TBTF Banks Still being Allowed to Cut Deals to Avoid Prosecution
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Former Obama Attorney General Eric Holder refused to prosecute the largest banksters because, he said, doing so might ignite another huge crisis in the financial system. Now its clear that Obama's new Attorney General, Loretta
Lynch, is continuing Holder's policy: this past week, no less than
Goldman Sachs was allowed to a $5 billion plea bargain rather than
facing a real court of justice for its role in deceiving investors and causing the 2008 financial crisis.
$5 billion may sound like a lot of money, but as various experts are pointing out, it is really not that much. First of all, the actual amount of cash extracted from Goldman Sachs will probably only be around $3 billion. Second, much of that $3 billion will probably be accounted as an expense as thus deducted from what Goldman Sachs pays in taxes, meaning that part of the agreement is actually being paid by USA taxpayers, not Goldman Sachs. Third, even the full $5 billion is a small amount when compared to Goldman Sachs's $32.9 billion in profits on $102.5 billion in revenues the past three years. David Dayen notes in a posting at The New Republic, that the settlement is for deceit in about 530 mortgage-backed securitizations between 2005 and 2007. Each securitization probably averaged $1 billion in size, and it would be a stretch to assume that Goldman Sachs did not make well over $2 billion on them.
Finally, as Allie Conti notes in a posting at Vice, the Government Accountability Office (GAO) has estimated that the fraud committed by Goldman Sachs and other banks cost American homeowners $9.1 trillion on paper, while the resulting Great Recession cost the economy $22 trillion. so, Goldman Sachs caused trillions of dollars in damages, but is going to cough up mere billions - less than one percent - for its misdeeds.
$5 billion may sound like a lot of money, but as various experts are pointing out, it is really not that much. First of all, the actual amount of cash extracted from Goldman Sachs will probably only be around $3 billion. Second, much of that $3 billion will probably be accounted as an expense as thus deducted from what Goldman Sachs pays in taxes, meaning that part of the agreement is actually being paid by USA taxpayers, not Goldman Sachs. Third, even the full $5 billion is a small amount when compared to Goldman Sachs's $32.9 billion in profits on $102.5 billion in revenues the past three years. David Dayen notes in a posting at The New Republic, that the settlement is for deceit in about 530 mortgage-backed securitizations between 2005 and 2007. Each securitization probably averaged $1 billion in size, and it would be a stretch to assume that Goldman Sachs did not make well over $2 billion on them.
Finally, as Allie Conti notes in a posting at Vice, the Government Accountability Office (GAO) has estimated that the fraud committed by Goldman Sachs and other banks cost American homeowners $9.1 trillion on paper, while the resulting Great Recession cost the economy $22 trillion. so, Goldman Sachs caused trillions of dollars in damages, but is going to cough up mere billions - less than one percent - for its misdeeds.