The failure to prosecute or fine individuals responsible for the mortgage meltdown continues, but today another settlement was announced, this time with Goldman Sachs. As usual, the fine sounds large, but none of it goes to the injured consumers, and much of it may well be funneled through politically connected organizations which support the Administration. Here’s the story from The Hill:
Goldman Sachs announced Thursday that it would pay roughly $5 billion to settle a government probe.
The investment giant said the deal, if finalized, would resolve potential civil charges sought by a government task force exploring the creation and sale of securities backed by residential mortgages, an investment type central to the 2007 financial crisis. Authorities involved in the probe included the Justice Department, the states of New York and Illinois, and other regulators.
“We are pleased to have reached an agreement in principle to resolve these matters,” said Lloyd Blankfein, the bank’s chairman and CEO.
Goldman said the settlement would cut into $1.5 billion of its fourth-quarter profits. The deal would also include a $2.4 billion monetary penalty, another $875 million in cash payments and $1.8 billion in consumer relief.
That consumer relief would come in variety of ways, ranging from principal forgiveness for underwater homeowners to the financing of construction or rehabilitation for affordable housing.
The agreement still needs to be finalized, but if it is, it would be the latest in a series of eye-popping settlements between the government and big banks. For example, in 2013, JPMorgan Chase announced a $13 billion deal to settle charges around its residential mortgage-backed securities activity.
An evaluation from Better Markets:
This settlement is a victory for Goldman. First, it got to keep all the ill-gotten gains for the last eight-plus years. Second, a $5 billion settlement is meaningless unless it is publicly disclosed how much money was made from the illegal conduct and the total amount of investor losses. Third, DOJ helped it cover up its illegal actions by letting Goldman merely acknowledge a Swiss cheese ‘statement of facts’ carefully crafted more to conceal than reveal what Goldman really did here. Fourth, Goldman’s net revenue was $37.7 billion and its net earnings were $9.5 billion in 2006 alone, just one year in the midst of this multi-year scheme. Fifth, every single individual at Goldman who received a bonus from this illegal conduct not only keeps the entire bonus, but suffers no penalty at all. Sixth, more than half of the $5 billion appears likely to be tax deductible, meaning U.S. taxpayers will be required to subsidize this settlement.
We went into this kind of corruption-by-settlement in the post “Corrupt Feedback Loops: Justice Dept. Extortion” a few weeks back. Legislation should prohibit diversion of funds from fines and settlements to any organization but the Treasury general fund and direct payments to victims, where it is practical to identify them.
More reading on other topics:
Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour
On Affirmative Action and Social Policy:
Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism
The greatest hits from SubstrateWars.com (Science Fiction topics):
Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare
More reading on the military:
US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy