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Justice Dept. to Goldman Sachs: The heat is off

Lloyd Blankfein

Lloyd Blankfein, Goldman Sachs CEO

W ith impeccably feckless timing, the Justice Department announced Thursday night (Aug. 9) Goldman Sachs won’t be prosecuted for its role in bringing the U.S. economy to its knees, costing Americans trillions of dollars, throwing millions out of work, causing businesses, including other investment houses and banks, to go under and wreaking additional havoc worldwide.

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After an “exhaustive review” that began last year, investigators “concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time,” the Justice Department said in a statement released Thursday night.

The officials said they could change their minds “if any additional or new evidence emerges.”

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Given the DoJ’s no-can-do record when it comes to nailing banksters whose M.O. surely has Mafia bosses shaking their heads and asking, “Why didn’t we think of that?” excuse us for wondering if Attorney General Eric Holder and his legal beagles could find their own butts using both hands in a well-lit room full of mirrors. As for additional or new evidence, maybe if Goldman Sachs CEO Lloyd Blankfein is caught red-handed, in person, looting the Fed’s gold repository five stories below Manhattan street level, then DoJ might be moved to prosecute.

Maybe, but we wouldn’t bet on it.

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We’re not alone in looking askance at Holder & Co.’s extreme reluctance to prosecute Goldman Sachs and its people. Sen. Carl Levin, D-Mich., is chairman of the Permanent Subcommittee on Investigations that spent two years probing GS’s chicanery, finding it a major culprit in wrecking the economy.

The subcommittee’s report, based on internal memos, emails and interviews with employees of financial firms and regulators, said Goldman profited from the crisis by betting billions of dollars against the mortgage market and then misled the bank’s clients and lawmakers about its activities.

The committee’s investigation included a high-profile hearing in which senators grilled Goldman Chief Executive Lloyd Blankfein. He testified that the bank had not consistently tilted its own investments heavily against the housing market, also known as having a “net short” position, as it was selling mortgage-related securities to its clients.

The subcommittee’s report said Goldman’s own financial records and internal communications directly contradicted Blankfein’s denial.

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Here is Levin’s statement on the Justice Department’s no-prosecution decision.

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“Our investigation of the origins of the financial crisis revealed wrongdoing and failures among mortgage lenders, banking regulators, credit rating agencies and investment banks. One of those investment banks, Goldman Sachs, created complex securities that included “junk” from its own inventory that it wanted to get rid of. It misled investors by claiming its interests in those securities were “aligned” with theirs while at the same time it was betting heavily against those same securities, and therefore against its own clients, to its own substantial profit. Its actions did immense harm to its clients, and helped create the financial crisis that nearly plunged us into a second Great Depression.

“Those are the facts the subcommittee found. Whether the decision by the Department of Justice is the product of weak laws or weak enforcement, Goldman Sachs’ actions were deceptive and immoral. That’s why I and others fought so hard to include tough new conflict-of-interest provisions in the Dodd-Frank Wall Street reform law, to help ensure that Wall Street could no longer engage in such blatant behavior.

“Yesterday’s announcement makes it even more important that regulators implement Dodd-Frank with rules that do not water it down, and that they enforce those rules with vigor. The integrity of our financial markets and the strength of our economy demand that we make sure that actions such as Goldman Sachs’ and other recently discovered misdeeds by financial institutions are ended.”

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Levin is right, but let us add a measure of free-market justice that needs doing. Investors — especially big institutional ones — should shun Goldman Sachs and not buy GS’ own stock. Companies planning to go public with an initial public stock offering should shun Goldman Sachs. Other banks and investment brokers should shun Goldman Sachs. Real estate and other businesses should shun Goldman Sachs. Goldman Sachs’ own trustees and executives, if they have a shred of integrity, should walk away from the company and not look back.

If all those things were to happen, Goldman Sach’s business would decline sharply and so would its stock. A bunch of its executives and employees who don’t care about honesty and integrity but care a lot about making maximum money would waste little time abandoning the sinking ship.

