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
Elaine,
Great links to the Taibbi interview. It is a scary story when the Banksters ave so much power that Thayer can tell the SEC and Justice to take a hike!
anon 1, April 17, 2011 at 3:56 am
I am going to repeat my first question. I think it’s an ontopic question and goes to the heart of professional integrity and what ethics within a profession is all about:
“I would assume that GS got sign off and advice from their lawyers re their behavior towards clients and Congress?
Should the heads of GS go to jail, what should happen to the lawyers?
Rafflaw? What actions will you take personally to maintain the integrity of your profession re: GS?
Thought so.
Thanks anyway.”
—————————————————–
anon, have you met Kay?
….be careful who you piss off here, you will be accused of being ‘smarmy’ or ‘crazy’.
…and it takes nothing more than pointing out the truth….
http://www.nytimes.com/2011/04/17/opinion/17kristof.html?_r=1&hp
The Power of Mockery (Nicholas Kristof, April 16)
A crucial lesson, he said, is the power of nonviolence: “If somebody is beating you, don’t attack him. Don’t use any violence against them. Just take photos of them and put them on the Internet.”
Toppling dictators is only one application of this kind of grass-roots movement. One of the most exciting trends in the struggle against poverty and social pathologies such as crime is the use of similar youth-owned movements to change cultural norms from the bottom up. (end excerpt)
For anyone interested–here’s a link to Amy Goodman’s interview with Matt Taibbi on Democracy Now!:
Matt Taibbi: “Why Isn’t Wall Street in Jail?” (Complete Interview)
http://www.democracynow.org/blog/2011/2/22/matt_taibbi_why_isnt_wall_street_in_jail
Excerpt from Interview:
AMY GOODMAN: Talk about John Mack and Gary Aguirre.
MATT TAIBBI: This is an amazing story, just because it demonstrates how far above the law these people are. John Mack is one of the most powerful people on Wall Street. Right now he’s the chairman of the board at Morgan Stanley. He used to be their CEO. Way back in 2001, when he was sort of between jobs, he had left Morgan Stanley and was interviewing with Credit Suisse First Boston. He was involved in a case that was investigated by the SEC. A hedge fund called Pequot made a very suspicious investment into a company called Heller Capital, which was about to be acquired by General Electric. This hedge fund bought, you know, an enormous amount of Heller stock three weeks before this acquisition by GE of Heller. Credit Suisse First Boston was Heller’s investment banker. John Mack was interviewing for the job with Credit Suisse a few days before Pequot made its purchases, and he was in direct contact with the hedge fund guy who made those purchases. Under any normal circumstances, he would be targeted for investigation by the SEC.
AMY GOODMAN: And his name was?
MATT TAIBBI: The investigator’s name was Gary Aguirre. And Aguirre—
AMY GOODMAN: And the guy buying up?
MATT TAIBBI: Art Samberg was the name of this hedge fund manager. He was a big star on Wall Street. In fact, there are articles about, you know, how does Art Samberg manage his amazing returns year after year? Well, you know, this was sort of a clue as to how.
Anyway, this SEC investigator named Gary Aguirre wanted permission to go interview John Mack, and his superiors at the SEC told him—they basically told him that he couldn’t, and the reason they said was because Mack has, quote-unquote, “powerful political connections.” At the time, he was a Ranger, one of Bush’s fundraising Rangers. He would later become a major fundraiser for Hillary Clinton. So he played both sides of the fence. This, again, is very typical of Wall Street. And Aguirre, when he pressed the matter, he was fired by the SEC.
AMY GOODMAN: And talk about the high-level people involved, like Mary Jo White.
MATT TAIBBI: Mary Jo White was the former U.S. attorney in the Southern District of New York. She was basically Rudy Giuliani for a few years. This is the top cop on Wall Street, basically. And she, at the time, was representing Morgan Stanley for the defense firm Debevoise & Plimpton. Again, this is what all these investigators do. When you leave a high-ranking position from the SEC or the U.S. attorney’s office, they all jump to these lucrative partnerships at corporate defense firms, where they make, you know, $2, $3, $4 million a year. So the incentives to really prosecute these guys are all backwards. And they all leave, and they take these jobs. Mary Jo White had left the U.S. attorney’s office. She’s representing Debevoise & Plimpton. She intercedes on behalf of Mack. And one of the SEC officials that she was in contact with, Paul Berger, Aguirre’s superior, ended up working for Debevoise & Plimpton a year later. And this is a very typical situation.
AMY GOODMAN: And Aguirre is fired.
MATT TAIBBI: He’s fired. He was—
AMY GOODMAN: He’s told to investigate, and then he starts to seriously investigate, and he’s fired.
MATT TAIBBI: Right. They gave him—two days after he started work at the SEC, one of his superiors handed him Pequot, just generally. They said, you know, “Look at this company.” Within a year or so, he was onto the Samberg case, and he had targeted Mack as a clear suspect in the case. He had overwhelming evidence. I mean, there were emails, there was documentary evidence. They put Martha Stewart in jail for much, much less than they had on Mack.
Elaine M.,
Thanks for clarifying that source of that quote! (Sorry for that omission.)
And thanks for the Taibbi/MSNBC link, too.