Louise Story and Gretchen Morgenson have a long piece in today’s New York Times about the lack of investigation into Goldman Sachs and other big banks fraudulent activities in mortgage security creation leading up to the financial collapse. They look at the SEC suit against Fabrice Tourre, a young, junior official at Goldman whose brash emails have become a signifier of the way that bank was fleecing clients and purchasers of their mortgage-backed securities.
Across the industry, “it’s impossible that only one person was involved with fraudulent activities in connection to the sales of these mortgage securities,” said G. Oliver Koppell, a New York attorney general in the 1990s and now a New York City councilman.
The Story-Morgenson piece goes on to look at how unlikely it is that Tourre is the sole individual responsible for fraudulent activity at Goldman, given that the Abacus deal that Tourre was sued over was one of many similar deals Goldman did in this period. Senator Carl Levin’s investigatory report, aimed primary at Goldman Sachs, provides ample evidence for their to be other investigations targeting high-level Goldman officials – investigations that should go beyond civil fraud and look at criminally fraudulent activities.
The best way to understand the alleged impossibility of one low-to-mid level official at Goldman Sachs being the sole target of SEC investigation into the firm is to recognize that punishing powerful people is not something the federal government is interested in. Even if the Department of Justice were to look only at perjurious statements made by Goldman officials to Congress, they would have ample grounds for prosecution from the Levin report. While the DoJ says they’re looking into the report, as of yet nothing has been forthcoming. And it’s not as if the Levin report was the first to discover fraudulent, criminal activity inside Goldman’s headquarters (or that of any other Wall Street bank). A two-tiered system of justice is in place and Fabrice Tourre is the perfect example of it. A young, arrogant, unlikable banker who wielded more power than any of the “widows and children” he proudly claimed to fleece, but who is so unimportant to Goldman that they’ve paid him for the last year not to work. While the federal government has proven unwilling to investigate, the work of state level attorneys general like Eric Schneiderman, George Jepson, Mark Shurtleff, Lisa Madigan and Kamela Harris is a much more promising path to accountability for fraudulent bankster behavior.