Goldman Sachs, Politics and Foreclosure

By now you’ve heard that Goldman Sachs is facing a civil lawsuit bought by the Securities & Exchange Commission based on allegations of fraud, or did you hear it differently than I did.

I know those that heard the news only took away what appealed to their sense of outrage at Wall Street’s greed.

Hearing that Goldman Sachs is Charged with Fraud may have offered homeowners facing foreclosure in Brooklyn a feeling that justice would finally be served upon those who conspired against their dream of homeownership.

Unfortunately, this won’t do anything for Lucylla Baynes and others like her.

Who this legal action benefits

The Securities & Exchange Commission’s regulatory role is to

protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Those who risk their money investing in securities traded in the capital markets of the United States is the only group the SEC is charged with protecting.

Parties who were duped as a result of the alleged fraud did not finance the purchase of their home with a sub prime mortgage loan.

While Goldman Sachs, along with other Wall Street firms, facilitated the housing market’s demand for funds, it doesn’t put them at the scene of the crime where mortgage fraud victimized individual home buyers at the closing table.

Bundling mortgage debt and selling it as an investment security to Pension Funds, Corporations and Governments without full disclosure is the only wrong doing that will be determined in a civil trial without threat of prison sentences for Goldman Sachs executives.

After all, it’s election season and the Democrats have a lot at stake this November.  What better strategy to insure a return to elected office than to play on the emotions of voters at the polls on election day.

Any consequences for their role in the foreclosure crisis?

No and Yes.

In the near term, there won’t be any further consequences for their role or involvement in any fraud related to mortgage investments or foreclosures.

In fact, I predict they’ll settle the lawsuit without any admission of wrong doing and pay the largest civil damages in history ever by a U.S. corporation, which won’t prove difficult after announcing $3.3 billion in 1st qtr 2010 earnings.

However, any future consequences will depend on you, the Voter.

It’s the people you elect to office that will reflect whether Goldman Sachs and other Wall Street firms will continue to enjoy the privilege of influencing the legislative and regulatory process in our City, State and Federal Government.

And the incumbent politician is betting heavy on your short memory.  It wasn’t the Republican party alone that got us where we are today.

Just ask any homeowner in south east Queens.