Congressmen Urge Dramatic Expansion Of Goldman Investigation, Demand Big Payback To AIG

peter defazio

The easiest reason to think that the Goldman Sachs (GS) news will metastasize is that so many players potentially have an interest in seeing it expand.

You have various states attorney generals, SEC players that won’t be content with sitting on their hands, various private-sector plaintiffs lawyers, Barack Obama, and Congress.

Obama won’t actually make comments on the direction of the investigation itself, but Congress definitely will, and in fact that’s already happening.

The New York Times’ Gretchen Morgenson reports:

Because the government has committed so much money to A.I.G., Representatives Elijah E. Cummings, Democrat of Maryland, and Peter DeFazio, Democrat of Oregon, are asking the S.E.C. to investigate all the Abacus deals issued by Goldman, and especially those insured by A.I.G.

The congressmen want regulators to determine whether fraudulent conduct by the investment firm contributed to billions of dollars in losses. If such conduct is found, the congressmen are urging the S.E.C. to recoup payments made by A.I.G. to Goldman.

Mr. Cummings and Mr. DeFazio are also asking the S.E.C. to refer matters that appear to involve criminal misconduct on the part of Goldman Sachs to the Justice Department.

Meanwhile, everyone is looking for the next firm to get charged, with names being bandied about including Deutsche Bank and Merrill Lynch.

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