And so the Securities and Exchange Commission has done a deal with Goldman Sachs, giving it a nice little love tap. In its announcement, the SEC announces that Goldman Sachs will pay $550 million to settle charges that it "misled investors".
What a turn of phrase. How about "ripped off the public" and "helped crash the US housing market by placing bets on its collapse". How about "damaged the US economy". Let's remember that the latest figures, according to this news report, reveal that close to one million people in the US are going to lose their homes in 2010. The housing crisis that Goldman Sachs made profits from is hitting hard and it's damaging the US economy. How so? Because people who are evicted don't go out shopping. Which is why consumer confidence is low and when there is no demand, companies don't employ which is why unemployment in the US is close to 10%. Goldman Sachs and the state of the US economy are inextricably linked.
Bloomberg columnist Jonathan Weil says it's a great victory for the SEC and that Goldman Sachs has lost a lot of public credibility and trust.
But corporate lawyer Andrew Stoltmann says it's an awful deal. It's only worth half the amount that Goldman allegedly defrauded investors out of in the Abacus deal. Senior management, which did the dirty deal, has been left in place and there's no mea culpa. "It is as if someone robs a bank of $30,000, gets caught, and then is only required to give part of the money back,'' Stoltmann says. "This provides zero deterrence going forward. In addition, Goldman's CEO gets to keep his job instead of being forced out."
And as the Los Angeles Times reminds, US taxpayers will only get 97 cents each of that money. The rest will go to the two biggest investors, the German bank IKB and the Royal Bank of Scotland, who were stupid enough to buy into the Goldman Sachs deal.
And besides, $550 million is just lunch money for a firm that made a $13.4 billion profit in 2009.
Reuters blogger Felix Salmon says it's a great victory for Goldman Sachs. The company's entire business was at stake if the courts found there was any wrongdoing, so a settlement means business as usual.
Salmon writes: "This settlement is surely testament to the extraordinary powers of persuasion which still exist within Goldman Sachs, but some kind of settlement was always likely: the SEC didn't want to risk bringing a complex case like this in front of an inherently-unpredictable jury … The risk, of course, is that Goldman's victory here will only serve to exacerbate its arrogance. Could the Squids of West Street become even more insufferable, now?"
no comment untill now