US taxpayers get screwed again as half of the Goldman Sachs $5 billion settlement with the Department of Justice will be tax deductible.
The Department of Justice announced that Goldman Sachs will pay $5 billion to settle claims that they misled investors during the mortgage crisis, “The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.”
Dennis Kelleher, President and CEO of Better Markets, pointed out that half of the settlement will be tax deductible for Goldman Sachs:
This settlement is a victory for Goldman. First, it got to keep all the ill-gotten gains for the last eight-plus years. Second, a $5 billion settlement is meaningless unless it is publicly disclosed how much money was made from the illegal conduct and the total amount of investor losses. Third, DOJ helped it cover up its illegal actions by letting Goldman merely acknowledge a Swiss cheese ‘statement of facts’ carefully crafted more to conceal than reveal what Goldman really did here. Fourth, Goldman’s net revenue was $37.7 billion and its net earnings were $9.5 billion in 2006 alone, just one year in the midst of this multi-year scheme. Fifth, every single individual at Goldman who received a bonus from this illegal conduct not only keeps the entire bonus, but suffers no penalty at all. Sixth, more than half of the $5 billion appears likely to be tax deductible, meaning U.S. taxpayers will be required to subsidize this settlement.
Democratic presidential candidate Bernie Sanders said that Goldman admitted to the whole world that their system is based on fraud.
Sanders said, “Goldman Sachs is one of the major financial institutions in our country. What they have just acknowledged to the whole world is that their system…is based on fraud.”
The fact that Goldman got to keep all of the money that have made from collapsing the economy plus will be able to write off half of the settlement with the Department of Justice should be enraging to taxpayers.
When Democrats talk about the system being rigged, the Goldman Sachs settlement is a perfect example of what they are referring to. Sure, their illegal activity will cost Goldman $5 billion, but it’s not really $5 billion because they will be able to write off half of it. No one from Goldman Sachs will be going to prison, and the American people will again be footing the bill.
The reason voters are enraged is because the system is rigged. The Goldman Sachs settlement isn’t justice. There is no way that the people who lost their jobs, homes, and life savings can feel like justice has been done. Voters are angry, and one of the main sources of their rage is the fact that Wall Street destroyed the economy and got off with less than a slap on the wrist.
Real change is needed in the United States, and it should start by holding the criminals who destroyed America’s economy accountable.
Mr. Easley is the founder/managing editor and Senior White House and Congressional correspondent for PoliticusUSA. Jason has a Bachelor’s Degree in Political Science. His graduate work focused on public policy, with a specialization in social reform movements.
Awards and Professional Memberships
Member of the Society of Professional Journalists and The American Political Science Association