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US Exchange Commission charges Goldman Sachs: subprime FRAUD





handfleisch
The Obama administration via the SEC is going pretty aggressively after the corportate causes of the financial crisis and Goldman Sachs. The right wing had criticized Obama because GS was a big campaign contributor to Obama and there are former GS executives in high positions on Obama's staff. But this pretty much shows that the White House is not in their pocket at all.

http://www.mcclatchydc.com/2010/04/16/92321/government-charges-goldman-sachs.html

Quote:
SEC charges Goldman Sachs with civil fraud in subprime deal

WASHINGTON — The Securities and Exchange Commission Friday charged Goldman Sachs & Co. and one of its executives with fraud in a risky offshore deal backed by subprime mortgages that cost investors more than $1 billion.

The SEC also contends that Goldman allowed a client, Wall Street hedge fund Paulson & Co., to help select the securities. Paulson in turn bought insurance against the deal and when the securities tanked, losing almost all their value, Paulson made a $1 billion profit.

The civil fraud charges were the first to be filed against Goldman, the prestigious Wall Street investment-banking titan that's at the center of multiple inquiries into the causes of the global financial meltdown.

Paulson has acknowledged that it reaped a $3.7 billion profit by betting against the housing market as it nose-dived in 2006 and 2007.

...

Cornelius Hurley, a former counsel to the Federal Reserve Board who now heads the Boston University law school’s Morin Center for Banking and Financial Law, called the complaint “stunning” and said it raises at least two questions:

* Was this an isolated incident at Goldman, or did the firm engage in similar “egregious” practices in other deals?

* Did other Wall Street firms engage in similar practices?

“It appears that the financial ‘protection’ provided by Goldman and described in the SEC complaint may have been more akin to the kind of protection provided by organized crime,” Hurley said.

McClatchy Newspapers, in a series published in November about Goldman’s role in the subprime lending disaster, found that Goldman sold more than $40 billion in mortgages in 2006 and 2007 while secretly betting on a housing downturn that would sink their value. It’s unclear whether any of those transactions have drawn SEC or Justice Department scrutiny, but a Senate investigations panel has been examining them.

Read more: http://www.mcclatchydc.com/2010/04/16/92321/government-charges-goldman-sachs.html#ixzz0lMHqyufr

menino
Its good that the Obama administration and the SEC have become more aware of transactions happening around financial institutions now.
Finally we are getting the info about the trail from where the financial meltdown occured. Who would have known at the time.
Moreover it has taken a long time to find this information, and trace the real culprits.

Hopefully soon, all institutions will have a better way of securing transactions and contributing to the economy in a much better fashion.
handfleisch
menino wrote:
Its good that the Obama administration and the SEC have become more aware of transactions happening around financial institutions now.
Finally we are getting the info about the trail from where the financial meltdown occured. Who would have known at the time.
Moreover it has taken a long time to find this information, and trace the real culprits.

Hopefully soon, all institutions will have a better way of securing transactions and contributing to the economy in a much better fashion.

Yes, Democrats in Congress is now trying to clamp down on the derivatives trading that was a big cause of the financial crisis, and Obama is trying to make it even stronger. The Republicans are against the measure though
hunnyhiteshseth
I think the clients involved here were infact big banks and they should have known what they are buying!
deanhills
handfleisch wrote:
The Obama administration via the SEC
Wouldn't it be damaging for Obama if he were to be seen to be in an influential position with regard to SEC investigations. I thought those investigations were conducted completely privately and independently?
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