Yesterday, Gretchen Morgenson reported in the New York Times that a single, mid-level trader has been the only Goldman Sachs employee so far to feel the long arm of the law. And not even the feds, at that -- the Department of Justice is letting it go.
Today, Andrew Ross Sorkin and a fellow reporter at DealBook have better news:
Goldman Sachs has received a subpoena from the office of the Manhattan district attorney (later corrected by the Times to the office of the New York State attorney general), which is investigating the investment bank’s role in the financial crisis, according to people with knowledge of the matter.
The inquiry stems from a 650-page Senate report from the Permanent Subcommittee on Investigations that indicated Goldman had misled clients and Congress about its practices related to mortgage-linked securities.
Senator Carl Levin, Democrat of Michigan, who headed up the Congressional inquiry, had sent his findings to the Justice Department to figure out whether executives broke the law. The agency said it was reviewing the report.
So. The Justice Department still isn't in the game. Ever since the meltdown, the states' attorneys have been far more professional in their handling of apparent extra-legal activities related to general malfeasance on the part of lenders. It won't be easy for Obama to distance himself from what his own Justice Department has and hasn't been doing.
And Goldman? So far, the subpoena is nothing more than a "request for information." But, as the Times reporters point out, but it's still a "blow to Goldman."
In early April, the Senate subcommittee published a scathing report, which took specific aim at Goldman. It notably highlighted testimony by the institution’s chief executive, Lloyd C. Blankfein, who denied the firm was making large bets against residential mortgages while selling securities based on home loans.
Yesterday, Goldman -- along with most of the market -- lost 2%, closing at about $136 -- down from $170 in January. At this writing they're down another 2 points.
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Maybe not all that much trouble for Goldman Sachs. Eric Hayden reports:
...The firm has previously been subpoenaed by an independent commission and unnamed regulators looking into mortgage securities. Now, the Manhattan DA is investigating the firm in connection with a 639-page Senate Permanent Subcommittee on Investigations report alleging that Goldman made "a huge bet against the housing market, misleading investors," reported the The Wall Street Journal.
Despite the inquiry, analysts believe Goldman may emerge unscathed by criminal charges. Dealbook and Bloomberg have both noted variations of this refrain in the Journal: "Subpoenas don't necessarily mean criminal charges against Goldman or individuals at the firm are inevitable or even likely."
