Goldman Sachs announced in a regulatory filing that the Securities and Exchange Commission has closed their investigation into the firm misleading investors on a $1.3 billion subprime mortgage-backed security deal. This represents a flip for the SEC, which notified Goldman of impending action back in February:
In February, Goldman received a so-called Wells notice from SEC staff related to disclosures in the deal’s offering documents. Such notices typically indicate the agency plans to take some kind of enforcement action, and gives firms a chance to respond.
On Monday, the SEC notified Goldman that the investigation had been closed and that it did not intend to recommend any enforcement action against the bank related to the offering, Goldman said in its quarterly 10-Q filing with the SEC.
This Goldman Sachs deal, known as Fremont Home Loan Trust 2006-E (the loans were largely from Fremont, California), is an example of a case where the firm did not properly disclose the nature of the subprime mortgages involved, misleading the investors who purchased the bonds. Goldman still lists $3.4 billion in legal exposure from various lawsuits and cases, up from $2.7 billion in May. But they will not face any SEC enforcement on this deal.
As Dealbook points out, this is another indication that there will be no major prosecutions or investigations into the activities of the financial industry during the 2008 crisis. It’s fitting that this revelation comes out on the six-month anniversary of the establishment of the task force that’s supposed to be investigating securitization fraud, the box into which the Goldman case would fall. Recall that Eric Schneiderman said last night that a Romney Presidency would mean the end of these investigations. He got the dates and the President wrong.
While the S.E.C. has brought more than 100 financial crisis-related cases, including a major action against Goldman in 2010, the agency was aiming to take a final crack at punishing Wall Street for its role in the crisis.
After President Obama announced the creation of a special task force in January to investigate the residential mortgage mess, the S.E.C. and other authorities vowed to hold the banks accountable. Wall Street packaged and sold subprime mortgages to investors, as well as the government-owned mortgage finance giants Fannie Mae and Freddie Mac, which suffered billions of dollars in losses.
Goldman’s Fremont deal, known as Fremont Home Loan Trust 2006-E, was one piece of a broader investigation into the mortgage-backed securities. Wells Fargo and JPMorgan Chase have also received warnings of potential action by the S.E.C.
“Mortgage products were in many ways ground zero in the financial crisis,” Robert Khuzami, the agency’s enforcement director, said at a news conference for the task force.
But this never happened. Everyone will turn to the new shiny object of Libor, where action is underway on the prosecution front. But as for the core of the financial crisis itself, the housing bubble and the piling on of CDO risk that intensified the crash, Wall Street will get away with it.
Goldman Sachs executives, wanting rhetorical in addition to physical deference, have sided with Mitt Romney in the Presidential race. But I suspect they see the election as a win-win situation.
Incidentally, there is one bit of exposure left for Goldman on this particular batch of Fremont loans. One federal entity has sued Goldman and other banks for misrepresenting mortgage-backed securities. That would be the Federal Housing Finance Agency. That Ed DeMarco is such a scoundrel.
UPDATE: More on this tomorrow, but the Justice Department has announced that they won’t prosecute Goldman Sachs for the allegations in Carl Levin’s Permanent Subcommittee on Investigations report. So today is “relieve Goldman Sachs of all their underlying legal exposure” day.




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O.T., in other Goldman news: New charges for ex-Goldman programmer in code theft case
Maybe somebody can explain why this isn’t double jeopardy.
http://www.reuters.com/article/2012/08/09/goldman-programmer-charges-idUSWEN697020120809
I am firmly convinced that Obama made a deal with the banksters to squelch any SEC, DoJ, or local state legal actions (best he could) against them in exchange for campaign contributions.
Please,someobody change my mind.
Now that Wall Street is abandoning the Dem’s, the Dem’s need to jail Wall Street. It is only fair.
Obama got just under $1 million in campaign donations from Goldman in 2008, the largest Goldman ever made to a single candidate. Money well spent, another stellar investment by Goldman.
I don’t think there was even a deal, Obama is a true believer in Reagonamics. He is letting the crooks go because he believes all the money they steal will somehow trickle down and help the economy.
It wasn’t the Supremes which said money is speech, it was Obama when he financed the most expensive presidential campaign in history with the help of Goldman Sachs.
