Goldman Sachs Faces Federal Subpoenas
Goldman Sachs is preparing itself for federal subpoenas seeking internal documents regarding the way the firm handled its mortgage practice, according to reports in the Wall Street Journal. This ramped up investigation follows a report from the Senate Permanent Subcommittee on Investigations regarding the cause of the financial crisis and a combined effort of 50 state attorneys general to reach a settlement with the nation’s biggest banks over allegations of illegal foreclosures and fraudulent mortgage practices.
The Senate report accuses Goldman of betting against the very products it was selling to the public and manipulating the market, painting Goldman as being evil and interested in only one thing, a profit for the firm even if it caused harm to its own clients. The report was documented with a litany of email evidence where Goldman traders talked about selling “shitty deals” and a head trader says the firm wanted “to cause maximum pain” by manipulating the market for derivatives.
In a related matter, Goldman settled with the SEC over allegations that it helped to set up a mortgage investment for a favored client, designing it to fail and then selling the product designed to fail to unsuspecting investors, allowing the favored client to profit by betting against it. The firm paid the largest fine ever of $550 million to dispense with the matter.