Tuesday, June 08, 2010

New York Times Editorial: What Is Goldman Hiding?

New York Times Editorial: What Is Goldman Hiding?
Copyright by The New York Times
Published: June 7, 2010

Congress created the Financial Crisis Inquiry Commission last year to investigate the causes of the meltdown. Many banks, financial firms and other witnesses have cooperated. But not Goldman Sachs.

According to the panel’s chairman, Phil Angelides, Goldman has either not responded to requests — stretching back to January — for documents and interviews or has submitted data that are so voluminous or disorganized as to be useless.

On Monday, Mr. Angelides announced that the panel had finally subpoenaed Goldman. He told reporters that Goldman’s performance had been “abysmal, unacceptable and won’t be countenanced.” He added that it is his job to ensure that the American people are not “played for chumps.”

We couldn’t agree more. We also have to ask what took the commission so long — and hope this new toughness will carry through to a smart and tough report. The commission’s final product is due on Dec. 15. If Goldman’s lawyers think they can play out the clock, Congress had better disabuse them of that notion right now.

If Goldman doesn’t comply, the commission can — and should — ask a court to enforce the subpoena. If Goldman still balks, the court could find Goldman in contempt.

We still don’t know in detail what the crisis panel is hoping to learn from Goldman. In its own disturbing lack of transparency, the panel has not made the subpoena public. A summary on its Web site, posted late Monday, says that it is looking for information on Goldman’s derivatives’ deals and wants to interview Goldman’s top executives and other employees with knowledge of specific transactions. The public clearly has the right to know those details and how they may have contributed to the financial crisis.

The Goldman subpoena is only the latest of many black eyes for the bank, including a civil suit for securities fraud brought by the Securities and Exchange Commission earlier this year.

In the conference call on Monday, the panel’s vice chairman, Bill Thomas, a former chairman of the House Ways and Means Committee, suggested that Goldman’s failure to cooperate indicated that the bank had something to hide. “They may have more to cover up than either we thought or than they told us,” he said. At the least, it suggests that Goldman is still trying to control the narrative of the financial crisis.

That is a prerogative it and all of the banks forfeited when they nearly brought down the financial system and then were bailed out by American taxpayers.

The country needs a full accounting of what went wrong. To do their job, Mr. Angelides, Mr. Thomas and the commission are going to have push a lot harder.

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