The secrets of Wall Street are hitting Main Street. Remember all the humongous bonuses of yesteryear? Well, now you can understand what was going on. Who was watching out for us on the Main Street? It is time that something is done!
The Securities and Exchange Commission (SEC) filed fraud charges against Goldman Sachs on Friday, alleging that the famously successful but vilified Wall Street bank sold investors a subprime-mortgage investment that was secretly designed to lose value. Huge news on the Wall Street Stratosphere!
In filing the civil suit, the agency targets one of the few banks that, with the help of taxpayer bailouts, emerged from the financial crisis stronger than before. The case strikes at a main cause of the financial crisis: the creation of investments derived from home loans made to borrowers who couldn't afford the houses they were buying.
But the suit, which alleges that Goldman Sachs misled its clients, goes beyond, raising the possibility that the bankers who devised these investments knew they were selling toxic financial products that could endanger the financial system but were concerned only with the fees they would earn by doing so.
The SEC suit comes against the backdrop of a escalating battle on Capitol Hill over how best to overhaul the regulation of financial firms and prevent the kind of abusive practices that contributed to the worst financial crisis in decades.
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