My Other Blog & Comments

News and Information Feed

Tuesday, July 20, 2010

SEC/Goldman back room deal smells like Big Government-Big Bankster corruption

The SEC’s fishy deal with Goldman
(Washington Examiner Editorial) --

The SEC settled its lawsuit against Goldman Sachs (pictured is CEO Lloyd Blankfein) for $550 million, an amount equal to just two weeks of Goldman’s profit. (Susan Walsh/AP)

It seemed a little odd last week when the Securities and Exchange Commission settled its lawsuit against Goldman Sachs within two hours of Senate passage of the Democrats' Dodd-Frank financial reform bill. After all, who could ask for a more perfect backdrop than a successful prosecution of the investment colossus of Wall Street and a prime mover in the economic crisis of 2008? But this one looks stranger still considering that the SEC action was announced on April 15 of this year, only a week before the legislation was brought before the Senate, thus neatly bookending debate on the proposal. And it gets even stranger. On the same April 15, President Obama's campaign organization, Organizing for America, purchased a Google ad directing people who Googled "Goldman Sachs SEC" to donate money at .

Rep. Darrell Issa, R-Calif., the ranking Republican on the House Oversight and Government Reform Committee, wonders about all this and more, and so has asked the SEC for documentation of commission officials' communication with the executive branch. The announcement of the Goldman settlement, Issa wrote, "less than two hours after the U.S. Senate passed controversial financial reform legislation raises questions about whether politics influenced the announcement." The SEC is prohibited from using its resources to influence the passage of legislation, but its chairman, Mary Schapiro, was already on record in support of the bill, having released a statement in late June praising its expansion of the commission's authority and for "improving the SEC's funding process."

Consider, too, that the SEC's settlement with Goldman is carefully phrased to avoid forcing the firm to admit the most damning fraud charges: "Goldman acknowledges that the marketing materials ... contained incomplete information. In particular, it was a mistake" to sell particular products "without disclosing" the role of parties whose interests were adverse to the investors. "Goldman regrets that the marketing materials did not contain that disclosure." Such language obscures the firm's ethically challenged actions behind a fog of rationalization. That might explain why the fine was only $550 million, an amount equal to just two weeks of Goldman's profit, not the $1 billion or more expected by veteran journalists covering the market...MORE...LINK

No comments: