Will Anyone At The Most Powerful Investment Bank Go To Jail?

Will Goldman survive the assault? Will the threat of criminal charges being pursued against the world’s leading investment bank spill over onto others on Wall Street? Is the criminalization of the crisis underway, or is all this just a maneuver?

For the last two years, I have felt lonely and isolated with my calls for a jail-out, and insistence that theft, fraud and crime are at the heart of our economic disaster. I have written two books documenting my contention and just released the film Plunder The Crime of Our Time treating the economy as crime scene.

There are a few other voices out there making a similar claim: Former bank regulator Bill Black; U.S. Senator Ted Kauffman; and even billionaire investor Jim Chanos, among them. Most politicians of both parties and media pundits have dismissed the suggestion, preferring to believe that virtually everyone was to blame and, hence, no one was to blame. “What me prosecute?”, is the mantra.

Most say finance professionals, considered the “smartest men in the room,” committed unintended “mistakes” because of economic trends no one could have anticipated.

Never mind that 1000 plus bankers went to prison after the S&L crisis. That was then, and this is now, nearly ten years after the financial services industry pulled off a costly legislative coup through lobbying and campaign contributions to erode regulations and decriminalize the playing field. With a major advertising campaign in a complicit media, they packaged their agendas in the language of modernization and innovation. They got laws gutted and prosecutors de-funded.

As their profits rose and the bubble boomed, they seemed to do no wrong until small blemishes like the Enron and WorldCom scandals tarnished their image.

Over the years, Goldman was riding high, raking in major profits and paying themselves obscenely well. That is until the SEC filed a civil complaint alleging a fraudulent transaction that deceived investors. That was followed by turbulent hearings on the Hill where Senator Carl Levin kept repeating an internal reference to “Shitty” deals the firm is said to have pedaled and then bet against.

Goldman looked bad, especially when protesters in the back of the room dressed in old-fashioned black and white prison garb protested. Part of the company’s defense was that “everyone” on the Street was doing what they were doing. Hmmmm.

Even after all of the drama, Goldman was still one of the biggest earners in town. Billionaire Warren Buffet who helped them stay solvent is now singing their praises again. The “oracle of Omaha” says they are being misunderstood.

But not in the public eye. Goldman has quickly descended from being Wall Street’s hero to a zero,

According to financial blogger Larry Doyle, “Goldman’s close, if not incestuous, relationships with Washington, many hedge funds, and major clients has positioned the firm as the centerpiece of America’s outrage toward Wall Street.”

The giant firm is now also being ridiculed, even though no charges have yet been proven, and they are “lawyered up” to the gills. Leslie Griffith calls their confrontation on the Hill a Marie Antoinette moment on Reader Supported News because most onlookers wanted to cut off their heads. She writes:

“A modern day financial monarchy, Goldman acts with the impunity once reserved for kings. Controlling legislators. Electing Presidents. Filling the Executive Branch with well-heeled lackeys, manipulating world markets and betting against the welfare of its own clients … the American people. When their equivalent of “tax time” came, they squeezed the peasants for billions of bail-out bucks.

Marie would be proud.”

When writer Matt Taibbi compared Goldman to a “vampire squid” many rushed to their defense. But that was not happening this time. Instead the Justice Department one-upped the SEC by asking for a criminal investigation.

Just the idea of it led to a $21 billion dollar loss in the value of Goldman’s shares. Some analysts downgraded the firm the way they downgraded Greece earlier in the week. CEO Chief Exec Lloyd C. Blankfein who said he had been “humbled” by the hearings must be pissed because in just a few days, he personally lost $81 million dollars on his 2,023, 364 shares which were worth about $373 million. There was little public sympathy for his fall from grace.

So what now? Will there really be a criminal prosecution or all this just smoke to create a sense of urgency for an already heavily compromised financial reform package? Will anyone go to jail? Unless there are more smoking guns and shocking revelations, some settlement of the civil charges is more likely as The Atlantic explained:

“… the standard for a criminal case is much higher. The DOJ must present very compelling evidence that a jury would be able to understand well enough to find that, beyond doubt, Goldman and/or some of its bankers are guilty of fraud. Given that there are many people questioning whether even the civil case can succeed under a weaker standard of guilt, it’s relatively doubtful that the criminal charges would stick. Yet, the public doesn’t have all of the information, so it’s too soon to know the fate of a criminal case for sure.”

Also, it seems as if only one lower level banker, Fabrice Tourre, a/k/a “Fab,” is at risk. His defense has already been laid out in his congressional testimony. As NPR’s Planet Money noted, “Tourre’s public statements make it less likely that he could change his story later and negotiate a lesser penalty with the SEC in return for information that could be damaging to the firm or other executives, the person said.”

