litton and Ocwen Financial, the mortgage company that bought Litton, struck a deal with New York State's Financial Services Department to allow the sale to go through, according to a Thursday statement from the state. Ocwen, which has become the 12th largest mortgage servicer in the country, will be "handling a very large number of customers in foreclosure or facing possible foreclosure," the statement says.
Among the provisions for homeowners included in the deal, Goldman promised to accept write-downs on $53 million in unpaid mortgage principal, forgiving about a fourth of the balance on 60-day delinquent loans in New York that were owned by Goldman and handled by Litton as of Aug. 1. The total reduction would amount to $13 million, according to the terms of the deal.
This applies to 143 mortgages, the Wall Street Journal noted in its report.
While that could offer significant relief for homeowners who are struggling to pay their bills, it's not much of a hardship for Goldman Sachs. On a typical trading day in the second quarter of this year, Goldman took in nearly 10 times that $13 million figure.
Goldman and Litton also agreed to end robo-signing -- the illegal practice that is a focus of settlement talks between the nation's biggest banks and federal and state regulators. All 50 state attorneys general and a host of federal agencies are negotiating a settlement with mortgage companies to silence allegations of illegal foreclosures, talks that have stalled as a few key participants have questioned the adequacy of the deal.
New York's agreement with the firms Thursday "does not preclude any future investigations of past practices or release any future claims or actions whatsoever," according to the statement. So, there could be penalties in the future.
In a separate action, the Federal Reserve on Thursday fired some harsh words in Goldman's direction, accusing it of a "pattern of misconduct and negligence" in its mortgage and foreclosure practices at Litton.
The Fed ordered Goldman to hire an independent consultant to investigate whether foreclosures were done improperly. "The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures," the Fed said in a statement.
But beyond that, Goldman isn't being asked to pay up -- at least not at the moment. The Fed "plans to announce monetary penalties," the central bank said in the statement.
Read the rest of the article here