DOJ, SEC Are Now Reviewing Senate Findings On Goldman

Tyler Durden's picture

Carl Levin wasn't kidding when he said he would refer Goldman to another set of Goldman subordinates: The DOJ and the SEC. Sure enough, as Bloomberg reports, "Senators Carl Levin and Tom Coburn, the Democratic chairman and senior Republican on the Permanent Subcommittee on Investigations, have signed a referral letter asking the agencies to examine the panel’s report, Levin said today in an interview." And now Goldman can finally pull all those high-CPM paying ads (for which the FT is very grateful) with photos of puppies and Ethiopian kids on them: obviously the humanitarian PR campaign has been an abysmal failure, and in fact is making the firm appear even shadier. "The scrutiny is a setback for Goldman Sachs, which hired lawyers, lobbyists and public relations specialists to monitor the two-year investigation and tamp down any controversy that arose from the subcommittee’s conclusions." On the other hand, as presaged in the first sentence with the keyword "subordinates" it is obvious that absolutely nothing actual will come out of this. Sure, someone may end up paying a fine that will amount to less than one day's worth of Goldman prop profits, but someone going to jail? Please...

From Bloomberg:

A formal referral from the Senate is “much more than a symbolic gesture” because it would prompt an agency to put the matter “at the top of its list,” said Robert Hillman, a professor at the University of California, Davis, School of Law.

For Goldman Sachs, “the question is how much pain they’re going to have to endure with the public spotlight for these revelations, and that depends in part how long the government’s willing to drag this out,” said James Cox, a securities law professor at Duke University School of Law.

Still, Cox said he is “very skeptical” that the examinations by the agencies will ultimately lead to new claims against Goldman Sachs, which last year paid $550 million to settle SEC claims related to its marketing of the complex securities known as collateralized debt obligations.

Elsehwere, Eric Holder took some time from his busy speculator hunt campaign to answer a question on why the DOJ will do absolutely nothing with this development:

Attorney General Eric Holder, testifying before the House Judiciary Committee today, confirmed that his department is scrutinizing the report. Two people briefed on the matter confirmed that the SEC enforcement division is also studying it.

Holder, in his comments, didn’t offer any specifics though he did single out the New York-based bank in his remarks.

“The department is looking right now at the report prepared by Senator Levin’s subcommittee that deals with Goldman Sachs,” Holder said.

When the report was released, Levin said he wanted the Justice department and the SEC to examine whether Goldman Sachs violated the law by misleading clients who bought CDOs without knowing the firm would benefit if they fell in value.

Apparently, as part of this most recent round of discovery, we will learn how more 27 year old VPs who singlehandedly operated the firm's CDO sales division, will have bashed the housing market even as they told all their clients to get into it.

According to the people briefed on the SEC’s review of the Senate report, who spoke on condition of anonymity because the matter isn’t public, investigators at the agency will scrutinize interviews, e-mails and other confidential documents that surfaced in the inquiry. While much of that evidence was seen by the SEC before its 2010 settlement, some is new, the people said.

Hillman, the law professor, said that given Goldman Sachs’s earlier settlement, the SEC or Justice Department would likely have a high bar for bringing a case against the bank.

In resolving that case, Goldman Sachs admitted no wrongdoing and said in a regulatory filing it “understands that the SEC staff also has completed a review of a number of other Goldman mortgage-related CDO transactions and does not anticipate recommending any claims against Goldman or any of its employees.”

In the meantime, the SEC porn overlords are at it again, trying to negotiate settlements for jobs.

The SEC’s enforcement division is “certainly free to revisit that, but the odds are that it won’t unless something very new comes out in the way of facts,” said Hillman. “The SEC has probably taken its major step with Goldman already.”

One can naturally hope something comes out of this. Or, one can know just how business is done in crony capitalist America, and all hope abandon. At this point we are leaning far to the latter.

For those interested, below is a trancript with notable quotables from the House Committee on the Judiciary, in which carbonite fan #1 Eric Holder was testifying.






May 03, 2011



     DEUTCH: Thank you, Mr. Chairman.

     General Holder, thank you
for being here. The Wall Street Journal reported today that the U.S. has filed
a lawsuit against Deutsche Bank for lying repeatedly about the quality of
mortgages so that they could profit from their resale.

     According to the lawsuit,
when selecting mortgages from the Federal Housing Administration's insurance
program, Deutsche Bank did not consider whether the borrowers would be

able to repay.

     Including violation of
Federal Housing Administration's mortgage insurance program, these government
insured mortgages were then sold off, earning the bank a massive profit while
leaving homeowners to face foreclosure and the government on the hook to pay
billions of dollars in insurance claims.

