Senate to probe Goldman Sachs, Deutsche: report
30 Jul 2009
Some of America's biggest banks may be in for some tough times ahead. A senate panel has subpoenaed leading financial institutions, including Goldman Sachs Group Inc and Deutsche Bank AG, for evidence of wrongdoing into last year's mortgage-market meltdown, informed sources said.
The congressional investigation is expected to focus on whether the firms had any misgivings about the financial soundness of mortgage-based securities they heavily promoted. The congressional investigation is likely to focus on the firms' internal communications to reveal any mismatch between their public stance and private position. In other words, the investigation will probe whether the banks knowingly misled the public on dubious mortgage-related securities. Last year's financial crisis was triggered in part by the collapsing worth of the mortgage-based securities.
According to the sources, the senate permanent subcommittee on investigation has also summoned Washington Mutual Inc, a Seattle thrift that was seized by regulators during last year's financial crisis and now largely owned by JP Morgan Chase & Co.
It appears likely that several other financial institutions have also received subpoenas.
Meanwhile, questions are being raised about investment banker Goldman Sach's role in triggering last year's crisis and the company is fast becoming the favourite target of critics.
Also, the fact that the company is known to be close to President Obama (Goldman Sachs and J P Morgan were among the biggest contributors to his presidential campaign) does no help either.