With justice more poetic than Holder’s underachievers could ever come up with, the above remedy would whipsaw Goldman Sachs with the personal and business decisions of the scrupulous and the greedy, leaving it in ruins — just like so many individuals, families and businesses after the 2007-2008 economic implosion.

We called the timing of DoJ’s announcement feckless. If you’re a government official who’s going public with something likely to trigger negative publicity and public outrage, you probably couldn’t pick a better time than an August Friday when Congress is in recess and media are focused on a presidential race.

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● For an informative timeline of SEC charges levied against Goldman and its employees just during the past decade, see 13 Reasons Goldman’s Quitting Exec May Have a Point..

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14 Comments

  1. Tom Harper says:

    A story like this could only be released during the Friday News Dump, and during the Olympics no less. I was thinking of doing a post on this when I first saw the story on Thursday night, but words failed me.

    I’m glad you wrote about it. I’m sure Matt Taibbi will go off on Goldman Sachs in the next Rolling Stone issue.

  2. Doesn’t it suck when the Justice Department doesn’t prosecute whom you think it should?

    I suppose Holder’s, what did you call them, underachievers got it right with the New Black Panthers but missed the boat here. What an outrage!

  3. S.W. Anderson says:

    Tom, I meant to mention the Olympics too but managed to leave that out. Thanks for filling it in.

    HR, you’re embarrassingly hard up. This is like comparing what Timothey McVeigh did to some kid lighting a firecracker in a city park. Two black men in military-style outfits showed up outside a polling place in a predominantly black and Democratic-voting neighborhood. One had a night stick. There was no proof the New Black Panthers sent them. Neither did anything to anyone. DoJ decided there was no reason to charge the NBP or the guy without a nightstick. Since the other one never actually threatened or harmed anyone, DoJ later decided there were no grounds to go after him.

    The usual disposition of situations like this is that a police car shows up, asks the two characters what they’re doing, then tells them to go in and vote or move along. If they don’t cooperate they can be arrested and charged with resisting an officer.

    Fox Noise and the usual radio squawkers tried to present this pathetic little drama as a looming menace of revolutionary urban blacks out to intimidate white voters. A bunch of gullible saps predisposed toward believing the worst in any incident involving blacks ate it up and passed it along in often embellished and wildly distorted blog posts and e-mails. A DoJ attorney tried to make a career builder out of it. He got sore and quit when that didn’t go over. He’s been flogging it as a conspiracy/whitewash ever since.

  4. Bill Cook says:

    We can’t fix anything, you should get a boat.

    1. S.W. Anderson says:

      Welcome, Bill. You might be right but I feel a need to try. I like the boat idea, but unfortunately it’s not practical for me.

  5. Dave Dubya says:

    Durbin was right about Wall Street, “they own the place”. Besides the DOJ has to prosecute their sacred war on medicinal cannabis users. Priorities, you know.

    If I didn’t know better, I’d say HR’s comment could have come from a corporate coddling racist. But we know better, right?

  6. SW, being a good liberal, did you ever think you’d have to stoop so low as to defend people trying to intimidate voters outside of a polling place?

    1. S.W. Anderson says:

      I didn’t defend them.

  7. Dave Dubya says:

    My, someone can’t let go of those hordes of scary black guys…both of them. Who was intimidated from voting, again? Who did they stop from voting for not having the politically correct ID?

    I’m sure HR is not a racist, but this is what racists love to hear and say. There’s a term for this, race baiting.

    It’s a Republican tradition going back to the Buchanan/Nixon “southern strategy” days.

    I trust HR will warn us of any further threats from the”black menace”, especially from the likes of Obama and Holder who allow those hordes to freely rampage on decent Americans.

    Nothing racial to see here, folks, for HR is not a racist.

  8. Very impressive, Dave. You bring race into the discussion… and I’m the racist.

  9. Dave Dubya says:

    You brought New Black Panthers to a post that has nothing to do with them. You chose to mention them instead of Wall Street corporate irresponsitbility and legalized theft.

    But you are not a racist. Oh, no. Never said you were. Nope.

    After all, Limbaugh and the radical Right have told us liberals are the real racists.

    Gotta be true. Yup. Rush is never wrong. Besides Beck and FOX(R) told us Obama is the “racist who hates white people”.

