With more indictments against Wall Street likely, Republicans unanimously opposed to financial reform

 

Following indictments for fraud brought against financial titan Goldman Sachs by the Securities and Exchange Commission, James Hackney, a professor at Northeastern University School of Law, said this is just the tip of the iceberg. Professor Hackney continued, "There are a lot of folks out there in different deals who played similar roles, and once it starts building steam, plaintiffs' lawyers will figure out this is where the money is and there should be a lot of action."

After the SEC went public with the Goldman Sachs allegations, the Dow Jones dropped 125 points and Goldman Sachs stocks dropped 13 percent, the largest one-day drop in company history.

The charges against Goldman relate to a complex investment tied to the performance of pools of risky mortgages. The SEC alleges that Goldman marketed the package to investors without disclosing a major conflict of interest: The pools were picked by another client, a prominent hedge fund that was betting the housing bubble would burst.

Goldman Sachs was not the only bank to pursue these financial schemes to profit on the collapse of the housing mortgage market. At the tail end of the real estate bubble, wily and underhanded investors searched for bigger ways to extract huge profits from the approaching disaster of using derivatives. These financial institutions basically placed bets and profited from the American economy’s downfall.

All 41 Senate Republicans declared their unanimous opposition to financial reform in a Friday letter to Majority Leader Harry With these indictments, and likely more to come, Republicans are going to have a much tougher time convincing Americans that immediate financial reform isn't necessary after the SEC's charges.