News / USA

US Senator Probing 2008 Financial Meltdown Blasts Goldman Sachs

Michael Bowman

A U.S. senator probing America's 2008 financial crisis says one of the nation's best-known investment houses marketed complex financial products to clients, while investing in instruments that would rise in value if those very same products failed.  Democratic lawmakers seek to advance a bill to overhaul the U.S. financial industry after a crisis that accelerated the nation's plunge into economic recession and led to massive government bailouts of the private sector.

Investment firm Goldman Sachs, already facing charges of fraud by U.S. financial regulators, now finds itself targeted by a Senate investigative panel probing the actions of financial firms leading up to the 2008 crisis.  On the eve of testimony by Goldman Sachs executives before Senate Permanent Subcommittee on Investigations, Chairman Carl Levin of Michigan gave a preview of evidence the government has collected against the firm, and laid out allegations the executives will be called on to answer.

Wielding copies of hundreds of emails between Goldman Sachs executives, Levin painted a picture of an investment house packaging and selling financial products tied to a risky segment of America's home mortgage industry.

The emails seem to show that beginning in 2007, Goldman Sachs lost confidence in the profitability of those financial products, but continued to market them while simultaneously placing bets that the products would plummet in value.

Levin said that when America's housing market declined and mortgage defaults soared, Goldman Sachs reaped huge returns while many of its clients - from individual investors to universities and other institutions - faced financial ruin.

"The evidence shows that Goldman Sachs helped build and operate a conveyor belt that fed toxic mortgages and mortgage securities into the financial system," said Carl Levin. "It then made large bets against the market that it helped create, reaping the profits from it.  In doing so, it sold to its clients products it clearly no longer believed in."

Levin said the subcommittee's goal is to uncover facts, not to assess the legality of Goldman Sachs' alleged actions.  He stressed that Goldman Sachs was not the only financial firm to engage in questionable dealings surrounding high-risk mortgages.

"The ultimate harm here is not just to the clients that were not well-served by their investment bank," he said. "The harm here is to all of us.  The toxins that Goldman Sachs and others helped inject into our financial system have done incalculable harm to people who have never heard of a 'synthetic CDO' [a financial security that manages the risk that an obligation will not be paid] and have no defenses against the harm that such exotic Wall Street creations can cause."  

Goldman Sachs has denied wrongdoing and pointed out that in some transactions involving high-risk mortgage products, it too lost money.

Related video report by Mil Arcega:

Levin spoke as fellow Democrats worked to bring a financial reform bill to the Senate floor for debate.  The legislation seeks to boost consumer protections in the financial industry, strengthen regulation and oversight of financial firms, limit the risk-taking ability of banks and other institutions and establish a procedure for the federal government to liquidate insolvent financial corporations.

The bill faces opposition from Republicans, who say it would give the federal government leeway to authorize future financial bailouts, and that it does not mandate preemptive action to break up institutions that are so large that, if they were to fail, could cripple the national economy.  

You May Like

Republican Majority in Congress Off to Rough Start

Standoff over Homeland Security funding exposes philosophical, tactical problems within party More

Pakistan Blocks Baloch Activist from US Trip

Human Rights Commission of Pakistan slams Islamabad officials for stopping people from leaving country to attend human rights conference More

Video Muslims Long Thrived in North Carolina Before Students Killed

Idyll shattered February 10, when three Muslim university students living in Chapel Hill were gunned down by a neighbor More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Muslims Long Thrived in N Carolina Before Slaying of 3 Studentsi
X
Jerome Socolovsky
March 05, 2015 9:04 PM
The killings of three Muslim students in North Carolina early last month came as Muslims across the United States have felt under siege, partly as a result of terrorist attacks being committed internationally in the name of their faith. But Muslims have long thrived in university cities in this part of the American South. VOA's Jerome Socolovsky reports.
Video

Video Muslims Long Thrived in N Carolina Before Slaying of 3 Students

The killings of three Muslim students in North Carolina early last month came as Muslims across the United States have felt under siege, partly as a result of terrorist attacks being committed internationally in the name of their faith. But Muslims have long thrived in university cities in this part of the American South. VOA's Jerome Socolovsky reports.
Video

Video Fuel Shortages in Nigeria Threaten Election Campaigns

Nigeria is suffering a gas shortage as the falling oil price has affected the country’s ability to import and distribute refined fuels. Coming just weeks before scheduled March 28 elections, the shortage could have a big impact on the campaign, as Henry Ridgwell reports for VOA.
Video

Video Report: Human Rights in Annexed Crimea Deteriorating

A new report by Freedom House and the Atlantic Council of the United States says the human rights situation in Crimea has deteriorated since the peninsula was annexed by Russia in March of last year. The report says the new authorities in Crimea are discriminating against minorities, suppressing freedom of expression, and forcing residents to assume Russian citizenship or leave. Zlatica Hoke has more.
Video

Video 50 Years Later African-Americans See New Voting Rights Battles Ahead

Thousands of people will gather to mark the 50th anniversary of a historic civil rights march on March 7th in Selma, Alabama. In 1965, dozens of people were seriously injured during the event known as “Bloody Sunday,” after police attacked African-American demonstrators demanding voting rights. VOA’s Chris Simkins introduces us to some civil rights pioneers who are still fighting for voting rights in Alabama more than 50 years later.
Video

Video Craft Brewers Taking Hold in US Beer Market

Since the 1950’s, the U.S. beer industry has been dominated by a handful of huge breweries. But in recent years, the rapid rise of small craft breweries has changed the American market and, arguably, the way people drink beer. VOA’s Jeff Custer reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More