Why Goldman Sachs won’t be prosecuted

Why Goldman Sachs won't be prosecuted

The big news is that executives at Goldman Sachs are bracing themselves for subpoenas from the Justice Department. Based on a two-year probe, the Senate Subcommittee on Investigations's 638-page report on the financial crisis accuses the company's mortgage-related business of betting against the housing market. It says Goldman Sachs cornered investors into bad deals and then promoted its own self interest over those of its clients. Or to put it more bluntly, it took its clients' money and then bet against them.

Sounds bad? Sure, but don't expect Goldman executives like CEO Lloyd Blankfein to face criminal charges.

Check these two interviews with Daniel Alpert, a manager of an investment firm, and Robert Gnaizda, an attorney. Alpert says that the cases against banks are complicated and that, in any case, the fraud is being committed against the banks' shareholders and bond holders, not the public. The cases were too complex and tough to prosecute and prosecutors don't like taking on cases they can't win. Gnaizda thinks that top bank executives should be prosecuted but concedes the problem is getting witnesses.

In any case, as Washington's Blog points out, all the corporate watchdogs in America have had their budgets cut right back. It means we might never see anyone prosecuted for bringing down the financial system that caused The Great Recession

No wonder analysts like Jeff Harte from Sandler O'Neill & Partners say that Goldman Sachs won't be prosecuted.

In America, banks are a protected species. Even if they caused the global financial crisis.


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