Goldman Sachs - Does Crime Pay?

[Wildcat]

Goldman Sachs has agreed to pay $550 million to resolve a civil fraud lawsuit over selling a mortgage investment that was established to fail. While the SEC hailed the $550 million settlement as the largest in Wall Street history, many outside analysts questioned why the government didn’t demand more. Investors responded favorably as Goldman Sachs shares jumped by five percent in late trading, adding far more to the firm’s market value than the amount it will have to pay in the settlement.

 

Well, you know, originally, Goldman didn’t want to settle. So the fact that it was settled at all is interesting. But, you know, this is sort of part of a larger pattern of how, you know, offences are dealt with by our regulatory enforcement mechanisms. You know, going back twenty years, almost every time we have an instance where a very powerful bank is caught doing something, you know, unethical or immoral, the procedure tends to be a fine which is much less than the profits they generated using that activity, followed by no admission of criminal wrongdoing. And, of course, nobody ever goes to jail. And the most famous example of that was the so-called global settlement, after the internet stock bubble, in which, you know, a variety of offences involved with the tech bubble were sort of lumped together by then-Attorney General Spitzer, and although some companies took a big hit—Citigroup had to pay $400 million—it was much less than all these guys made during the stock bubble. And so, the important fact here is that these companies know that even if they get caught, the worst-case scenario, they’re going to pay a fraction of the money they make doing this stuff, and that’s why they’re continually emboldened to do it.

 

http://www.thestreet.com/story/10808969/1/goldman-sachs-financial-winners-losers.html?cm_ven=GOOGLEFI

 

http://www.democracynow.org/2010/7/16/goldman_sachs_settles_civil_fraud_case

 

Why is there one rule for us and another for banks that get slaps on the wrist for massive frauds?

[Alien]

http://www.thestreet.com/story/10808969/1/goldman-sachs-financial-winners-losers.html?cm_ven=GOOGLEFI

 

http://www.democracynow.org/2010/7/16/goldman_sachs_settles_civil_fraud_case

 

Why is there one rule for us and another for banks that get slaps on the wrist for massive frauds?

 

 

 

 

Is "Civil fraud" illegal and a crime? If so then yes, in this case. Surely.

[HeadingNorth]

Is "Civil fraud" illegal and a crime?

 

It is not.

 

Fraud is a crime, but for reasons that I haven't remotely been able to understand, what Goldman Sachs were doing does not count as criminal fraud. (It should, in the eyes of any but a professional banker, but .... it doesn't.)

 

A "Civil fraud" lawsuit means some private individual, or body, is suing Goldman Sachs for cheating them; they have not been, and will not be, prosecuted.

[mj.scuba]

Speculation. A casino. They bet both ways. They were never going to lose.

[HeadingNorth]

Speculation. A casino. They bet both ways. They were never going to lose.

 

The bit that ought to have been a crime is that they were giving financial advice to some people which encouraged them to invest in (Dodgy Product #23) when the whole purpose of creating that product was to have the investment fail. Goldman Sachs profited more highly from it failing than they could ever do from it succeeding.

 

Why such a thing can possibly not be a criminal fraud - along with almost all of the details about the product itself! - is somewhat like the Peace of God. It defies all understanding.

[emmysdad]

Civil fraud lol!!!! Seriously are you havin a laugh?

[mj.scuba]

As far as Goldman Sachs go, some body posted an excellent thread in the last week to do with food specualtion and how it drove up the price of rice etc. I'm sue GS were party to that, a truly despicable turn of events which basically starved people to death. Far worse than the mortgage racket.

[Cavegirl]

This is another claim made about Goldman Sach's less than sterling behaviour in recent times:

 

At the same time, there are reports that raise questions about whether Goldman Sachs and other firms may have failed to disclose material information about swaps with Greece that allowed the country to effectively mask the full extent of its debt just as it was joining the European Monetary Union (EMU). We simply do not know whether fraud was involved, but these actions have kicked off a continent-wide controversy, with ramifications for U.S. investors as well.

 

It was stated by Sen. Ted Kaufman in his speech last week to the Senate. The rest of the speech is also worth a read as it covers quite comprehensively the potentially fraudulent practices of Wall Street in recent times:

 

http://kaufman.senate.gov/press/floor_statements/statement/?id=de804dbb-6dc3-4537-8c5d-81496714ed73

[Rupert_Baehr]

Sometimes.

 

If you do the sums and get them right.

 

Why shouldn't it? - You don't have to make the rules, but you do have to work within them.

[poppins]

http://www.thestreet.com/story/10808969/1/goldman-sachs-financial-winners-losers.html?cm_ven=GOOGLEFI

 

http://www.democracynow.org/2010/7/16/goldman_sachs_settles_civil_fraud_case

 

Why is there one rule for us and another for banks that get slaps on the wrist for massive frauds?

 

Selling mortgages that are sure to fail is nothing new, Clinton gave ACORN the ok to do the same thing for few years back, don't ask don't tell, just let them sign on the dotted line, then go vote.