Submitted by Lawrence Rafferty, (rafflaw), Guest Blogger
It has been almost 4 years since the economy crashed in 2007, causing what some people have referred to as the worst economic disaster since the Great Depression. Since that time there has been little or no action on indicting the alleged participants in the cause of the disaster. Maybe now, that dismal record will change.
“The chairman of the U.S. Senate’s investigative subcommittee said he believes Goldman Sachs officials made misleading statements about their trading during the financial crisis and should be investigated criminally. Sen. Carl Levin (D-Mich.) said on Wednesday that he plans to refer Goldman officials, and potentially officials from other organizations, to the Justice Department for possible prosecution and to the Securities and Exchange Commission for possible civil proceedings. “In my judgment, Goldman clearly misled their clients and they misled the Congress,” said Levin, the chairman of the Senate Permanent Subcommittee on Investigations.”Legal Times Senator Levin has called out the Goldman Sachs officials in particular for their alleged false statements to Congress and to their own customers. The committee’s 639 page report is the result of an exhaustive 2 year bipartisan investigation into the actions of Bank and Investment house officials. Levin-Coburn Report Both Levin and the Republican Ranking Member, Senator Tom Coburn have come down hard on the actions of these officials. Just what is at the heart of this investigation?
The Legal Times article linked above gives a succinct description of the issues at hand here. “At issue are the investments Goldman made regarding mortgage-backed securities. Citing e-mails and other internal company documents, the Levin-Coburn report alleges that Goldman placed major bets against those types of securities even as it continued to sell them to clients. Blankfein testified a year ago that Goldman was “not consistently or significantly net short the market in residential mortgage-related products in 2007 and 2008.” The Levin-Coburn report says Goldman’s denials ‘“are directly contradicted by its own financial records and internal communications, as well as its own public statements in 2007, and are not credible.”’ When the Republican Ranking Member agrees that the Goldman Sachs officials are unethical at best, that should open some people’s eyes. “Coburn added, “It shows without a doubt the lack of ethics in some of our financial institutions, who embrace known conflicts of interest to accumulate wealth for themselves.” Legal Times
In a Think Progress article on this subject, Senator Levin gave more details. “This deal was just one example of Goldman “profit[ing] from the failure of many of the…securities it had underwritten and sold.” As the report explains, Goldman frequently touted securities that it expected to fail to outside investors, and then bet against those securities by taking a “short position” on them. In total, Goldman “generated net revenues of $3.7 billion” by betting against securities, while their alleged victims were left with an investment that was worth only a fraction of what they paid for it.” Think Progress
It has taken quite some time for the Levin-Coburn report to come out, but for once, the Senators have not minced words. Levin doesn’t like that fact that the Goldman Sachs officials lied to him in the Senate hearing and the detail and breadth of this investigation is finally an indication that someone in Washington is taking this alleged criminal activity seriously. Is that what it takes for Congress to take allegedly criminal behavior seriously? Would Levin and Coburn have delved so deeply into this matter if they hadn’t felt lied to? At this point, I for one am just happy that Levin and Coburn are doing the right thing and referring the matter to the Justice Department and to the SEC. Now, if we can only get Attorney General Holder’s Justice Department to seriously follow-up on the Senatorial referrals, we just may have a little bit of the rule of law back in play. Maybe!
Respectfully submitted by Lawrence Rafferty, Guest Blogger
Additional Source: Levin You Tube