U.S. Senate Panel: Goldman Sachs Sold Clients Investments it Knew would Fail
A US Senate investigation has found that Wall Street investment firm Goldman Sachs sold clients mortgage-backed securities it knew would fail, the BBC reports. A two-year probe by the Senate Permanent Subcommittee on Investigations, headed by Democrat Carl Levin of Michigan, found “a variety of troubling and sometimes abusive practices” by banks as the credit crisis began in 2007.
Not only did Goldman Sachs sell complex mortgage securities to banks and other investors without warning them how risky the investments were, the firm also failed to inform them that Goldman itself was betting against the very same products it was selling.
Senator Levin said Goldman had “exploited” its clients, and that the subcommittee had found additional new evidence that the firm’s wrongdoing went beyond the case at hand.
Goldman Sachs has already paid out $550 million to settle civil fraud charges pertaining to similar accusations in the Abacus deals. The investment bank claims it “take[s] seriously the issues explored by the subcommittee.” “We recently issued the results of a comprehensive examination of our business standards and practices, and committed to making significant changes,” Goldman spokesman Michael DuVally told the BBC.
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