Last week, August 9, the Justice Department announced that after a "careful review" it would not be prosecuting Goldman Sachs or its employees for financial fraud. There is no basis for a prosecution, the department declared.
This is despite the revelations in a Congressional report released jointly by Senators Carl Levin and Tom Coburn in 2011 as the result of a two-year investigation by the Senate Permanent Subcommittee on Investigations. That report singled out Goldman Sachs and Deutsche Bank as examples of Wall Street firms that reaped huge profits by marketing toxic securities as safe investments to clients, even as those same banks were betting against those very same securities - that is, were taking out insurance on them such that if the securities failed, they would collect - a fact they hid from their clients.
The charges in the report were based on thousands of internal company documents and e-mails, hundreds of interviews, and congressional testimony. Emails showed that even as the banks were pushing the securities as AAA-rated investments, internally they were calling them things like "junk," "crap," and "flying pig." There was that notable moment in the hearings when Levin persistently quoted one Goldman Sachs email that described one such deal as "shitty."
What's even more, Goldman had already agreed to pay $550 million to end a civil-fraud suit filed by the SEC, one which, again, involved Goldman deceiving clients about the actual worth of the investments it was pushing on them.
But none of that was good enough for the Justice Department. "Nope, just not enough. Nope." Something to note clearly here is that what the DOJ is saying is that there wasn't enough in the Congressional report for a prosecution. But that also means that the DOJ is saying it's not going to do any investigating about any of this on its own. The DOJ is not going to investigate financial fraud by the big banks.
The agency did grandly allow as how it would take another look if "new information comes to light" - that is, if someone else will do all the work of research and investigation and drop an air-tight case into their laps with such a loud plop that it can't be ignored.
Now all this might not be as much of a surprise as you think. Do you know what company was the source of the second largest amount of private contributions to the 2008 Obama for President campaign? It was Goldman Sachs. JPMorgan Chase was sixth, and Citigroup was seventh.
The beginning of last week, on August 6, a New York jury acquitted a former mid-level Citigroup official of financial fraud. The jury felt that the government hadn't proved his particular guilt and they believed he was being made a scapegoat for the entire industry. They concluded that he had structured the crooked deal the way his bosses told him to and wondered - and this is the key thing here - why this guy was on trial instead of the top executives of Citigroup, whose behavior was, in the words of the jury foreman, "appalling."
They felt this so strongly, and were so concerned that the acquittal would "send the wrong message," that they took the highly unusual step of issuing a statement along with the verdict. According to the foreman, Beau Brendler,
We were afraid that we would send a message to Wall Street that a jury made up of regular American folks could not understand their complicated transactions and so they could get away with their outrageous conduct. We also did not want to discourage the government from investigating and prosecuting financial crimes.The statement, read in open court, said
This verdict should not deter the S.E.C. from continuing to investigate the financial industry, review current regulations and modify existing regulations as necessary.Brendler said "It wasn't a particularly eloquent statement, but we hoped it would get a point across."
Hopefully. Because the American people know how crooked Wall Street is. We know how we have been screwed over again and again and will be screwed over again and again until it is stopped one way or another. And we know there have been no criminal prosecutions against Wall Street banks and executives a a result of them screwing us over again and again, in spite of the pain they inflicted on us, the losses of our jobs, our homes, our futures
And we know that the problem we face now is that the people in a position to do something about it also know - and they just don't care.
It is an outrage.
Sources:
http://www.care2.com/causes/justice-department-wont-prosecute-goldman-sachs.html
http://edition.cnn.com/2012/08/09/business/goldman-justice-department/index.html
http://crooksandliars.com/susie-madrak/justice-department-goldman-sachs-hook
http://www.opensecrets.org/pres08/contrib.php?cid=N00009638
http://www.huffingtonpost.com/2012/08/06/brian-stoker-jury_n_1747218.html
http://dealbook.nytimes.com/2012/08/03/s-e-c-gets-encouragement-from-jury-that-ruled-against-it/
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