Goldman Gets Subpoena, June 2 2011

Courtney ComstockBusiness Insider
Goldman Sachs just got a subpoena from the Manhattan DA.

The civil subpoena is related to Senator Levin’s report that Goldman Sachs should be investigated beyond the inquiries that have already taken place (Goldman has settled with the SEC after it claimed Goldman lied to investors and Goldman testified about their role in the crisis before Congress).

Senator Carl Levin published a report for the Senate’s Subcommittee on Investigations about the financial crisis earlier this year that said he would refer the testimony Goldman gave before the Senate committee to the DOJ for possible perjury charges because he believes Goldman execs, including CEO Lloyd Blankfein, lied during their testimony before Congress.

Weirdly, the DOJ isn’t behind the subpoena — the Manhattan DA is.

The subpoena might relate to Levin’s perjury claims, ie the few lies that Goldman Sachs (allegedly) told before Congress, and/or it might relate to something else. Bloomberg says it is related to the firm’s activities leading to the credit crisis.

The Senate Committee’s report on the financial crisis revealed numerous examples of egregious behavior by banks and ratings agencies. For example: ratings agencies screwed with criteria, and Deutsche Bank built a $4 billion short by “duping CDO fools.”

The news of a Goldman Sachs subpoena is after a report from an analyst that said that Goldman Sachs would not be prosecuted or charged with any crime because it would threaten the entire financial system.
According to a note analyst Brad Hintz sent investors, he believes that Goldman won’t face criminal prosecution related to sales of mortgage-linked securities because such a move could threaten the U.S. financial system.

“If an alleged violation is identified during a Goldman investigation, we expect a reasoned response from the Justice Department,” Hintz, an analyst for Sanford C. Bernstein & Co, wrote. “In a worst case environment, we would expect a ‘too big to fail’ bank such as Goldman to be offered a deferred-prosecution agreement, pay a significant fine and submit to a federal monitor in lieu of a criminal charge.”