Sunday, August 01, 2010

Suing Wall Street for negligence

Two weeks ago, Goldman Sachs settled fraud allegations brought by the Securities and Exchange Commission by agreeing to pay over half a billion dollars in fines regarding their role in the meltdown of the mortgage market that triggered the financial collapse of 2008.  But they also managed to avoid the stain of a confession of fraud. Instead, GS made the extraordinary admission that it made "a mistake" by not disclosing that the securities it sold were secretly designed by Paulsen and Co. to fail; indeed, the products -- known as Abacus 2007-AC1 -- were never to make money for the purchasers.

These admissions did not relieve Goldman of all of their potential punitive burden, however. While there has been a paucity of investor lawsuits to date, the states -- on behalf of injured parties such as their pension and retirement systems for teachers and public employees -- are taking matters into their own hands.

While at least one state's attorney general has gone after a Wall Street outfit on behalf of her residents -- Martha Coakley of Massachusetts, and Morgan Stanley -- so far the attorney general of Texas, Greg Abbott, is unable to respond in similar fashion for Texans, despite the fact that the legal brief and complaint has been prepared for and delivered to him. Along with an offer on behalf of several attorneys to pursue the case for no fee.

Of course since it is his Democratic challenger, Barbara Radnofsky, who has done the legwork in this matter, Abbott must think that pretending not to notice her efforts is the best course of action ... for his re-election prospects.

But even former Texas Governor Mark White -- who also served as Texas attorney general -- called on Abbott to file suit, explaining: "Radnofsky's proposed suit versus Goldman Sachs and other Wall Street firms is greatly aided by Goldman's concessions announced (July 16). The State of Texas has suffered as a result of Wall Street negligence and fraud. And the harm to the State we love is physical as well as economic."

Sign the petition calling on Greg Abbott to go after the Wall Street crooks. Since we bailed them out with taxpayer money (which they then spent on executive bonuses), isn't this the very least he can do?

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