Decision not to prosecute Goldman Sachs shows weakness: senator

WASHINGTON Fri Aug 10, 2012 5:44pm EDT

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010. REUTERS/Brendan McDermid

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010.

Credit: Reuters/Brendan McDermid

WASHINGTON (Reuters) - The Justice Department's decision not to prosecute Goldman Sachs Group Inc for its subprime mortgage trades resulted from either "weak laws or weak enforcement," the senator who asked for a criminal investigation of the firm said on Friday.

A day after the department announced its decision, Democratic Senator Carl Levin reiterated in a written statement the criticisms he lodged against Goldman beginning more than two years ago. He called the firm's actions "deceptive and immoral."

Goldman said it did nothing wrong in its marketing of mortgage securities, including one known as Abacus that was the subject of televised hearings before Levin's investigative subcommittee in 2010. The hearings focused on whether Goldman was wrong to sell products that it disparaged internally.

Levin said he is still convinced Goldman was in the wrong.

"It misled investors by claiming its interests in those securities were 'aligned' with theirs while at the same time it was betting heavily against those same securities, and therefore against its own clients, to its own substantial profit," he said on Friday.

Goldman settled a related civil investigation by the U.S. Securities and Exchange Commission for $550 million in July 2010 without admitting wrongdoing.

On Friday, Goldman spokesman Andrew Williams said the firm continues to stand by its actions.

"As the DOJ stated, it has 'not hesitated to investigate and take enforcement action when the evidence and facts support doing so.' We believe that their examination has been thorough and impartial," Williams said in a statement.

DODD-FRANK AND 'VIGOR'

In April 2011, Levin asked for a criminal probe on the day that he and Republican Senator Tom Coburn released a 639-page report on the financial crisis.

The unsigned Justice Department statement on Thursday on its decision not to prosecute said that "the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time."

To critics, the department's decision was another example of the inability of prosecutors to pinpoint blame for a financial crisis that pushed the United States into a severe recession from which the economy is still recovering only slowly.

Levin said the 2010 banking and Wall Street regulation overhaul known as Dodd-Frank is part of a solution if regulators "do not water it down" and "enforce those rules with vigor."

(Reporting by David Ingram; Editing by Kevin Drawbaugh, Gary Hill)

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Comments (4)
mutt3003 wrote:
C’mon…. Levin is part of the game. Anybody who thought this was going any further than a few sound bites needs to wake up. Congress, the president and the banksters are on the same team and they never lose, especially when their opponent is the American people.

Aug 10, 2012 4:49pm EDT  --  Report as abuse
Chazz wrote:
Those evil bankers…!

Actually, the reason the administration decided not to prosecute is because while we’ve all been focused on Romney’s murder(s) and tax evasion, “undocumented” workers from south of the border quietly moved into Goldman Sachs, set up offices, spawned and…well…you know the story.

Aug 10, 2012 5:24pm EDT  --  Report as abuse
xyz2055 wrote:
Listen up! There’s no way in the world that I’m voting for Mitt Romney! But I’m incredibly. disappointed in this decision. John Paulson, paid Goldman Sachs, something like $15M to set up Abacus so that he could short it. Goldman even allowed Paulson to hand pick some of the assets (sub prime mortgages) that went into the fund. The ratings agencies gave the fund a triple A+ rating and Goldman marketed this fund to a variety of investors. In the end everyone lost money except Goldman and Paulson (who made $1B out of it). This is 50X’s more heinous than the guys that the SEC has been sending to prison for insider trading. Goldman is entrenched in the federal government and they obviously have a get out of jail free card. Obama talks big..but in the end he really doesn’t defend what’s right. Romney would be worse.

Aug 10, 2012 7:04pm EDT  --  Report as abuse
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