Representatives from the bank Goldman Sachs defended their actions against a caustic Senate panel on Capitol Hill yesterday. Many on the panel alleged that the bank plotted multiple strategies to profit from deliberately bad investments without telling investors about those plans. Senators from both sides of the aisle also charged Goldman Sachs with reaping billions of dollars in profit off the scheme and accused the bank of contributing to the global financial meltdown in 2008.
Those testifying on behalf of Goldman Sachs denied the charges, claiming their bank had made decisions to reduce risk and had been fair to investors. But members of the Senate panel read e-mails and cited evidence showing that Goldman Sachs bankers had kept investors in the dark about how their money was being used.
The heated Senate hearing was a precursor to a larger fraud investigation of Goldman Sachs by the Securities and Exchange Commission (SEC). In the coming months, the bank will have to defend itself once again, this time before SEC lawyers and investigators.
"You think you are so smart? Any street gambler would never place a bet with a bookie or a house with the record that is revealed in the documents that this committee has gathered." - Sen. Claire McCaskill (D-Mo.)
"The culture at Goldman Sachs was one in which excellence and integrity are expected." - Daniel Sparks, former partner, Head of Mortgages Department, Goldman Sachs
"I deny categorically the SEC's allegations, and I will defend myself in court against this false claim." - Fabrice Tourre, executive director, Structured Products Group Trading, Goldman Sachs
"How about the fact that you sold hundreds of millions of that deal after your people knew it was a [EXPLETIVE DELETED] deal? Does that bother you at all; you sold the customers something?" - Sen. Carl Levin (D-Mich.)
1. What is an investment? What kinds of things do people invest in?
2. What does the phrase "Too Big to Fail" mean in the context of the recent economic collapse?
3. What do bankers do?
1. According to the video, what is Goldman Sachs being accused of? Why is it unethical?
2. Why is it difficult to hold institutions like Goldman Sachs accountable for their actions? What power do they hold over the American economy?
3. How did the actions of large banks like Goldman Sachs influence the economic collapse and the everyday lives of ordinary Americans?
4. What do you know about the Securities and Exchange Commission (SEC)? What is its role?