The National Credit Union Administration (NCUA) believes that Goldman Sachs has not yet fully made up for mistakes made in the sales of mortgage-backed securities (MBS), and it has filed another $491 million lawsuit against the firm. This brings the total NCUA is seeking in damages for Goldman Sachs to nearly $2 billion[1]. NCUA believes that Goldman Sachs made “numerous material representations” about the MBS and “caused corporate credit unions to believe the risk of loss associated with the investment was minimal when in fact the risk was substantial.” Debbie Matz, NCUA board chairman, says that the suits are part of NCUA’s responsibility to seek “maximum recoveries” for its investors and “those who caused problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions.”
NCUA has already sued JPMorgan Chase over similar issues to the ones that Goldman Sachs is now dealing with and representatives have stated that more cases are likely on the way[2]. The lawsuit was filed in the U.S. District Court for the Central District of California[3].
Do you think that these lawsuits are appropriate and/or necessary?
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[1] http://nationalmortgageprofessional.com/news26218/ncua-seeks-491-million-damages-goldman-sachs-over-mbsmisrepresentations?term=NCUA+Seeks+_24491+Million+in+Damages+From+Goldman+Sachs+Over+MBS+Misrepresentations
[2] http://www.fiercefinance.com/story/goldman-sachs-charged-ncua/2011-08-10
[3] http://www.ncua.gov/news/press_releases/2011/MR11-0808NCUASuesGS.pdf
This is the beauty of accountability. The feds won’t even slap their hands, but we can rely on the injured party to take them to task and make them pay. That is going to pave the way for individuals.
Necessary from the Credit Unions’ perspective to cover losses, to the extent they can be documented. Appropriate? Absolutely. Goldman Sachs is a crooked outfit, IMHO, in bed with the government. Their execs have long had a revolving door, from Goldman Sachs into government and back again. I’ve no pity for them as victims of the economic downturn. They were, and always have been key players, and their far too cozy relationship with the federal government has led to far too many problems that adversely impact investors of all stripes, and the nation as a whole. A lot of them would probably most fittingly be provided with a berth in Leavenworth.