Due to fraudulent behavior regarding mortgage backed securities that led to the economic disaster in 2007 and 2008, the massive financial institution Goldman Sachs has agreed to a $5 billion settlement with the U.S. government.
The settlement will be distributed in various ways. According to ThinkProgress, “The firm will pay New York State $190 million in cash and take $480 million worth of consumer relief actions for New York residents. The remaining $1.3 billion in consumer relief will be spread around other agencies and consumers that brought similar allegations.”
However, Goldman won’t be coughing up that full $5 billion so easily. The firm has found numerous loopholes to weasel its way out of paying the full amount.
ThinkProgress reports that financial giant will be able to “write off $1.8 billion of consumer relief actions…[and] $875 million in payments to settle related cases.”
This leaves only about $2.835 billion that is considered an actual penalty, although apparently Goldman may be able to work around this as well through “simple deductions,” as the language in the settlements is not unequivocal.
This may be wholly intentional. According to the New York Times, Dennis Kelleher, the founder of the advocacy organization Better Markets, claims that, “[The government] appears to have grossly inflated the settlement amount for P.R. purposes to mislead the public, while in the fine print, enabling Goldman Sachs to pay 50 to 75 percent less.”
“The problem all along, with all of these settlements — and this one highlights it even more — is that they are carefully crafted more to conceal than reveal to the American public what really happened here — and what the so-called penalty is,” Kelleher concludes.
This is exactly right. The Department of Justice failed to indict almost every single individual on Wall Street involved in the systemic, illegal behavior that destroyed the U.S. economy and led to taxpayers bailing out the big banks.
In an even broader context, this is largely correlated with the fact that these financial institutions donate exorbitant amounts to politicians, who are then sympathetic to them rather than focused on enacting necessary regulations.
It’s no coincidence that President Obama received the most contributions from Wall Street than any candidate in history.
This is simply a slap on the wrist for Goldman Sachs, and it’s abhorrent that our government refuses to hold it, and other banks, accountable.
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