Foreclosure Crisis is Pulling Back One Curtain After Another

The foreclosure crisis has laid bare many skeletons in the cupboard and one by one curtains are being pulled back. The latest in the eye of the storm is the issue about banking ethics.

The senators in Washington during the hearing on Goldman Sachs asked the bankers what made them do the way they did. The legislators did not like the answers they got. The officials of the financial giant defended its role but they had to stand up to tough questions about their morals and ethics from the legislators who did not hide their skepticism.

Senator Carl Levin (Democrat/Michigan) chairperson of the subcommittee on investigations put pressure on former top brass of Goldman as to whether it was right of him to have sold the investments backed by sub-prime mortgages. These were termed as downright vulgar in an internal e-mail of Goldman. Daniel Sparks, the official replied, “There are prices in the market at which people want to invest in things.” He was formerly heading the mortgage sector of the firm.

Senator Levin took that answer to be an evasive one. Senator Susan Collins (Republican/Maine) one of the top members of the subcommittee tried to put forward the same question. In reply Sparks said, “Senator I had a duty to act in a straightforward and open way with my clients.” Collins also took this to be an evasive answer avoiding the basic ethics of the matter. Collins said, “I’m starting to share (Levin)’s frustration and I’m only 30 seconds into my time.”

This hearing (Senate Homeland Security and Governmental Affairs Committee Permanent Subcommittee) is taking place when Securities and Exchange Commission has initiated fraud charges against Goldman for the part it played in the sub-prime related foreclosure crisis. It is stated that the firm failed to give proper information to their clients that the mortgages had been bundled together by a particular hedge fund. The latter was betting on its failure.

Individually the vice president of Goldman Fabrice Tourre was named in the legal suit. He presented himself before the panel and tried to justify his actions. Touree stated, “I deny, categorically the SEC’s allegation, and I will defend myself in court against this false charge.”

But such bland statements had little impact on the listeners – the senators from the both the parties.

Senator John McCain (Republican/Arizona) said that although Goldman did not do anything against the law, the documents show that the firm frequently bragged about profits made by betting in the housing market. This might seem unseemly to the taxpayers of America.

Source: Foreclosure Crisis is Pulling Back One Curtain After Another