If I were a cartoonist, I would depict a single set of footprints in the desert, each one being a thousand dollar bill, to go with the legendary tale of the pilgrim who felt entirely alone after looking back and seeing only one set – where was God? The response from a leering archdemon (in my version) is, “He was carrying you.” Only this time it’s Obama looking back, and those footprints belong to Goldman Sachs. (Maybe a few fiery flames round the perimeter would help. I did tell you I’m no cartoonist.)
the SEC is a wholly owned subsidiary of the evil minds at goldman sachs. there is no more perverse virus upon an otherwise good society than the snake that is goldman sachs… the worshippers of money, descendents of the temple that Jesus revolted against by turning their tables.
What people own is the land under their feet unless they allow the likes of thieves to have possession and control of it.
In the beginning their were hunters and farmers. the people ate and could celebrate life except that for those conquerors who wanted domain and power over others. Stealing and killing became a way of life until the United States COnstitution was created to put an end to the INEQUALITIES of power and force a respect for life.
But the thieves, liars and whores for money didn’t like the constitution. it was in their way. so they devised ways to turn money into speech and and to kill votes and lie at will and to deceive the people. and to take their homes and the land under their feet. then to deprive them of health care to kill them off and to deprive them of food.
these thieves and liars and whores for money are a virus upon the good. they seek to infect others and make their victims either like them or as slaves for them. they will not stop for they know no other way for they were born different.
Fraud is the new compliance standard.
Because as Richard Haass tells us, Goldman Sachs and Microsoft now control US sovereignty. Specifically, Goldman Sachs Flash trading has been protected by the Department of In-Justice. In the first trial, DOJ had to get a Federal Judge on the 4th of July to protect Goldman Sachs Flash Trading.
My guess is there are some “backdoors”, and special Goldman Sachs malware, that is also being protected.
goldman sachs bought up trading software and then initiated their own exchange. my best guess is that real time trading isnt real real time. if the real market is a re-broadcast, then goldman sachs can frontrun every trade and make the claim it isnt by making the claim that they are the market – that they are the market maker for all markets.
if they arent doing this now, they will. its a 100% win for them and as much a guaranteed loss for all the willing victims of the greatest – but not so great – PRICE SHAM of the century.
it is double jeopardy. its one way that thieves like the minds at gldman sachs have of saying “it wasnt me”. the art of denial, the falsification of history, the branding of illusion and never having to admit wrong doing – just hang someone else.
so when the thieving minds at goldman sachs dont get their scapegoat one way they try another. thats what thieves do. for instance, the poor fellow they are trying to scapegoat could also be charged with altering code as copyright violation, or writing code past midnight which would be another charge for a crime committed on another day – a crime a day as it were. or perhaps they could charge him with speaking about the code when he had no contract that he actually could talk about it.
EVIL HAS NO BOUNDARIES.
tru dat!
since you arent a cartoonist, try being a thinker. perhaps President Obama knew the only way to change things without going syria was to infect them – working his way win then calling on others for help. he did say “i’ll need your help”. he meant it. only question is, will you provide it?
watched PBS the war
yes evil has no boundaries
i do believe he messed up with the sec. i would have fired the entire lot.
WOW!!!!
Joe, that was an impressive, but very disturbing post.
I think many of us looked to Obama to be a savior for the common man. I, for one, with this event and others, no longer believe in him or the democratic party. I thknk our country is in serious danger.
Minor correction:
Fremont is a city in the bay area, however in this case it was a now bankrupt sub-prime lender based in SoCal somewhere.
Goldman Sachs runs the White House. Waste of time expecting anything but a pretense of a punishment, if that. More in your face indifference is what you’re more likely get. Total BS on a stick. Too sick of it to go into it.
Two parties work together to sheer you. Watch them send out their paid villains to agitate the crowd and gin up the two party drama. Wake up .
Arrest Goldman Sachs. UNITE America. I will never call myself a Dem or a Repub again. These parties ARE the PROBLEM.
Yep, that about covers it!
And there you go folks. One of those people who can be fooled ALL THE TIME. Daaaamn!
Really? Some legal wizard at the SEC went down the rabbit hole at Golden Slacks and couldn’t find ONE crook?! And, didja’ REALLY think Eric Holder was gonna’ … oh, never mind.