     The claims are startling, and
the charges highlight the efforts to seek profit at any cost while leaving
thousands of people and their families to lose their homes and the taxpayers
being forced to pay for the bank's actions.

     First, I'd like to commend
you for the department's vigorous pursuit of these charges against Deutsche
Bank, and I'd like to ask whether -- first, whether the department is

investigating any other large banks and possible
deceptive actions that they may have taken to fuel the mortgage crisis that the
country's been facing. We'll start with that.

     HOLDER: We have a very
active program under way that looks -- looking at a variety of players in the
mortgage field. We've brought a number of cases already. There are a number
of investigations that are -- that are pending.

     DEUTCH: Next, will the
department pursue criminal charges
that could result in in-jail time
for the heads of these larger banks and servicers,
if it's found
that they knowingly took actions like those described in the lawsuit filed
against Deutsche Bank?

     HOLDER: Yes, I mean, the scrutiny that we
would bring would not simply be at the organizations and be looking to punish
the organizations. If there are individuals who have taken
actions that would warrant individual liability, that is something that we will
pursue as well.

     DEUTCH: And -- and if I
could just pursue one possible line of prosecution that's been raised, I'd love
your thoughts on it. And
that is under Sarbanes-Oxley, the requirements under Sarbanes-Oxley that
executives at Wall Street firms have to establish and maintain adequate systems
of internal control, that they've got to regularly test those controls to make
sure that they are adequate.

     And, as I understand
it, that statute provides that in the case of knowingly making false claims,
one would be subject to fines of up to $1 million and imprisonment of up

to 10 years. And then if those claims were willful,
those violations were willful, fines then of up to $5 million and jail time of up to 20 years in

     Is this the -- would this be the basis of
potential claims against individuals in connection with the mortgage
foreclosure cases that are being pursued?

     HOLDER: Those are potential
statutes. There are other statutes that we can bring, I mean, some as old as
and tried and true as wire fraud and mail fraud. I mean, there are a

whole variety of tools that we have, including those that
you have mentioned, and we will try to make use of all of those as we continue
in these investigations.

     DEUTCH: And so as -- as you
pursue these claims, at what point is the determination made? Obviously, my
colleagues asked, others have asked. It's certainly been the big topic

of conversation.

     While there is a
billion-dollar case that's been filed today, which I applaud you for, given the
-- the
vast array of potential claims that could be -- individual claims that could be
brought, that would
bring the potential of criminal violations. When might we
expect to -- to see some of those cases filed as well?

     HOLDER: Well, it's hard to
predict. You know, we
are serious about the investigating that we are doing, and it's always hard to
determine exactly when these cases will -- when
decisions will be made easier to prosecute or to decline prosecution.

     All I can tell you is that
we are looking at these cases seriously. We are going to pursue them
aggressively, and as soon as we can make a determination and share that, you
know, with the American people, we will.

     DEUTCH: So then there is.
Just to conclude,
General Holder, there is -- we should know, the members of this committee, the
American people should -- should know that your
Justice Department is vigorously investigating these potential claims

and that under Sarbanes-Oxley and a whole array of other statutes, the possible
-- the possibility for

criminal prosecution against individuals in connection
with the mortgage foreclosure crisis is real, and we should look forward to the
potential of those cases being brought.

     HOLDER: I mean, I don't want to over promise, but the
possibility that those cases could be brought, yes, that is certainly the case.
I mean, we are in the process of looking at a whole variety of these matters,
and it is possible that
criminal prosecutions will result
. Civil actions might result.

     We're going to try to take
whatever enforcement action we can to try to hold people responsible where that
is appropriate.

     DEUTCH: Thank you.

     And I yield back, Mr.


CONYERS:  Now for the things that we want you to
improve on. I start off with the fact that the worst economic upheaval since The Depression, with
all the suffering and damage that its caused citizens and their family, there
is to my knowledge not one single prosecution on any of the Wall Street barons
that have created this economic mess


LOFGREN: Now I raise this because many of us, when we go home every week, get
this question from our constituents

     As far as we can tell, the department has not brought a
single prosecution of a high-ranking Wall Street executive or major financial
firm in the wake of the Wall Street scandal that contributed to the global
economic crisis.

     So it looks to me that the department is
spending its resources prosecuting nannies and busboys who are trying to get
back to their families, illegally reentering.

     And yet we have not brought
any prosecutions on the bandits on Wall Street who brought the nation and the
world to the brink of financial disaster. Could you explain these priorities,
Mr. Attorney General?

