On Thursday, Goldman Sachs, the Wall Street financial giant paid a $550 million fine in a settlement of the civil fraud case brought by the SEC.
As part of the deal, Goldman did not admit to "the SEC's allegations of wrongdoing." As to "the penalty, it amounted to 4% of Goldman's $13.8 billion profit last year." The stock price of the firm "rose nearly 10% after the announcement of the settlement which "added more than $6 billion to the firm's stock market value."
Two questions arise in the mind of this observer in the government's acceptance of this deal with Goldman.
If the SEC had many instances of fraud (as alleged) attributed to Goldman's financial activities why did it accept any out of court settlement let alone the relatively paltry sum of $550 million?
Why not let the case come before a jury so that the allegations could be made public and on the record?
This settlement essentially lets Goldman off the hook, officially exonerated. This was a travesty of injustice.
Goldman is the behemoth of the financial industry and the firm squarely at the center of the unregulated derivatives trading of sub prime mortgage securities that brought the 2008 financial meltdown and the economic calamity that followed. It was the largest benefactor of the government's $180 billion bailout of AIG, receiving more than $13.2 billion from its derivatives deals with the insurance goliath (these being the credit default swaps of "toxic assets" we all heard about which was paid by AIG to Goldman as if they were worth full value).
This deal with Goldman does nothing to restore the people's confidence and trust in their government. If anything it conjures thoughts of collusion done behind the scenes.
Even if this case brought against Goldman was eventually lost (now we'll never know) there are some cases that need to be aired fully with complete transparency. By the SEC settling the case out of court full transparency was precluded. If the people's interests were to be fully respected, this was a case that screamed to be heard in open court.
A society suffers greatly when those who commit fraud are not held to account, particularly those with deep pockets and great political influence because of that largesse. It says there is a basic unfairness to a system where those of lesser means are fully held accountable i.e. pay their bills on time (mortgage, credit cards, utility bills etc. or risk foreclosure, visits from collection agencies or garnishment of wages) while giant corporate interests (which commit massive fraud and economic misery) are at most given paltry fines, face no jail time for their felonious behavior and in the case of Goldman see its stock value rise over 10 times more than the fine it paid.
When this type of injustice prevails in a society, that culture is a distorted and twisted, deserving of little respect.
It is a betrayal of its people in favor of the plutocracy.