The case has not even been heard in court and the company denies all the allegations. Almost every business publication has carried commentaries by insiders who say the government may have a hard time prevailing, and dismissing all the Sturm and Drang.
And yet the public seems to be delighted if not outraged by the SEC’s charges against Goldman Sachs, the opulent investment bank that many Americans see as the poster child of those causing the financial crisis. Even in the world of business where dislike of government crackdowns is dominant, a new poll shows that a majority believe Goldman is getting what it deserves.
Argyle Executive Forum conducted the survey electronically among its senior corporate leadership community.
The precise wording of the survey question was:
As Goldman Sachs Group is currently at the center of a legal maelstrom triggered by the SEC’s fraud charge last week, we want to ask you how you currently feel about the charges. Please select one of the below:
• I feel the firm is innocent
• I feel the firm is guilty
• I am currently unsure
• 55.2 percent of business leaders feel Goldman Sachs is guilty
• 20.7 percent of business leaders feel Goldman Sachs is innocent,
• 24.1 percent of business leaders are currently unsure”
An earlier poll of the citizenry found that 82 percent in our highly polarized country wanted a “crackdown” on Wall Street. A public that seems to oppose bailouts has a different attitude towards a jailout.
Writing on Greanville Post, Patrick O’Connor and Barry Grey argue that Goldman’s actions are criminal even though the SEC brought only a civil complaint against what seemed to be an arcane practice, alleging a failure to disclose key information. They write:
The public marketing and secret short-selling of junk assets was a common practice carried out by virtually every major Wall Street firm. It was part of a colossal fraud perpetrated on the American people. The banks lured people into taking out mortgages they knew the purchasers could not afford. They then packaged these toxic loans into securities–collateralised debt obligations–and made billions in profits by selling them to investors around the world, including pension funds, 401(k) plans, insurance companies and private investors. Those involved knew very well they were running the equivalent of a giant Ponzi scheme–a fraud far more massive and destructive than the criminal
operation headed by Bernard Madoff.
Madoff’s sins preceded the meltdown by years diverting attention from how Wall Street itself had become a far more sophisticated crime scene, not of lone con men but of institutions that had successfully lobbied to loosen laws and regulations and build an industry on a bedrock of fraud and deception.
This environment was promoted through the expenditure of hundreds of millions of dollars for lobbying legislators and campaign contributions. There was extensive collusion between the financial services industry
and politicians of both parties.
Cutbacks in government monitoring of financial practices became the norm, with fines and “settlements” in (with some exceptions) replacing vigilant oversight and the prosecution of wrongdoers at the federal and state level. Fraudsters were primarily punished with fines businesses paid as a cost of doing business.
These practices, aided and abetted by cutbacks in the budgets of agencies that monitored and enforced laws, meant that an open season on homeowners and investors had been declared. In 2004, the FBI warned of an epidemic of mortgage fraud, but also acknowledged their own white-collar crime squads had been downsized when fighting “the war on terror” became the priority.
[continues in the Nation]