     HOLDER: Well, there's a lot
packed into that question. The fact that there are so many prosecutions along
the border is an indication of the nature of the problem that we


     This administration has
always stood for a comprehensive approach to...

     LOFGREN: No, no, no. I'd
like to know about the Wall Street, the lack of Wall Street prosecutions

     HOLDER: All right. Well, I
was just dealing with some things that you said (inaudible).

     The fact that we have these
prosecutions on the border is not any indication that we're not taking the Wall Street potential
offenses seriously

     We have prosecuted a great
many cases that deal with fraud with regard to the mortgage area, with regard
to financial schemes.

     A case was brought by
(inaudible) the last couple of weeks a $3 billion fraud scheme and that
involved Colonial Bank, Mr. Lee Farkas.

     The department is
looking right now at the report prepared by Senator Levin's subcommittee that
deals with Goldman Sachs

     The notion -- and people
have to disabuse themselves of the notion that, somehow or other, this
Department of Justice, the prosecutors who look at these cases, don't want

to bring these cases.

     They come to the Department
of Justice to look at matters like this, to apply the law, look at the facts
and to bring new cases. We are extremely aggressive in that way.

     LOFGREN: May I ask how many investors and U.S.
attorneys are assigned to the prosecution of executives on Wall Street who may
have committed misconduct?

     HOLDER: I can't give you an
exact number, but I can tell you that a substantial number of people in the
Southern District of New York, as well as the criminal division here

in Washington, numerous...

     LOFGREN: Well, maybe you
can get that number after the -- this hearing.

     I'd like to turn to the
whole mortgage industry. There was tremendous misconduct undertaken relative to
the mortgage industries, including fraud.

     And as you are aware, I am
sure, all 50 attorney generals (sic) have engaged in settlement discussions
with banks about their misconduct.

     Recently, the Comptroller
of the Currency released a draft cease- and-desist order, which one expert
described as the regulatory equivalent of a Potemkin village.

     I'm wondering if you could
tell us -- I understand the department is also engaged in the negotiations --
what should the top priorities for a global settlement of legal claims

against serving -- servicing industry include?

     Do you concur with the
attorney generals' (sic) outlined settlement? Or do you have a different


HOLDER: Well, I'm not sure you can look at -- you can say
that the attorneys general -- attorney generals (sic) are a model if they have
a variety of approaches.

     Tom Perrelli, who is the
associate attorney general, is intimately involved in that process.

     And we're trying to work
with the financial institutions as well as the state attorneys general to try
to work our way through an appropriate settlement.

     LOFGREN: Well, they have a
framework. And I'm just wondering if you agree with that framework or not.

     HOLDER: Well, I -- yes,
there's a framework. There is a framework. But there are still a whole bunch of
different views, believe me. There's a stated framework.

     But in terms of the
interaction that goes on in these negotiations, there are a variety of
positions that we are trying to harmonize and trying to work with the financial

institutions to reach a conclusion...

     LOFGREN: But if I could ask
unanimous consent for 30 seconds, Mr. Chairman, it -- could you tell us if the
– if the...

     SMITH: The
gentlewoman is recognized for an additional 30 seconds.

     LOFGREN: ... if the
settlement discussions fail, are you prepared to prosecute these institutions,
since that is the basis for the settlement discussions?

     HOLDER: If there -- if the
negotiations fail, if there is a basis for prosecutions, we will bring them.

     LOFGREN: Thank you, Mr.

MARINO: Thank you.

     Now I want to switch gears
here to Countrywide Financial, particularly Angelo Mozilo, the former chair and CEO of
Countrywide Financial. And the SEC filed charges against him and others on June
4th of 2009 alleging that they failed to disclose to investigators the
significant credit risk that Countrywide was taking on as a result of its
efforts to build and maintain market shares.

     The SEC's complaint further
alleged that Mozilo engaged in insider trading while he was aware of material
nonpublic information concerning Countrywide's increasing credit risk

and the risk regarding the poor expected performance of
Countrywide originated loans.

     This gentleman received or made
from 2001 to 2006 $470 million in salaries and stock options and things of that

     In the federal prosecutor
in Los Angeles dropped these criminal investigations on this man in February
2011. He was assessed civil penalties to the tune of almost $68 million.

     And I don't know all the
facts. I haven't read any indictments or anything -- or potential investigative
reports, only what I read in the newspaper and catch from

other individuals.

     But I understand this
person is still enjoying his yacht out in the Mediterranean and based on the
limited material that I read I think there's a question there. I think there's a serious
question that at least could have been brought before a grand jury to determine
whether to indict. I can see why he probably would want to hand over $68
million if he made $470 million and not spending any jail time on that.

