Goldman Sachs has been emblematic of the financial crisis since Matt Taibbi memorably described it as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” It's got its tentacles in both parties, from former New Jersey governor and former Goldman CEO Jon Corzine to bailout architect and former Goldman CEO Henry Paulson—and was the largest donor, through its employees, to President Obama. (Taibbi is actually quoted in the FHFA's lawsuit against Goldman, though not his best line.)
And Goldman takes it on the chin in the FHFA's lawsuits, accused of committing fraud directly as well as aiding and abetting fraud. The Times pointed out, “the suit says that 'Goldman was not content to simply let poor loans pass into its securitizations.' In addition, the giant investment bank 'took the fraud further, affirmatively seeking to profit from this knowledge.'”
Several executives are named in the lawsuit, but most prominently Daniel Sparks, former head of Goldman's mortgage department. Courtney Comstock at Business Insider noted, “Dan Sparks is full-on attacked in the lawsuit. The FHFA basically blames the rot of Goldman's mortgage business on him and his team's 'traveling the world' to 'make some lemonade from some big old lemons' (his words).”
Those big old lemons, of course, were mortgages that were not created by Goldman; they were simply repackaged and resold by the finance giant, preferably as quickly as possible, the lawsuit argues, to keep them off its own books because it knew they were likely to fail.
“Some 73 million Americans are homeowners and about two-thirds are mortgage holders, representing a huge voting block for President Barack Obama. With little chance of the unemployment rate being reduced much before the next presidential election, the biggest way Obama could influence voters is through the housing mess....The FHFA...is sitting in a perfect place to negotiate those results and take the pain out of the foreclosure mess for millions of Americans.”
ReplyDeleteAnd Rep. Brad Miller argued, “The rule of law really does require that we pursue those claims, that people be able to pursue claims that they are harmed. To say that those claims should not be pursued or should be obstructed I think undermines the rule of law, which is more damaging to our economy than the solvency of any given bank. Our economy depends on people being able to contract and enforce their contractual rights in legal actions.”
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