Goldman 'can't sugarcoat it,' Sen. Levin says
Last week was a good one for Sen. Carl Levin. The Michigan Democrat's arch-nemesis, Goldman Sachs, agreed to a $550 million settlement with the SEC.
Levin had pilloried Goldman executives at a hearing of his special Senate investigative committee last spring, complaining that the Wall Street bank bet against its clients. Also last week, he saw financial reform legislation pass the Senate, including an amendment he co-sponsored that would rein in conflicts of interests in banks that trade their own money.
I chatted with him Friday. The interview is lightly edited.
What's your reaction to the SEC settlement with Goldman?
It effectively acknowledged wrongdoing. They tried to sugarcoat it a little bit, but you can't sugarcoat it. When you acknowledge you made incomplete disclosures and made a mistake, that's the heart of wrongdoing. And usually you don't express regret when you do the right thing. They did express regret, so that pretty clearly reflects that they did something wrong.
A few weeks ago at your hearing, you said you were examining an issue of morality and ethics but not the law. Does the SEC settlement validate your investigation in a court of law?
Clearly it reflects the ethics and morality issues. But it doesn't get to the question of the conflicts of interest, which is why we got that language into Dodd-Frank.
How will your amendments remedy the conflicts you describe?
What we were able to add was language in two places which prohibits conflicts of interest. It'll be case by case as the SEC implements the new language. We make it clear that you can't put together a security, sell it to clients and then bet against that same security.
The SEC settlement orders a host of changes to how Goldman does business. But what it doesn't do, for example, is require Goldman to meet a higher business standard where it will tell a customer if Goldman thinks what a customer is doing is unwise. Is that a disappointment?
I focused on a clear example of a conflict of interest that was not prohibited, currently at least by the law. It ought to be. And that's why we were able to get the conflict language added. And that is what I focused on.
You, your committee and the SEC have been able to scold, criticize and in many ways hold accountable Goldman for their alleged wrongdoing. But nobody's going to jail and it seems maybe nobody will even lose their job as a result of all this. Do you think this it the proper amount of justice?
Whether or not someone goes to jail is going to be up to the Justice Department. Not up to us. We have not commented on criminal wrongdoing here because that's not our domain. So I think it's premature to either conclude that there's not going to be any criminal action here unless the Justice Department has said that. I think it's premature to conclude there won't be.
July 19, 2010; 11:30 AM ET
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