WASHINGTON – The Justice Department said Thursday it won't prosecute Wall Street firm Goldman Sachs or its employees in a financial fraud probe.
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.
A Senate subcommittee chaired by Sen. Carl Levin, D-Mich., in April 2011 found that Goldman marketed four sets of complex mortgage securities to banks and other investors but that the firm 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 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.
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."
Levin questioned the accuracy of testimony Goldman Sachs executives gave to Congress about whether the firm steered investors toward mortgage securities it knew likely would fail.
Goldman CEO Lloyd Blankfein told the Senate panel that the company didn't bet against its clients and couldn't survive without their trust. The company lost $1.2 billion in the mortgage meltdown in 2007 and 2008 that touched off the financial crisis and the worst recession since the 1930s, Blankfein testified. He also insisted that Goldman wasn't making an aggressive negative bet -- or short sale -- on the mortgage market's slide.
In 2010, Goldman agreed to pay $550 million to settle civil fraud charges by the SEC of misleading buyers of mortgage-related securities. The agreement applied to one of the four deals cited by the Senate subcommittee.
The Justice Department said it would aggressively pursue investigations of "matters affecting our financial system." The department pointed to its probe into the manipulation of the London Interbank Offered Rate. Britain's Barclays bank admitted in June that it had submitted false information to keep the rate low. Barclays was fined $453 million in settlements with the Justice Department, the U.S. Commodity Futures Trading Commission and British regulators.
LIBOR, as it is known, is the interest rate that banks charge each other for short-term loans. It is used as the benchmark for bank rates all over the world.
No surprise! The cartels never get prosecuted, only the poor sap selling nickel bags goes to jail. Little cosmetic cleaning on the corner and the streets are safe, don't ya' know. SEC ia a f'n joke, bought and paid for just like congress.
Remember? I can not understand why someone can "pick" portfolio to sell, (AND) bet against the portfolio. So the law is this is not criminal?
"Goldman Sachs, the most profitable company in Wall Street history, created and sold CDOs linked to subprime mortgages in 2007, using ACA Management LLC, a firm that analyzes credit risk, to select underlying securities. Goldman Sachs knew that at least one prospective investor, Dusseldorf, Germany-based IKB Deutsche Industriebank AG, wasn’t likely to invest in a CDO that didn’t have a collateral manager to analyze and select the portfolio, according to the SEC’s lawsuit. Goldman Sachs misled investors by not disclosing that Paulson had a hand in picking the portfolio, according to the SEC’s lawsuit."
"Participants knew “someone had to take the other side of the portfolio risk,” and disclosing that “the relatively unknown Paulson” was betting against the CDO wouldn’t have been material to the investors, Goldman Sachs said in the September document. The facts show “no one in fact considered Paulson’s role important and that no one was misled.”
Maybe one day the people of this country will take it back from the criminals that's now running it. We can have the Nuremberg Trails right here in the U S A . God only knows how many Congressmen & Senators will be charged with treason.