One public symptom over the past week or so has been the drop in Goldman Sachs' share value. Now, according to the Times, the hiring of a crack criminal defense lawyer -- Reid Weingarten -- signals real trouble. Most of it is coming from the direction of the Department of Justice.
A spokesman for Goldman said executives at the firm were expected to be interviewed by the Justice Department. The agency is conducting an inquiry that stems from a 650-page report produced earlier this year by the Senate Permanent Subcommittee on Investigations. That report said that Goldman had misled clients about its practices related to mortgage-linked securities.
“As is common in such situations, Mr. Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department’s inquiry into certain matters raised in the P.S.I. report hired counsel at the outset,” Goldman Sachs said in a statement.
There have been no subpoenas so far, but the investigations have been going on in one part of government or another for a couple of years. At the heart of the accusations are indications that Goldman was "duping clients by selling mortgage securities that were secretly created by a hedge fund firm to cash in on the housing market’s collapse."
Reid Weingarten, Goldman's attorney, used to work with Eric Holder at Justice on corruption cases. The men are reported by WSJ to be friends.
The Guardian warns:
Legal experts said the move would reinforce speculation that the legal fallout from the financial crisis is far from over.
