Federal prosecutors have finally decided that with all this smoke everywhere, there's got to be some fire coming out of Goldman Sachs.
Federal prosecutors would face a higher bar in bringing a criminal case against Goldman, whose role in the mortgage market came under sharp scrutiny this week during a marathon hearing in the Senate. In contrast to civil cases, the burden of proof is higher in criminal ones, where prosecutors must prove their case beyond a reasonable doubt.
The stakes are high for Goldman, but they are also high for the United States attorney’s office. Prosecutors from the Eastern District of New York lost a case last year filed against two hedge fund managers at Bear Stearns, whose collapse presaged the turmoil on Wall Street.
Prosecutors built much of that case around internal e-mail messages at Bear Stearns, much the way the S.E.C. and senators have pointed to e-mail at Goldman in which employees had disparaged investments that they were selling to their customers.
In the end, however, prosecutors were unable to prove to a jury any criminal wrongdoing by the Bear Stearns employees.
A spokesman for Goldman declined to say whether the bank knows about a criminal case, but he said “given the recent focus on the firm, we’re not surprised” to learn about a criminal inquiry. The spokesman said Goldman would cooperate with any investigators’ requests for information.It's nice to finally see somebody decide that what happened to our economy might have actually been a criminal act perpetrated by people who stood to gain a metric crapton of money by betting on the entire housing bubble detonating like a M-80 inside a paint can.
The argument I keep hearing (and the NY Times article continues along that thread) is that "Well, what they did was immoral and horrible and pretty bad and it wrecked the economy, but it wasn't illegal." No offense, but doesn't that mean we need to change the law so that what happened is made illegal, so that people don't do this in the future? That's the whole point of laws and punishment, in order to discourage people from breaking laws and causing untold havoc in society.
I'd call the loss of eight million jobs "untold havoc in society". I'm not saying it's all Goldman's fault, but given all the overwhelming evidence against them of profiting from a disaster and the repeated disdain they have shown time and time again for anybody who wasn't a Goldman Sachs executive, I'd say the law needs to be amended before it happens again.
Unless people think it's a good idea to have another financial crisis on our hands. Any business plan that includes "and then the American economy collapses into a near depression and then we make a fortune" should be illegal.