by Anthony Kammer
The Manhattan District Attorney’s Office delivered a subpoena to Goldman Sachs yesterday seeking information relating to the company’s role in the 2008 financial crisis. The New York Times’ DealBook covered the story here. The scope of the subpoena is still unreported.
The information request was made in connection with a recent Senate report from the Permanent Subcommittee on Investigations that accused Goldman Sachs of misleading buyers of mortgage-related investments and further stated that the company had mislead Congress. The subpoena comes more than two-and-a-half years after TARP’s passage and the AIG bailout, at time when Goldman is under investigation by the NY Attorney General’s Office and the SEC.
At the time the Senate’s report was released, Carl M. Levin (D-MI), the head of the Permanent Subcommittee on Investigations, also recommended that federal prosecutors consider bringing charges against Goldman CEO Lloyd Blankfein and other employees who testified misleadingly while under oath before Congress last year.
The New Yorker’s John Cassidy has an interesting take on the case and on possible prosecutions against Goldman’s upper echelons. Cassidy lays out several reasons why piecing together criminal charges will be a difficult task for prosecutors and cites Sanford Bernstein analyst Brad Hintz, who noted that Goldman’s “too big to fail” status means prosecutors are unlikely to pursue any measures that would disrupt the larger U.S. economy.
Hintz’s take symbolizes precisely the thinking and the moral hazard that’s been fueling public outrageagainst Goldman Sachs since early in the financial crisis. Even if prosecutors hold off on charges, these investigations are likely to provide some much-needed transparency into the operation of the financial system and will likely still have an impact on the way Goldman and the rest of Wall Street conduct business