     If you are familiar with
that, could you elaborate on it a little bit? And if not, could you have
someone look into that, please?

     HOLDER: Well, I'm not sure
there's an awful lot of information we'd be able to share. I'm not intimately
familiar with the case, but again (inaudible) sure we'd be able to share
information on a closed matter. As you are a member from your DOJ days, that is
not something that is typically done.

     What we try to do,
obviously, is to look at these matters, be aggressive. You know, we have good
lawyers, again, as you know, around the country. We look at these

matters and try to make cases.

     And that's something that I
hope I've conveyed today, that these matters are examined by prosecutors who
come to the Justice Department to try these matters, investigate

these matters and to take these matters to court and then
to hold people responsible.

     If the determinations are
made not to proceed, it's not for lack of trying. It's because they have made a
determination that they can't.

     MARINO: You've made it very
clear today, I applaud you for those efforts. My office was involved in
prosecuting a case similar to this, and I never would question a U.S.

attorney as to why they did or didn't. I'm sure there are

     But this is the
kind of situation where my constituents say, how can someone this wealthy get
away with that? And you know how they're couching it, in terms of wealth and
get away with it. I know that's not case with the Justice Department.

     Thank you so much for being
here today. And I yield my time.

     HOLDER: Thank you.

     SMITH: Thank you, Mr.

h/t MM

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cossack55's picture

Get Out Of Jail Free Card Bitchezzzz!!!!

Long-John-Silver's picture

and collect $2,000,000 bone-us as you pass GO.

Fish Gone Bad's picture

Goldman in ads with puppies??  I was only kidding when I said that Goldman employees volunteered at the animal shelter, killing newborn puppies with claw hammers.  Perhaps it is cooler to show puppies being "ridden" by starving Ethiopians. 

sysin3's picture

Might be good shit, but do you have anybody who speaks ENGLISH as a first language ? That's just nasty prose.

tellsometruth's picture

neat. When some one goes away like Bernie I'll ______

FunkyMonkeyBoy's picture

Yeah, yeah, yeah, yeah, yeah... haven't we seen all this before... yes we have, nothing will happen.

Why would one arm of the same beast prosecute another arm? All these entities are the same criminal beast.

Same old dog and pony shown from the fascist controllers of one of the most pathetic countries history has ever seen.

Dr. No's picture

Why? Massive billable attorney hours. And tax deductible

Jovil's picture

Let's not forget that the bankers always win, at least that is what history teaches us. Then, there are the puppet masters who own the banks. Knowledge is power.


Dr. No's picture

Sent to Inaction Jackson?  Its as good as dead.  no action.

Milton Waddams's picture

When asked about these emails, Mr. Swenson also denied that Goldman had attempted to squeeze the CDS short market. He claimed that the cost of single name CDS shorts had gone too high, and the purpose behind Goldman’s actions was to restore balance to the market. Mr. Swenson could not explain, however, why in an effort to restore balance to the market, he used the phrases “cause maximum pain,” and “this will have people totally demoralized.”

I am Jobe's picture

Holder has no balls , he is a pole smoker . SEC is too bsuy watching porn. Hang all the bitchezzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.. Fuck you SEC and DOJ, 2 useless fucking dept.Enough of this long drawn out process, just start the hanging and clean out the system.

Id fight Gandhi's picture

But they'll go after whitey on a whiff of a hate crime.

Dburn's picture

I think the banks are going for a clean sweep to get the GOP in power in 2012. Levin said "wait a fucking minute". In fact they are starting this at the right time. It gives them a good 18 months to get it wound up. Most of these Senators are wealthy as hell, the house members on this committee hearing want to get there too.

So, Goldman has pissed off the Dems in Congress by giving more and early to GOP candidates. Power meets Power with Holder going "Oh fuck, What does this do to my mindless 8 hour masturbation sessions". I have slight hopes that this could register on the Richter scale.

It's not for the right reasons, but shit, who cares how they get there, just as long as they do. This may have happened when they started using overhead doors at the Goldman Sach's Director's offices, so they could get their heads through.

Long-John-Silver's picture

Who wants to start a Guillotine Party? The TEA Party is too tame to do anything of any importance.

buzzsaw99's picture

LMAO!! I know that ***IS*** the case with the DOJ.


Hey DOJ, go ticket a jaywalker ya putzez.

buzzsaw99's picture

The Attorney General is Jamie's bitch, bitchez!

Cdad's picture


I'm not so sure about nothing being done about things.  I know that is the way things have been for a long time.  However, as many have posited, things like that work until they don't.  And right now, it isn't working.

