U.S. pushed Goldman, others for legal loss estimate
The Goldman Sachs building is seen at 200 West Street, New York June 2, 2011.
Credit: Reuters/Shannon Stapleton
NEW YORK |
NEW YORK (Reuters) - Goldman Sachs Group Inc and other banks disclosed estimates of potential losses from legal issues after pressure from Securities and Exchange Commission staff, according to documents released on Friday.
In a letter to Goldman on February 22, Stephanie Hunsaker, the senior assistant chief accountant in the SEC's division of corporate finance, questioned an assertion by Goldman management that the bank was unable to come up with solid loss estimates.
Other major banks, including JPMorgan Chase & Co, and Citigroup Inc, and Morgan Stanley received similar requests.
Hunsaker said the assertion by Chief Financial Officer David Viniar "appears unusual" and requested that Goldman revise its financial statement to provide loss estimates and additional disclosures about legal matters, or an explanation for why it could not.
The SEC has been pushing banks to provide more disclosures about their legal liabilities, which has become a major investor concern.
Last year, Goldman spent $700 million on lawyers hired to defend the bank in various lawsuits and also spent $550 million to settle civil fraud charges with the SEC.
In addition to civil suits filed by private parties, Goldman also faces probes from the SEC, the Commodities Futures Trading Commission, the Justice Department, the New York Attorney General and the Manhattan District Attorney's office.
Goldman responded to the SEC's request that it disclose more information by estimating its "reasonably possible losses" for legal matters to be approximately $3.4 billion in its annual report for 2010 filed on March 1. That figure was adjusted to $2.7 billion in Goldman's first-quarter report.
The SEC also asked Goldman for more information about its impairment of intangible assets for its designated market maker rights, growth rates for components of its equities business, its decision to separate principal lending and investing activities and its potential costs for repurchasing residential mortgage-backed securities.
(Reporting by Lauren Tara LaCapra, additional reporting by Dan Wilchins; Editing by Tim Dobbyn, Gary Hill)
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America is dragging a multifaceted financial anchor as it tries to recover from the Collapse of 2007/2008. One of those facets is that no one trusts the market anymore. The American system failed when credit rating agencies lied, realtors lied, and banks lied which resulted in such harm that America and the rest of the world is still struggling in 2011 to survive the aftermath.
When vast profits are made illegally while simultaneously causing harm on an unfathomable scale, Congressional scoldings and modest SEC fines are insufficient to restore faith in the market and government. Citizens need to believe that the retribution against the perpetrators and profiteers will stand as a monumental, historical deterrent against future bad behavior.
Anything short of that makes it appear that there is a protected class in America, a oligarchy/plutocracy/aristocracy who can do anything they want with relative impunity.
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