Goldman Sachs will pay $5.06bn for its role in the 2008 financial crisis, the US Department of Justice said on Monday. The settlement, over the sale of mortgage-backed securities from 2005 to 2007, was first announced in January.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” acting associate attorney general Stuart Delery said in a statement.
Actually the comment I was responding to was about "running a tight shop" -- which is about operational integrity in general (not just on the matter of unhedged risk).
In the, you know, "would you buy a used car from these guys?" sense.
Perhaps a difference of definition but I don't consider a tight shop to have anything to do with morals or integrity. Tight shops I always considered efficient and optimized. Car dealerships are shady, but they can run a tight shop.
The only reason GS is still around is because they did what they did. They protected their shareholders the fine is trivial (less than 10%) compared to the losses they would have taken if they followed the course of action that everyone else did.
Operational integrity for investment bank is to a very significant degree risk management. Integrity as in having control over something not in a moral sense. In the case you referenced I'd rather see GS's counterparties taking more blame. The whole we are poor guys running multi-billion dollar funds and charging millions in fees didn't do due diligence and want to blame someone else thing is pure BS.
The point is that the assertion you attempted to make in favor of the idea that GS just of course wouldn't take large unhedged positions -- "they run a tight shop" -- just doesn't have a great deal of solid backing.
You can believe whatever you want. Based on my own research over the years -- and personal dealings with people who have worked there -- I tend not to trust that "shop".
Goldman Sachs will pay $5.06bn for its role in the 2008 financial crisis, the US Department of Justice said on Monday. The settlement, over the sale of mortgage-backed securities from 2005 to 2007, was first announced in January.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” acting associate attorney general Stuart Delery said in a statement.
-- https://www.theguardian.com/business/2016/apr/11/goldman-sac...