Streams

Government Won't Prosecute Goldman Sachs in Probe

Thursday, August 09, 2012

Stock prices whiz by on a ticker near the Goldman Sachs booth on the floor of the New York Stock Exchange April 16, 2010 in New York, New York. (Chris Hondros/Getty)

Listen as WNYC's Soterios Johnson discusses the significance of the Justice Department's decision not to prosecute Goldman Sachs with Steve Thel, securities law professor at Fordham Law School.

The U.S. Justice Department said Thursday it will not bring criminal charges against Goldman Sachs or its employees for selling investors complicated packages of mortgage-backed securities and then under-representing how risky they were.

In a written statement, the department said it conducted an exhaustive investigation of allegations brought to light by a Senate panel investigating the 2008-2009 financial crisis.

"The department and investigative agencies ultimately 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 department said.

But the department added that if additional or new evidence were to emerge, it could reach a different conclusion about prosecuting Goldman if warranted.

The allegations first emerged two years ago during a hearing on Capitol Hill. During a Senate subcommittee, Sen. Carl Levin, D-Mich., grilled Goldman CEO Lloyd Blankfein about four sets of complex mortgage securities the company marketed to banks and other investors but failed to tell clients that the securities were very risky. The Senate panel said Goldman secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to theirs.

The Senate panel probe turned up company emails showing Goldman employees deriding complex mortgage securities sold to banks and other investors as "junk" and "crap."

Levin said during his subcommittee's investigation that he believed that Goldman executives "misled the Congress" and that Goldman "gained at the expense of their clients and they used abusive practices to do it."

The Justice Department's decision capped a good day for Goldman as the Securities and Exchange Commission decided not to file charges against the firm over a $1.3 billion subprime mortgage portfolio. At the same time, the Justice Department's decision ensured that the Obama administration will continue to feel political heat, particularly from the liberal wing of the president's own party, for not having brought more prosecutions in the financial crisis.

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Comments [3]

nancy from Nyc

Seems a shame that none of their shenanigans are being brought to the table..please have another show to explain..why ?

Aug. 10 2012 10:19 AM
john from office

The recent Bo trial in China was a foregone conclusion.

The no trial of Goldman, who brought a nation to the edge of bankrupcy and hurt millions of home owners is a foregone conclusion.

Older I get the more I see that it comes down to POWER.

Aug. 10 2012 09:55 AM
Tara from NYC

Another free pass for the crooks! Why am I not surprised...

Aug. 10 2012 09:43 AM

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