FCIC Subpoenas Goldman (Update: Details on Firm’s Intransigence)

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.

Update 6:00 PM (hat tip reader Tim S). The BusinessWeek report makes clear that Goldman engaged in deliberate obstruction:

Goldman Sachs sent more than a billion pages of documents, FCIC Vice Chairman Bill Thomas said on a conference call with reporters today. Not all of the information is what the panel requested, and Goldman Sachs didn’t cooperate with requests to interview Chief Executive Officer Lloyd Blankfein, Chief Operating Officer Gary Cohn and Chief Financial Officer David Viniar, FCIC Chairman Phil Angelides said.

“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish,” said Angelides, 56, who previously served as California’s treasurer. “This has been a very deliberate effort over time to run out the clock.”


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