Now, says Doyle, there is “little doubt as to why the Goldman Sachs execs were reticent in their answering questions this past Tuesday knowing full well that a criminal investigation was potentially close to being launched.”

The criminal issue is hardly underway. As one lawyer said to Bloomberg News, “In order to proceed criminally in a case, you need to have very clear evidence of lying, cheating and stealing.” Robert Hockett, a law professor at Cornell University, downplayed the crime angle. “It’s really not a big deal,’’ says Hockett. “It isn’t uncommon for the SEC to refer a case to the U.S. Attorney. It doesn’t present a new legal development. It’s a procedural development.”

The bottom line: don’t get your hopes up. The government has not declared war on Wall Street even after Wall Street declared war on Main Street. The Goldman gang is still at large.

Meanwhile, our media is soft-soaping the criminal practice in which the firm, for one thing, deliberately re-engineered mortgages to fail, a charge that it earlier admitted to. Where are the editorials calling for perp-walks?

Can we trust a media that just last week mostly blacked out a march by 15,000 workers on Wall Street. I was there and couldn’t find anyone who didn’t believe crimes were committed.

Wall Street has hardly been humbled. It is still spending a fortune on PR with 25 lobbyists pressuring every member of Congress. Its arrogance is evident in an email the Financial Times reports is now “pinging around” trading desks. It reads in part:

“We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable… Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours.

… We aren’t dinosaurs. We are smarter and more vicious than that, and we are going to survive.”

The gauntlet has been thrown down.

Filmmaker and News Dissector Danny Schechter edits Mediachannel.org.
For more on his film, visit plunderthecrimeofourtime.com.

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  • ldragen

    no none of these men frome goldman sachs will do jail time. Let me ask the people who posted this, if you were in a position of power, would you allow one of your friends go to prison for fraud after that same friend gave you a couple of mil only months before the investigation?

  • Word Eater

    Someone will go to jail, but it will be a sacrificial lamb, chosen by both sides.

    In related news, I just got a letter from my employer that our Goldman Sachs Structured US Equity Fund is being eliminated.

    I'm sure the smart vampires have already moved their assets around so that, even if Goldman Sachs faces financial devastation, personally, they will do just fine.

  • tonyviner

    I have just come up with a terrific idea. Next time you need something to do, simply kill a banker. It doesn't matter how you do it: stabbing to death, gunshot wound to the face, piano wire, poison, drowning, repeated blows to the face with a blunt object, slicing of one's throat, chainsaw, bomb, ice pick, sledgehammer, anvil from the roof, throwing one off the roof, smothering with a pillow, toaster in the bathtub, releasing deadly snakes into their house, burning at the stake, sending them into space without protective gear, sending them into a mine without protective gear. This will also work for oilmen, union bosses, regular bosses, or just anyone that you feel has outlived their usefulness. By no means should the families of those murdered be considered innocent, that is the biggest mistake you could make. That, getting caught, or accidentally killing yourself in the process, but every generation needs a martyr that we can later imbue with mystical powers in order to start this thing all over again.

  • http://www.mistersifuentes.com Mister Sifuentes

    Short answer, NO! They just did what they had permission to do in the first place. Our policy makers are the ones who should be investigated and prosecuted.

  • dumbsaint

    They'll go to rich people's jail, which is somewhere in the Bahamas.

  • oman28

    Let's hope Goldman Sachs isn't the 'sacrificial lamb'. If they fall and the likes of JP Morgan et al are allowed to continue then nothing has been achieved. Just one less lion to feed with the pack.

  • jon doe

    Surely these bankers who profit from the failure of home loans (and proudly lead their “premium customers” to join them in investing each nickle they could in derivatives from the failure of home loans,) will face many years in a cement jail with no air conditioning. For no doubt our justice system with all its laws and courts will come to rescue us.

    As we can all learn from Sid Meyers Civ. 4 “Large banks are more dangerous than standing armies” – That Guy.

  • Anonymous

    Where is the same blame on government?

    Senators Slam Goldman, Schiff Slams Senators: “They Have Some Nerve”

    http://www.youtube.com/watch?v=K5Pd4ig7s9w&

  • prose_stylist

    Where is the same blame on government?

    Senators Slam Goldman, Schiff Slams Senators: “They Have Some Nerve”

    http://www.youtube.com/watch?v=K5Pd4ig7s9w&

  • prose_stylist

    Where is the same blame on government?

    Senators Slam Goldman, Schiff Slams Senators: “They Have Some Nerve”

    http://www.youtube.com/watch?v=K5Pd4ig7s9w&

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