Monday, April 18, 2016

U.S. Gov't Lets Goldman Sachs Get Away With $5 Billion Sham Settlement; Another Bankster Walks Away Unscathed By Giving Feds, State Authorities Shakedown Money, Cutting Them In On Illicit Profits Fleeced From Public

From Public Citizen Litigation Group's Consumer Law & Policy Blog:
  • This week's settlement between the financial giant and the government is the latest in a string of billion-dollar settlements addressing Wall Street misconduct in the lead-up to the financial crisis of 2008. (The others were with JPMorgan Chase, Bank of America, Citibank, and Morgan Stanley, and the values ranged from approximately $3 billion to $16 billion.)

    Like the other settlements, no individuals will be held accountable. As Public Citizen President Rob Weissman argues in response to the settlements, "Without criminal prosecution, there’s not even the illusion of accountability." Read his statement here.
Source: Goldman to pay $5 billion for selling bad mortgages.

See also, No consequences, no justice in Goldman Sachs settlement (The Justice Department’s failure to punish wrongdoing at major financial institutions stands in stark contrast to its vigorous prosecution of more than 2,700 individuals at the local level – mortgage brokers, borrowers, appraisers – who were small cogs in the corrupt mortgage machine).

See also, Why the Goldman Sachs Settlement Is a $5 Billion Sham (The penalty might sound pretty stiff. But get a load of the real math):
  • The Justice Department announcement in the Goldman case states that between 2005 and 2007, the investment bank marketed and sold mortgage-backed securities to investors that were of lower quality than promised. As a result, Goldman will pay a $2.385 billion civil penalty to the Justice Department, $875 million resolving claims from other state and federal agencies, and $1.8 billion in so-called “consumer relief” measures, like forgiving principal on loans and providing financing for affordable housing. That’s where the much-touted $5 billion figure comes from.

    In The New York Times, Nathaniel Popper took a careful look at the consumer relief provisions, finding that Goldman Sachs could pay up to $1 billion less than advertised, because the company gets extra credit for spending in certain hard-hit communities or for meeting its obligations within the first six months. I appreciate Popper’s precision, but it’s unnecessary. None of this consumer relief represents a penalty on Goldman at all.

    That’s because Goldman Sachs doesn’t own any of the loans it’ll be modifying. They were sold to investors years ago. Goldman will quite literally pay that fine with someone else’s money; in fact, the money comes from the very investors Goldman victimized, by selling them toxic securities under false pretenses.
    And who benefits from Goldman’s payments? Not the investors who were the actual victims of the misconduct; as I noted before they end up paying more money by seeing principal cut on the loans they own. Some homeowners get affordable loans or reduced mortgage debt, even though Goldman Sachs specifically harmed investors. But the biggest beneficiaries in this transaction are the Justice Department, the New York Attorney General’s office, and the other state and federal agencies who receive cash awards, from the civil penalty and the resolution of other claims.

    The upshot: Law enforcement settled a case on behalf of investors and then walked away with the proceeds, while investors got nothing. Goldman Sachs and the Justice Department get to divvy up the profits of a fraud scheme perpetrated on the public.

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