BAROFSKY: No Criminal Charges Against Goldman Tells Us Something About The 'So-Called' Financial Task Force

Neil Barofsky, Former TARP Inspector General

Photo: Business Insider

The SEC has abandoned its attempt to bring criminal charges against Goldman Sachs for any part that it may have had securitizing mortgages before the housing crisis, the FT reports.You may remember that six months ago, Goldman got a Wells notice — the SEC’s infamous calling card — saying that it would be investigated for $1.3 billion worth of subprime mortgage backed securities from 2006. That’s no guarantee that charges are coming. It just means the SEC is looking into the possibility.

So we were all waiting to see what would happen. A slap on the wrist? A trial of the century? Perhaps something in between.

We did not expect criminal charges to be dropped completely.

To find out what dropping the case said about how the SEC would be handling cases going forward, we called Neil Barofsky former TARP Special Inspector, NYU Law Professor, and author of Bailout: An Insider Account of How Washington Abandoned Main Street While Rescuing Wall Street.

We figured he might have something to say about the decision to abandon the case against Goldman. And he did:

“On the sixth month anniversary of the announcement of the so-called financial crisis task force, the twin announcements yesterday that Goldman Sachs and its executives will not be charged by either the Sec or DOJ for conduct directly related to the toxic assets at the heart of the crisis is a stark reminder that no individual or institution has been held meaningfully accountable for their role in the financial crisis. And without such accountability, the unending parade of megabanks scandals will inevitably continue,” Barofsky told Business Insider.

That said there are two things to keep in mind. First, according to the FT, the SEC can still press civil charges against Goldman and collect a few million here, a few million there as they’ve been doing.

Also it’s important to note that the SEC may have dropped the case because the statute of limitations for MBS from 2007 is approaching.

In fact, 2012 is the regulator’s last chance to bring charges for a lot of MBS created in 2006 and 2007 unless the statute of limitations is extended somehow.

In some cases, that could actually happen, says the FT:

People familiar with the matter say the SEC is asking companies and individuals to sign “tolling agreements” to extend the agency’s ability to bring a case after the five year statute of limitations expires. Lawyers involved in investigations expect to see more cases by the November election, given the president’s announcement of a residential mortgage-backed securities taskforce announced in January.

For now, though, it’s status quo antebellum.

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