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Wow, $5 billion! That’s the stunning amount that Goldman Sachs has agreed to pay to settle federal criminal charges over its shameful financial scams that helped wreck America’s economy in 2008. That’s a lot of gold, even for Goldman.
Yet, the Wall Street powerhouse says it’s “pleased” to swallow this sour slug of medicine. Is that because its executives are contrite? Oh, come on – banksters don’t do contrite. Rather, they are pleased with the settlement because, thanks to backroom dealing with friendly prosecutors, it’s riddled with special loopholes that could eliminate nearly $2 billion from the publicized “punishment.”
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For example, the deal calls for the felonious bank to put a quarter-billion dollars into a affordable housing program, but generous federal negotiators put incentives and credits in the fine print that will let Goldman escape with paying out less than a third of that. Also, about $2.5 billion of the settlement is to be paid to consumers hurt by the financial crisis. But the deal lets the bank deduct almost a billion of this payout from its corporate tax – meaning you and I will subsidize Goldman’s payment. As a bank reform advocate puts it, the problem with these settlements “is that they are carefully crafted more to conceal than to reveal to the American public what really happened here.”
One more reason Wall Street bankers privately wink and grin at these seemingly huge punishments is that even paying the full $5 billion would only be relatively painful. To you and me, that sounds like a crushing number – but Goldman Sachs raked in $33 billion in revenue last year alone, so it’s a reasonable cost of doing business. After all, Goldman sold tens of billions of dollars in the fraudulent investment packages leading to the settlement, so the bottom line is that crime can actually pay – if it’s big enough.