Historically, financial firms settle. They do not want the risk, publicity, and visibility of court action. If GS went in front of a jury and the "payback" measures suggested by Slowhand were presented, there is a good chance they would lose, regardless of how expensive the lawyers were, so they settle.(I don't think it will ever come up.)

They play a game of negotiation and risk management. Court is roulette.

Even murderers cut deals.

Any discussion about the players in the financial meltdown has to lead back to CONGRESS not doing it's JOB of regulating. Someone needs to put ALL of those Congressman that made statements about the soundnes of Fannie/Freddie loans on the hot seat. Those loans are at the core of what really happened and what created the environment in which Goldman could limit losses and profit.

It is a little more than that. Deregulation in the Clinton presidency made all of this come true. Those partly bald Hair Club For Men azzholes of G&S need to serve HARD prison time in say Leavenworth among the population. This BS needs to end! No more power brokers and money men screwing up our economy! No more robbery under the law!

i apologize if this has already been covered.
i did look thru the list,and did not see it.
just wondering what your opinions are of the wall street mess.



1. This is a weak case. Actually, no — its a very strong case. Based upon what is in the SEC complaint, parts of the case are a slam dunk. The claim Paulson & Co. were long $200 million dollars when they were actually short is a material misrepresentation — that’s Rule 10b-5, and its a no-brainer. The rest is gravy.

2. Robert Khuzami is a bad-***, no-nonsense, thorough, award-winning prosecutor. This guy is the real deal — he busted terrorist rings, broke up the mob, took down security frauds. He is now the director of SEC enforcement. He is fearless, and was awarded the Attorney General’s Exceptional Service Award (1996), for “extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation.”

When you prosecute mass murderers who use guns and bombs and threaten your life, and you kick their ***** anyway, you ain’t afraid of a group of billionaire bankers and their spreadsheets. My advice to anyone on Wall Street in his crosshairs: If you are indicted in a case by Khuzami, do yourself a big favor, and settle.

3. Goldman lost $90 million, hence, they are innocent. This is a civil, not a criminal case. Hence, any mens read — guilty mind — does not matter. Did they or did they not violate the letter of the law? That is all that matters, regardless of what they were thinking — or their P&L.

4. ACA is a victim in this case. Not exactly; they were an active participant in ratings gaming. Look at the back and forth between Paulson’s selection and ACA's management. Fifty-five items in the synthetic CDO were added and removed. Why?

What ACA was doing was gaming the ratings agencies for their investment grade, Triple-A ratings approval. Their expertise (if you can call it that) was knowing exactly how much junk they could include in the CDO to raise yield, yet still get investment grade from Moody’s or S&P. They are hardly an innocent party in this.

5. This was only one incident. The market sure as hell doesn’t think so — it whacked 15 percent off Goldman’s market cap. The aggressive SEC posture, the huge reaction from Goldie, and the short-term market verdict all suggest there is more coming.

If it were only this one case, and there was nothing else worrisome behind it, Goldman would have written a check and quietly settled this. Their reaction (some say overreaction) belies that theory. I suspect this is a tip of the iceberg, with lots more problematic synthetics behind it.

And not just at Goldman Sachs. I suspect the kids over at Deutsche Bank, Merrill and Morgan are working furiously to review their various CDO deals.

6. The timing of this case is suspect. More coincidental, really. The Wells notice (notification from the SEC they intend to recommend enforcement) was over eight months ago. The White House is not involved in the timing of the suit itself, it is a lower-level staff decision.

7. This is a complex case. Again, no. Parts of it are a little more sophisticated than others, but this is a simple case of fraud/misrepresentation. The most difficult part of this case is likely to turn on what is a “material omission.” Paulson’s role in selecting mortgages may or may not be material — that is an issue of fact for a jury to determine. But complex? Not even close.

8. The case looks thin. What we see in the complaint is the bare minimum the prosecutor has to reveal to make their case. What you don’t see are all the e-mails, depositions, interrogations, phone taps, etc. that the prosecutors know about and Goldman Sachs does not. During the litigation discovery process, this material slowly gets turned over (some is held back if there are other pending investigations into Goldman Sachs).

Going back to who the prosecutor in this case is: His legal reputation is he is very thorough, very precise, meticulous litigator. If he decided to recommend bringing a case against the biggest, baddest investment house on Wall Street bank, he certainly has a major arsenal of additional evidence you don’t know about. Yet.

Typically, at a certain point the lawyers will tell their client that the evidence is overwhelming and advise settling. That is around six to 12 months after the suit has begun.

9. This case is political. I keep hearing that phrase, due to the SEC party vote. It is incorrect. What that means is the case is not political, it means it has been politicized as a defense tactic. There is a huge difference between the two.

10. I’m not a lawyer, but . . . Then you should not be ignorantly commenting on securities litigation.

I have $1,000 against any and all comers that GS does not win — they settle or lose in court. Any takers? My money is already in escrow — waiting for yours to join it. Winnings go to the charity of the winner's choice.

Barry Ritholtz is the author of "Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy." His blog is The Big Picture.

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okay..i do have one question
if they are found guilty in civil court,will the next step be criminal court?

Can I get a Golden Parachutte?

Seems this would be an opportune time to bring up REINSTATEMENT of the first Glass-Stegall Act of 1932 and the later Glass-Stegall Act of 1933 (a/k/a the 'Banking Act') ... you know, the one that mandated the separation of commercial and investment banking in order to protect depositors from the hazards of risky investment and speculation ... the one that was repealed on November 12, 1999, by the Gramm–Leach–Bliley Act. Interesting, ain't it, that REPEAL of Glass-Stegall was led in the House and the Senate by REPUBLICANS (House: Jim Leach, R-IA, and Senate: Phil Gramm, R-TX) - and CLINTON signed it into law November 12, 1999. Who says the 'craps are the only corrupt bastids in politics ... ? Both parties suck when it comes to looking after the best interests of 'We, The People' ... it's only a matter of degree, not of kind.