The legal assault on Goldman Sachs is growing — just days after federal regulators accused Goldman of fraud, the Justice Department has launched a criminal investigation into whether Goldman employees duped investors who bought mortgage-backed securities from the firm. Now, the Wall Street powerhouse faces a difficult decision: Tarnish its reputation by admitting wrongdoing under a deal to avoid prosecution, or enter a potentially devastating legal battle by continuing to insist it did nothing wrong. What should Goldman do? (Watch a Fox report about Goldman Sachs' settlement pros and cons)
Settling is the only way to end the bleeding: "It's time for Goldman to reach for the checkbook," says Henry Blodget in Business Insider. It will be "galling and humiliating" for the bank to pay a $1 billion-plus fine when it insists it did nothing wrong. But the firm's nosediving stock price has already cost it $21 billion in market value, and the specter of criminal charges only makes matters worse.
"The more Goldman's stock falls, the more quickly the firm will settle the SEC suit"
Goldman has to defend itself, at least for now: Goldman Sachs can't afford to give in without explaining why it feels it told its clients everything they needed to know about the securities they were buying, says former New York governor Eliot Spitzer, as quoted by Reuters. "To settle now is to wave the white flag. That would do real harm to the brand of the firm."
"Goldman Sachs' soul search — sincere or strategy?"
Both sides benefit from a settlement: There's "not a person on Wall Street" who isn't predicting a settlement, says Charlie Gasparino at Fox Business. But it will take time. The government is using this case to push financial reform, and Goldman needs to stick it out a bit longer to see what evidence regulators have. But the bottom line is that neither side can risk defeat either, so both sides will be motivated to talk settlement soon.
"Goldman not talking settlement, yet"
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