Goldman Sachs Under Fire for Mortgage Deals

Goldman Sachs Under Fire for Mortgage Deals

The Goldman Sachs controversy has dominated the news lately. Earlier this week, officials from the investment company went to Capitol Hill to answer some questions. Here are some highlights from that event.

It’s difficult to pick up a newspaper lately and not see something about the Goldman Sachs debacle which has developed in recent weeks. Earlier this week, several of the leaders of the company were on Capitol Hill taking questions and meeting with rugged senators – both Democrat and Republican – who were not too happy with the alleged fraud and other wrongdoings committed by Goldman Sachs in terms of their handling of mortgages and other investments.

One of the issues at stake in this week's questioning and the situation in general is the company’s aggressive marketing of mortgage-based investments. This is not the best time to push those types of investments with the decline of the housing market and the economy in such bad shape. However, the four officials from Goldman Sachs who stood before the subcommittee said the company did nothing wrong and they did not mislead their clients when it came to purchasing these investments.

This week's hearing was part of a greater debate concerning the overhaul of financial regulation in the United States. The Senate has been debating this idea for awhile now and the Goldman Sachs situation seemed to play into the debate quite seamlessly. Senators discussed the need for more transparency as well as the conflict of interest between investment banks and clients. In addition, the question of ethics in the finance industry was brought up during the debate. The officials from Goldman Sachs were also asked about any changes they would make in regards to the financial regulatory system.

One of the main themes during the hearing was the gap that exists between “Main Street” and “Wall Street.” Senators consistently pointed out the idea that banks have been seeing huge profits while the overall economy was suffering greatly.

The officials from Goldman Sachs certainly had their feet held to the fire today as senators put them on the defensive for their actions. At times, some senators were getting frustrated at what they felt was the officials trying to dodge questions or stall for more time when answering a question. Senator Susan M. Collins even asked each of the four officials if they felt that it was their duty to keep the best interest of their clients at the heart of all their decisions. Only one of those officials said he felt it was his duty to do that while the other three did not answer the question directly. The four officials were also asked if they had sympathy or remorse over their decisions which contributed a great deal to the financial downturn. One official said that they have sympathy for the people who got hurt due to the company’s mistakes, but there was no improper conduct for which to be apologetic.

I’m sure this is not the end of the Senate’s questioning of Goldman Sachs officials. We’ll keep an eye on this situation as more news develops.

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