Justice Department won't prosecute Goldman in probe

The headquarters of Goldman Sachs Group, Inc. is seen on Sept. 16, 2008, in New York City. (Mario Tama/Getty Images)

(AP) WASHINGTON - The Justice Department says it won't prosecute Wall Street firm Goldman Sachs (GS) or its employees in a financial fraud probe.

In a written statement, the department said it conducted an exhaustive investigation of allegations brought to light by a Senate panel investigating the 2008-2009 financial crisis.

"The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time," the department said.

But the department added that if additional or new evidence were to emerge, it could reach a different conclusion about prosecuting Goldman if warranted.

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A Senate subcommittee chaired by Sen. Carl Levin, D-Mich., in April 2011 found that Goldman marketed four sets of complex mortgage securities to banks and other investors but that the firm failed to tell clients that the securities were very risky. The Senate panel said Goldman secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to theirs.

The Justice Department's decision capped a good day for Goldman as the Securities and Exchange Commission decided not to file charges against the firm over a $1.3 billion subprime mortgage portfolio. At the same time, the Justice Department's decision ensured that the Obama administration will continue to feel political heat, particularly from the liberal wing of the president's own party, for not having brought more prosecutions in the financial crisis.

The Senate panel probe turned up company emails showing Goldman employees deriding complex mortgage securities sold to banks and other investors as "junk" and "crap."

Levin said during his subcommittee's investigation that he believed that Goldman executives "misled the Congress" and that Goldman "gained at the expense of their clients and they used abusive practices to do it."

Levin questioned the accuracy of testimony Goldman Sachs executives gave to Congress about whether the firm steered investors toward mortgage securities it knew likely would fail.

Goldman CEO Lloyd Blankfein told the Senate panel that the company didn't bet against its clients and couldn't survive without their trust. The company lost $1.2 billion in the mortgage meltdown in 2007 and 2008 that touched off the financial crisis and the worst recession since the 1930s, Blankfein testified. He also insisted that Goldman wasn't making an aggressive negative bet or short sale on the mortgage market's slide.

In 2010, Goldman agreed to pay $550 million to settle civil fraud charges by the SEC of misleading buyers of mortgage-related securities. The agreement applied to one of the four deals cited by the Senate subcommittee.

The Justice Department said it would aggressively pursue investigations of "matters affecting our financial system."

The department pointed to its probe into the manipulation of the London Interbank Offered Rate. Britain's Barclays bank admitted in June that it had submitted false information to keep the rate low. Barclays was fined $453 million in settlements with the Justice Department, the U.S. Commodity Futures Trading Commission and British regulators.

LIBOR, as it is known, is the interest rate that banks charge each other for short-term loans. It is used as the benchmark for bank rates all over the world.

[sjc_1]

Goldman CEO Lloyd Blankfein told the Senate panel that the company didn't bet against its clients and couldn't survive without their trust.

They bet against their clients, they told them they were the best bundles when they were the worst and then hedged against their failure. That is a matter of record.

[credibility2]

The feds couldn't find anything that was done in violation of prevailing laws. Start creating laws that will prevent these types of things from happening again. Clearly the feds have to play catch-up on such matters and until they are caught up, more shenanigans will continue.

[FormerUSMCSergeant]

The Justice Department said it would aggressively pursue investigations of "matters affecting our financial system."

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Starting when?

[DCCorruption]

The fine is a slight tap saying, ok, we're going to make it appear as though we did something...keep up the good work. If this whole scenario isn't proof of the outright corruption and fraud between government and the agencies it's supposed to regulate, I don't know what is. Both political parties are one party, and both parties serve wall street and the banking industry.

[venusvegasvada]

Wow. Anyone on the planet surprised by this?

Do we have a big enough pair of clown-shoes for the Govt. to wear?

The off shot of things like this, for me anyway, is that every single time I see an advertisement from any of the Wall Street Banking or investment companies on TV like Goldman Sachs and the like, is that I extend my arm out towards the TV and raise my middle finger and give them the middle class salute.

...and vow to never give them a penny of my money ever again.

Yup, I give them a hardy @@#$-You, every time I see one of their ads. Same for the National Ass. of Realtors too. Screw all of them.

Until I see them put back the Glass-Steagall Act and tear down Gramm-Leach-Bliley and strike down the cute little lines that allow them to circumvent state bucket shop laws and do unlimited side betting....

I will salute you all.

[Mathion]

Of COURSE they're not going to prosecute them. After all, you don't kill your own, personal golden goose. They don't want to derail their gravy train. Without the money from the rich stolen by the rich from the poor, the politicians wouldn't be able to enjoy the high-life and still do nothing.

They'd have to get real jobs with the same kind of benefits the rest of us are getting: Nothing.

Politicians know what side of the bread is buttered and by whom. It hasn't been by the American people for 30 years or more.

[feyindie]

It's unfortunate that they have just been fined. They make that money in interest in a very short time. Bad call-Keep looking harder, there are illegal business practices there. If there aren't, we need new rules about holding Other People's Money IN TRUST.