What people are saying about the Goldman charges

McClatchy NewspapersApril 16, 2010 

WASHINGTON — Federal civil fraud charges levied Friday against Goldman Sachs & Co. brought swift and strong reactions from lawmakers, regulators and consumer advocates.

Here's what they had to say:

ROBERT KHUZAMI, director of the Division of Enforcement at the Securities and Exchange Commission: "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party...The product was new and complex but the deception and conflicts are old and simple."

BARBARA ROPER, director of investor protection at the Consumer Federation of America: "I think the average person looks at this and is appalled at the total lack of morality that it shows. That you would design securities to fail so that one of your favorite customers could bet against them and then sell them?...To me it highlights the total disconnect between Wall Street's view of the world and how the rest of America sees these things...The real crime here is the totally immoral behavior of Wall Street. That there literally isn't anything they won't do to make a buck."

CHRIS DODD, Senate Banking Committee Chairman (D-Conn.): "Let's be clear, we don't need to know the outcome of this case to know that the opaque nature of unregulated asset-backed securities fueled the financial crisis. And even as our country is still recovering from those mistakes, Wall Street financial firms continue to game the system. We must pass Wall Street reform to bring practices like these into the light of day and protect our economy from another devastating blow."

LAURA BERRY, executive director of the Interfaith Center on Corporate Responsibility: "The problem is (Goldman Sachs) being on both sides of the trade. If you're operating from solid ethical principles, you disclose fully and you don't take both sides of the trade. And we've created a system that incentivizes the trade rather then the contract, rather than the promise. And once you start incentivizing the transaction rather than the promise, you have a problem. And we have a big problem on our hands...However, I think the financial reform that's being put forth (in Congress) is certainly a step in the right direction. And I am delighted by the SEC's clear commitment to enforcement as they exhibited today with the Goldman charges."

JOHN BOEHNER, House Republican leader (R-Ohio): "These are very serious charges against a key supporter of President (Barack) Obama's bill to create a permanent Wall Street bailout fund...Instead of permanent bailouts for President Obama's Wall Street allies, Republicans believe the best way to protect taxpayers is by reforming Fannie Mae and Freddie Mac, the government-sponsored companies that sparked the meltdown by giving high-risk loans to people who couldn't afford it."

HARRY REID, Senate Majority Leader (D-Nev.): "I'm pleased that the Obama administration is using all of the tools in its arsenal to bring accountability to Wall Street and standing up for homeowners and small businesses across America...This is also why we need to pass strong Wall Street reform this year...We will stop banks from becoming 'too big to fail' and end taxpayer bailouts. Republicans should stop obstructing our efforts to hold Wall Street accountable so that Main Street can once again prosper."

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McClatchy Newspapers 2010

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