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FCIC Issues Subpoena to Goldman

07 Jun

Bloomberg reports that the FCIC subpoenaed documents from Goldman:

The U.S. panel investigating the causes of the financial crisis issued a subpoena to Goldman Sachs Group Inc. after the Wall Street firm failed to hand over documents in a “timely manner.”

The Financial Crisis Inquiry Commission “has made it clear that it is committed to using its subpoena power” if firms under review don’t comply with information requests, the panel said in a statement today. Moody’s Corp. and Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett were previously subpoenaed by the commission.

Yves here. It’s surprising, to say the least, that Goldman would risk precisely what took place: having a subpoena issued and the resulting media commentary, which again would focus attention on the continuing investigations against the firm (the stock traded down on the news when the market is flattish so far today). The fact is that the FCIC is thinly staffed relative to its mandate, has only limited industry expertise among its commissioners, and is required to complete its work this year. Any one of those shortcomings could be compensated for, but the three in combination are likely to blunt its impact considerably. Perhaps Goldman thought that by dragging its feet, it could guarantee that the commission had insufficient time to deal effectively with whatever the documents contained. If so, that would suggest the documents requested contain material that is embarrassing or damaging. Or it could simply be that the firm is used to getting its way and overplayed its hand.

 
 

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