Now, why would it be different this time?  Well, the answer is in the fund flows, or the lack thereof.  One of the things that has become patently obvious in all of this long struggle is that Average Joe no longer has faith in the criminal syndicate known as Wall Street.  In the end, the syndicate needs buyers to step up and receive their hot potatoes.  It isn't happening.

As such, I do believe that we are approaching that time when something MUST be done about this syndicate, or capital simply will not form, and the market will ultimately fail [as soon as the last dollar is printed].

No, I rather think it is time for some enterprising politician to make an example of someone, if only to distract from the role that politicians have played in enabling the kleptocracy.

Call me naive.  Call me hopeful.  However, I think this is actually a practical matter.

Id fight Gandhi's picture

While I wish what you're saying is true. Nothing will change.

They will run the same games until the country is in default and in wwiii.

Never underestimate the power of greed.

Cdad's picture

The lack of retail participation in the market is one strike against what you are suggesting.  Of course, we shall see.

I am Jobe's picture

mary gives BJ's to the banksters. DB being investigated is nothing , and how is that mary Schapiro is not being investigated when she over looked the crap at FINRA> Time for hanging is near. Hang the bitchezzzzzzzzzzzzzzzzzzz, no more court cases required and the lawmakers are buch of pussies and have no balls to stand up.

DavidC's picture

You know, being the naive soul that I am, I can't help feeling that a) it would cost Goldman's a lot less and b) it would get it a whole heap more business if it just did things with a bit more integrity, in other words a bit more like it used to...

In other words, in the days when these institutions were partnerships rather than public companies.


I am Jobe's picture

The days are gone and it is a fiction.I like your comment. Nothing changes as long as these vermins are in power.

anynonmous's picture

DC you may enjoy this interview from BBC

(april 30 edition)


It is an interview with  Charles-Edouard Bouée  of RolandBerger and his new book new book "China's Management Revolution". In the interview h tells Peter Day of the BBC how Chinese management philosophy is quite different to that in the West.


If we think we are falling behind Asia in Science and Tech the thesis of this book will shake America's biz establishment to its core.

Hephasteus's picture

I think this deserves a 40 foot yacht in the ass as punsishment.

anynonmous's picture

simply downsizing to a 40foot 'yacht' would be punishment enough... imagine the humiliation of pulling into Saint Tropez this August in what would essentially be a tender

connda's picture

Goldman is just a philanthropic organization doing God's work. Holy Jesus Mother of Mary, give these poor, hardworking guys a break.  They're just trying to work for the betterment of humanity and to make an honest buck!  Sheezzz.

Yen Cross's picture


Dr. Impossible's picture collusion with the American Bar Association..the members of the BAR, over the period of time, refuse to file the appropriate lawsuits from the people, and, if they did, they were way costly (preventatively costly) to the people to find knowledgeable representation. instead allowing the escalation of activities, till issues become of National importance, devastating HUGE amounts of people. Waiting for an act/order from congress to move forward, again ensuring the cost of suit/s would be in the ASTRONOMICAL range, lining the pockets of the ABA members...all licensed under the POTUS.

 I demand this be heard by a citizens tribunal.including any and all input from the people..with absolutly ZERO(0) ABA membership participation. As its purely a conflict of interest. This demand is simply for the protection of the Judicial Branch of the U.S. Bush said it best.."No body is above The Law"


Youri Carma's picture

A SLICE TROUGH THE MATRIX: DOJ, SEC Are Now Reviewing Senate Findings On Goldman

Holder says: There are variety of players, a variety of positions, a variety of tools, a variety of approaches … There are a whole variety of these matters, a whole bunch of different views, a number of cases, a number of investigations … We are numerous… , we are a substantial number of people who take whatever enforcement action. And we are serious and agressive.

You know, we are serious about the investigating that we are doing. All I can tell you is that we are looking at these cases seriously. We are going to pursue them aggressively. The fact that we have these prosecutions on the border is not any indication that we’re not taking the Wall Street potential offenses seriously. The notion — and people have to disabuse themselves of the notion that, somehow or other, this Department of Justice, the prosecutors who look at these cases, don’t want to bring these cases.

They come to the Department of Justice to look at matters like this, to apply the law, look at the facts and to bring new cases. We are extremely aggressive in that way. What we try to do, obviously, is to look at these matters, be aggressive. We look at these matters and try to make cases. If the determinations are made not to proceed, it’s not for lack of trying. It’s because they have made a determination that they can’t.

IF, IF, IF, but Bottom Up-Line: NEGOTIATIONS!

Holder: If there — if the negotiations fail, if there is a basis for prosecutions, we will bring them.