Should Lloyd Blenkfein, the CEO of Goldman Sachs, be brought up on perjury charges? U.S. Senator Carl Levin, head of the Senate panel investigating investment fraud, obviously thinks so. Furthermore, Levin doubts the veracity of other investment professionals who testified before Congress during the 2010 financial crisis.
In an April 2011 Bloomberg.com article titled “Goldman Sachs Misled Congress, Duped Clients, Levin Says,” the Senate Democrat is quoted as saying that the company “misled their clients.” And according to Levin, they “misled the Congress,” too, when Blankfein denied that Goldman Sachs pursued its own financial gain in clear disregard of its clients’ potential (and, as it turns out, actual) investment loss.
It its defense, Goldman Sachs claims that it did not hold an overwhelming net short position. Senate findings, however, contradict that assertion. In at least in one case, that of Hudson Mezzanine Funding 2006-1, the investment firm purportedly told clients that its financial interests were in keeping with theirs—despite the fact that it held 100 percent of the short side. Senior Republican Tom Coburn, who is also on the panel, called such breaches of fiduciary duty not only unethical, but also a threat to our country and its financial institutions.
In general, the Senate panel report points the finger at banks on Wall Street for the financial crisis of 2010. It particularly castigates investment banks like Deutsche Bank AG and Goldman Sachs for purportedly pushing CDOs that even their own traders thought unsound. Levin wants the SEC as well as the Justice Department to determine whether Goldman Sachs is guilty of securities fraud by not disclosing their financial gain if the CDOs they sold fell in value. The report also criticizes credit-rating agencies, Washington regulators and poor lending standards for their role in bank failures.