August 12, 2012
Goldman Sachs Escapes Criminal Charges
by Robert Kropp
Despite evidence of conflicts of interest detailed in last year's report by the Senate's Permanent
Subcommittee on Investigations, the Justice Department announces that it will not bring a criminal
prosecution against the bank.
In May, 2011, the US Senate's Permanent Subcommittee on Investigations published its report on the
causes of the financial crisis. Entitled Wall Street
and the Financial Crisis: Anatomy of a Financial Collapse, the report was notable for the
severity of its criticism of the activities of Goldman Sachs, going as far as advising regulators
to "review the…activities described in this Report to identify any violations of law."
Goldman Sachs, the Senate investigators found, designed, marketed, and sold
collateralized debt obligations (CDOs) "in ways that created conflicts of interest with the firm's
clients and at times led to the bank's profiting from the same products that caused substantial
losses for its clients."
In a press briefing following the Subcommittee's publication of
the report, Senator Carl Levin, the Chairman of the Subcommittee, stated, "Our investigation found
a financial snake pit rife with greed, conflicts of interest, and wrongdoing. Rampant conflicts of
interest are the threads that run through every chapter of this sordid story."
following the report's publication, Matt Taibbi wrote in
Rolling Stone, "The evidence has been gift-wrapped and left at the doorstep of federal
prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial."
More than a year later, the US Justice Department has delivered its verdict: there will be no
criminal charges brought against the bank. In a statement issued on Thursday, authorities stated,
"Based on the law and evidence as they exist at this time, there is not a viable basis to bring a
Also on Thursday, "Goldman Sachs announced early Thursday that the
Securities and Exchange Commission had ended an investigation into a $1.3 billion subprime mortgage
deal, taking no action," Th
e New York Times reported. "The move was an about-face for the commission, which notified the
bank in February that it planned to pursue a civil action."
On Friday, Levin issued a statement addressing the Justice Department's decision.
decision by the Department of Justice is the product of weak laws or weak enforcement, Goldman
Sachs' actions were deceptive and immoral," Levin stated.
"Yesterday's announcement makes
it even more important that regulators implement Dodd-Frank with rules that do not water down it
down, and that they enforce those rules with vigor," Levin continued. "The integrity of our
financial markets and the strength of our economy demand that we make sure that actions such as
Goldman Sachs' and other recently discovered misdeeds by financial institutions are ended."
Praising Levin for "a public service well done," Bloomberg columnist Jonathan Weil wrote on Thursday, "Fortunately, the details of Goldman's appalling behavior and
role in the financial crisis will live on forever in the public record."