SEC Probe Shouldn’t Stop With Goldman Sachs

April 21, 2010 07:19


Investigation should follow the money trail to all the congressmen and Wall Streeters invloved in the incestuous snake pit that is looting the US treasury.

By Phil Kerpen – FOXNews.com


The Securities and Exchange Commission is investigating whether Goldman acted improperly, but what about the other players in the scheme?

You might think the breaking scandal swirling around Goldman Sachs gives Democrats one more talking point in their push for regulatory reform. However, if we look just below the surface of the scandal there are explosive revelations that implicate some of the central players who support the legislation being pushed by Senate Banking Committee Chairman Chris Dodd – who is retiring in disgrace over his connection to the earlier Countrywide scandal.

It looks like hedgefund billionaire John Paulson may have helped engineer the housing collapse that made him a fortune. Paulson, along with other notorious subprime kingpins Herb and Marion Sandler, funded a North Carolina-based outfit called the Center for Responsible Lending (CRL) to the tune of $15 million, to shake down and harass banks into making bad loans to unqualified borrowers. CRL then turned around and lobbied for legislation to undermine the burgeoning subprime market they had helped create.

Meanwhile, Paulson paid Goldman Sachs another $15 million to design collateralized-debt obligations comprised of specific subprime mortgages that he selected. This bucket of investments may have included loans that he knew were unsound and were made only because banks were strong-armed by the CRL. It also may have included loans that he knew would be undermined by the CRL’s extensive lobbying activities. Until there is a full investigation, we won’t know for sure, but it appears Paulson’s $30 million – split between the CRL and Goldman Sachs – financed a scheme that netted his fund a cool $1 billion dollars.

The Securities and Exchange Commission is investigating whether Goldman acted improperly, but what about the other players in the scheme? What about the Center for Responsible Lending, which facilitated both the creation of subprime assets and their collapse, while its principal supporter made a fortune? What about the politicians who for years pumped up the subprime markets as a political pander to lower income and minority communities?

Not only is the Center for Responsible Lending escaping the spotlight of investigation, but under the Dodd legislation the CRL is poised to accomplish most of its longtime goals and achieve sweeping new powers.

FULL STORY



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