    Yessiree.

  10. S.W. Anderson says:

    H.R., you seem to be a prototypical Fox viewer and Rush listener, and that’s sad. Be honest. If two white guys, one with a nightstick, had hung around outside a polling place in a predominantly white suburban neighborhood, do you think Fox, Limbaugh and even some members of Congress would’ve gone all out for months trying to sensationalize it? I don’t think they would’ve even mentioned it. The matter would’ve ended with police car showing up, as I described.

    You brought this up in a lame attempt to indicate racial favoritism at the DoJ. You’re evidently primed for that, if not by personal bias, at least by the “news” sources you rely on.

    BTW, re-read my post and you’ll see that I didn’t charge DoJ with any particular motive in not prosecuting Goldman and/or Blankfein. I did include the department’s stated motive. I can’t know absolutely whether that’s all there was to it, or if there was more what other considerations went into the decision. Instead of engaging in pure speculation, I laid out the facts and criticized the decision and an agency I consider a bit too gun shy when cases aren’t sure wins.

    Our country would be better off if Fox, Limbaugh and the rest of the right-wing noise machine would strive to apply similar standards and restraint. However if they were to do that, they would fail in their mission as propagandists, and that would be ruinous for them.

    Dave, H.R. mentioned NBP as an instance where people of his persuasion believe DoJ wrongly failed to prosecute. To that extent he was on topic. The argument ensued because of the massive lack of equivalence between the two potential cases.

  11. “you seem to be a prototypical Fox viewer and Rush listener, and that’s sad”

    Irrelevant, even if true. Instead of making assumptions about my listening and viewing habits, why not address my point?

    “Be honest. If two white guys, one with a nightstick, had hung around outside a polling place in a predominantly white suburban neighborhood, do you think Fox, Limbaugh and even some members of Congress would’ve gone all out for months trying to sensationalize it?”

    Irrelevant. If two white guys were trying to intimidate voters, I would still want the Justice Department to investigate and prosecute.

    “You brought this up in a lame attempt to indicate racial favoritism at the DoJ.”

    I brought it up to point out that you are a hypocrite when it comes to the DOJ. You’re not upset about their inactivity on the New Black Panthers, but you are upset that they’re not prosecuting a bank.

    You and Dave have brought up race. I have not. Mentioning an example of a group that happens to base their membership on race does not mean I have introduced race.

    I have stayed on topic. Your post expresses anger at DOJ inaction. I echo that, and ask why you’re not upset about the other areas where the DOJ has refused to act.

    “BTW, re-read my post and you’ll see that I didn’t charge DoJ with any particular motive in not prosecuting Goldman and/or Blankfein.”

    I didn’t say that you attributed any motives. Now re-read my comment and understand I was making a very simple point that you and Dave presume to be racial. The racial thinking is exclusively on your part.

    “Our country would be better off if Fox, Limbaugh and the rest of the right-wing noise machine would strive to apply similar standards and restraint. However if they were to do that, they would fail in their mission as propagandists, and that would be ruinous for them.”

    I could say the same about the left. Why don’t you stop whining about the right wing news and realize we live in a complex media environment. That bloggers like you and me make our own opinions and don’t have to rely on those sources.

    “H.R. mentioned NBP as an instance where people of his persuasion believe DoJ wrongly failed to prosecute. To that extent he was on topic. The argument ensued because of the massive lack of equivalence between the two potential cases.”

    The first sentence is true. I’m glad it wasn’t completely lost on you. The second statement is yet to be proven. Kindly explain the false equivalence.

  12. S.W. Anderson says:

    “. . . why not address my point?”

    I did. You either can’t grasp that or don’t like what I had to say.

    “. . . I was making a very simple point that you and Dave presume to be racial.”

    I presume the politicians and information sources your thoughts on this are based on had both racial and political motives.

    Obviously, the concept of equivalence, or lack of it, is lost on you, H.R., along with the fact the two cases are drastically different in every respect except that DoJ failed to prosecute.That’s too thin a reed for me to draw conclusions out of, but it’s sufficient for you. So be it.