Goldman Sachs Finally Admits it Defrauded Investors During the Financial Crisis
Investment banking giant Goldman Sachs GS 1.28% has agreed to a list of “facts” in addition to paying $5.1 billion to settle a lawsuit related to its handling of mortgage-backed securities leading up to the 2007 financial crisis, the U.S. Department of Justice announced Monday.
It’s a definite improvement on the DoJ settlements of a few years ago when Wall Street firms were able to get away with saying they “neither admit or deny the charges.” But it’s unlikely to quell critics that say the government hasn’t done enough to punish bankers in the wake of the financial crisis. Just like in past settlements, no individual bankers have been charged with wrong doing.
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Goldman Sachs to pay $5bn for its role in the 2008 financial crisis
The settlement holds the bank accountable for its ‘serious misconduct’ in falsely assuring investors that securities it sold were backed by sound mortgages
Goldman Sachs to Pay Billions in Fines Related to the Financial Crisis, but Nobody's Going to Jail
Back in 2006, the financial titan Goldman Sachs was preparing to sell a bundle of housing loans it had purchased from the mortgage giant Countrywide. After a Goldman analyst wrote an optimistic assessment of Countrywide's mortgage stock, a company due diligence officer responded with a cryptic email, apparently dissenting from the analyst's view. "If they only knew. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ." he wrote — with 34 ellipses.
What those ellipsis may have been referring to is the fact that Countrywide business model relied upon issuing mortgages to buyers who couldn't afford them, and then selling those mortgages as high-quality investments — a practice that helped precipitate the 2008 financial crisis.
Leading up to the crisis, Goldman Sachs bought up these questionable mortgages and sold them to investors, marketing them as a sound financial product even as its own internal assessments raised concerns. The US Justice Department highlighted that internal Goldman Sachs email on Monday, as it announced a $5.1 billion settlement stemming from Goldman's conduct in the lead up to the financial crisis. The announcement does not include any criminal charges against Goldman executives — rather it asks the firm to pay the equivalent of 70 percent of its quarterly revenue in fines.
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Years and years of continuous and systematic fraud that enriched the lives of the fraudsters by hundreds and hundreds of millions of dollars — and ruined the lives of millions.
Now excuse me, I’ve got to go give a thirty-minute speech.