Originally Posted by MJ1970
I apologize. I was confusing this thread with the Wall Street "reform" bill thread.
My questions still stand only tweaked a bit:
Are you assuming that the case has merits? Nothing but merits? Based on what? You've seen all the evidence and arrived that the conclusion that it has only merits and that the only reason anyone would vote against is for partisan reasons?
The SEC's Enforcement Division built the case, took it to the commission, and asked for approval to pursue the case. (Side question - do you think the Enforcement Division has more Bush appointees than Obama appointees?)
Why not let the court decide the merits of the case, instead of you or me or the Republican commissioners? Why would the Enforcement Division spend many months and many, many man-hours building the case, and then present it to the commissioners, if it didn't have at least enough merit to take it to trial?
Here's some relevant background material to support my opinion:
Republican opponents of strong legislation cried foul. “The events of the past five days have fueled legitimate suspicion on the part of the American people that the commission has attempted to assist the White House, the Democratic Party and Congressional Democrats by timing the suit to coincide with the Senate’s consideration of financial regulatory legislation,” Representative Darrell Issa, a California Republican, wrote in a letter to Mary L. Schapiro, the S.E.C. chairwoman.
Ms. Shapiro promptly denied that anything of the sort had taken place. So did the White House.
The more interesting question may be why the Republicans thought it was good politics to seem to be allied with Goldman.
One reason to think it did not happen is simply the way the S.E.C. works. Goldman knew of the enforcement division’s thinking last summer. In September, it tried to persuade the S.E.C. staff that the case was unreasonable.
Under normal S.E.C. procedures, the enforcement division would have asked for commissioners’ approval of a court filing at least a month before the commission acted. It is not clear how anyone in the commission would have known in early March what the Senate would be doing in late April.
It may have been legal for Goldman to put together synthetic collateralized debt obligations, known as C.D.O.’s, to allow people to bet on the collapse of the housing market. But such a product does not raise capital for any useful purpose. And we know that the buyers of this paper went broke.
Nor does it help that the man who put the deal together, the Goldman trader, Fabrice Tourre, wrote in an e-mail message to a friend, “More and more leverage in the system. The whole building is about to collapse.” He went on to describe himself as “fabulous Fab,” a man who created “complex, highly leveraged exotic trades” that he called “monstruosities” (sic) whose implications he did not understand.
He wrote that as he was putting together this deal.
The S.E.C. case asserts that Goldman should have told potential buyers that John Paulson, a hedge fund manager who wanted to short the synthetic C.D.O., had been heavily involved in choosing which earlier deals would provide the reference points for the C.D.O., and misled some people who did know of his role into thinking that Mr. Paulson was bullish.
Goldman argues that few people knew at the time who Mr. Paulson was and so his involvement would not have mattered to the investors. It also argues that the selections he influenced were immaterial in the end because the whole market collapsed, just as Mr. Paulson had expected.
The final straw for Goldman, and Wall Street, may have been the statement by Lloyd Blankfein, Goldman’s chief executive, that he and his firm were doing the Lord’s work. Such praise is normally reserved for those doing selfless acts of charity, which is not exactly the public perception of investment bankers.
April 20 (Bloomberg) -- The U.S. Securities and Exchange Commission split 3-2 along party lines to approve an enforcement case against Goldman Sachs Group Inc., according to two people with knowledge of the vote.
SEC Chairman Mary Schapiro sided with Democrats Luis Aguilar and Elisse Walter to approve the case filed on April 16, said the people, who declined to be identified because the vote wasn’t public. Republican commissioners Kathleen Casey and Troy Paredes voted against suing, the people said yesterday.
Schapiro, an independent appointed by Democratic President Barack Obama, cast the deciding vote in a high-profile case for the second time this year. In February, she sided with Democrats in a $150 million settlement with Bank of America Corp. tied to its takeover of Merrill Lynch & Co.
“She’s not worried about consensus because ultimately, this case is going to be decided by a jury trial,” said Peter Henning, a former federal prosecutor and SEC attorney who teaches at Wayne State University Law School in Detroit. “It might help Goldman a little bit in the public-relations battle to show that there is division.”