An SEC financial fraud probe may not be the end to Goldman Sachs' problems. Though the Wall Street giant is vowing to vigorously (if quietly) fight the charges, and has added recent Obama White House counsel Gregory Craig to its legal team, more battles may be looming: Sen. Carl Levin (D-MI) says his Senate committee has "another big shoe to drop on Goldman," and The New York Times reports that CEO Lloyd Blankfein and other top executives played a "pivotal role" in Goldman's SEC-tagged mortgage dealings. Will the SEC investigation trigger more trouble for the company? (Watch a CBS report about Goldman's chances of survival)
The market thinks this is a non-issue: Wall Street certainly doesn't seem worried, says Lynn Thomasson in Bloomberg. Its outlook on Goldman is "the most bullish since 2005," and analysts predict that the firm will not only "preserve its reputation" but also profit handsomely from an expanding economy. The worst likely scenario is "a short-term loss of business from public pension funds."
"Goldman Sachs 'buy' ratings...undaunted by SEC"
Don't forget that the SEC has a poor track record: Goldman's actions were "not too far from morally reprehensible, unethical, slimy, devious, and unjustifiable," says David Weidner at MarketWatch. But the SEC won't be able to show that they were illegal. The SEC has lost similar cases with much less savvy and powerful players, and so far there is no "smoking gun."
"Why Goldman can beat the SEC"
The media is overplaying this: The media has "forcibly evolved" this "unconvincing look at a minor bit of potential malfeasance" at Goldman's mortgage unit into a "bizarre and misunderstood scandal," says Choire Sicha in The Awl. Goldman will "win this one without even really trying too hard."
"The Goldman Sachs SEC investigation is a joke"
The probe is blood in shark-infested waters: Even if the SEC loses, says The Economist, "Goldman is unpopular enough that this might let loose a wave of subpoenas and hearings, one of which might turn up something Goldman can't beat." Many people in many countries are very angry, and this lawsuit is "just the morsel they needed to begin the feeding frenzy."
"The squid and the fail"
The SEC charges are bad for business: Goldman's defense — essentially "let the buyer beware" — might work in court, says Andrew Leonard at Salon. But its "highly unlikely to assuage any future clients of Goldman who might be wondering just whose interests the investment bank is serving in any given deal." No trust equals no deal.
"Goldman Sachs and the SEC"
Goldman loses by fighting: When I read the SEC's charges, "I was stunned by how weak their case is," says the blog Economics of Contempt. But Goldman's decision to fight, instead of settle, is "incredibly short-sighted." Instead of a "one-month story that you lose," Goldman now gets "a two-year story that guarantees a steady stream of negative publicity and wears on morale, but that you win."
"Quick (and, alas, non-substantive) word about the Goldman case"