Goldman Suit Exposes Big Banks to Legal Firestorm

Filed in bank of america, ceo, Gold, Gold Bullion prices, goldman sachs, sov by on April 21, 2010 0 Comments

Now we learn that the SEC split 3-2 over whether to go after Goldman Sachs in court. Supposedly, the regulatory agency prefers unanimous votes when bringing enforcement actions against the firms it regulates. Why the exception this time? The Wall Street Journal made it sound like it was simply partisan politics that carried the day – i.e., the SEC’s two Republicans voted against suing Goldman for civil fraud, but the three Democrats prevailed. That is superficially what happened, and it is as much of the story as the SEC is willing to divulge right now. But it’s bound to leave many observers, particularly Obama-ites in Congress who are out to pillory the bankers, with the impression that the two Republicans were merely looking out for their fat-cat buddies on Wall Street. This thought occurred to us as well, so we’d have to concede it is at least possible. But might there have been another reason why the Republicans backed away from bringing formal charges against Goldman? We think there is and that it goes to the heart of the corruption in which the world’s largest banks have inextricably trapped themselves. For if you assert in a of court law that Goldman defrauded its customers, you have implicated every bank in the big leagues. Enabled by their respective central banks to create loans from thin air, every one of them – even banks run by otherwise spotless Swiss Burghers — have played the same Ponzi game as Goldman. Now, regardless of whether the charges brought against Goldman are civil or criminal, they will open the door to an endless flood of litigation with the potential to bring down the entire banking system. From this point forward, Goldman will be fair game for every aggrieved city, county, state, sovereign fund and class of investor with whom Goldman has done business during the last decade. The same goes for Bank of America, J.P. Morgan, Morgan Stanley, Deutsche Bank et al. Lynch Mob So it’s just possible the Republicans put politics aside when they voted, in effect, to quietly sanction Goldman behind the scenes. It must also have occurred to them that it would ultimately be impossible to mask the overwhelming stench of Goldman’s actions. The firm, after all, did sell an investment to the public that had been furtively created by someone betting on the portfolio to fail. There is no way Goldman can talk its way out of this one, although that hasn’t stopped CEO Lloyd Blankfein from trying. With Goldman reporting a spectacular $3.4 billion quarter yesterday, he might as well have tried to explain to a lynch mob that he has never, ever kicked his cat and that he always helps little old ladies cross the street. Some see the charge of civil, as …

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Goldman Suit Exposes Big Banks to Legal Firestorm

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