Expert answer:discussion these questions
Expert answer:Hi thereI have 3 discussion.I need someone to answer them.NO1 . Strauss/Santoro: Wall Street Values, Ch. 7, Goldman Abacus Settlement press release (I have attached)”Moral Moral” hazard is the label Santoro/Strauss give to settlements which do not include an admission of guilt. The Goldman Abacus settlement and other similar settlements did not include an admission of firm guilt. Do you think that the lack of such admission really matters, or was the level of fines and revisions to business practices substantial enough that justice was served?No2.Reading – DOJ Goldman settlement (in files), also this link for very brief summary:https://www.wsj.com/articles/goldman-reaches-5-billion-settlement-over-mortgage-backed-securities-1452808185 (Links to an external site.)Links to an external site.In 2016 the DOJ and Goldman reached an overall settlement related to Goldman’s business practices prior to the financial crisis. Again, the overall settlement leaves out admissions of guilt – The fines are substantial and cover many abuses. Are you satisfied that justice has been served and that these types of settlements provide sufficient deterrent to avoid future abuses.No 3. Gary Cohn, Former Goldman President (until recently), now a member of the Trump Administration has been associated with advocating for undoing the repeal of Glass Steagal.https://www.wsj.com/articles/gary-cohn-backs-breaking-up-big-banks-1491491219 (Links to an external site.)Links to an external site. (Links to an external site.)Links to an external site.Some find it difficult to accept that the former President of Goldman, who is leading the administration’s economic team is taking this point of view. Skeptics think that there has to be something in his point of view that is good for his former partners. Discuss your reaction to Cohn’s support the idea of undoing the repeal of Glass-Steagal.Notice.After you post the answers I will give you small student’s opinion and please replay to them.
ch7.pdf
goldman_financial_crisis_settlement_agreement.pdf
Unformatted Attachment Preview
This Settlement Agreement(” Agreement”) is entered into between the United States
acting through the United States Department of Justice (“Department of Justice”), along with the
States of California and Illinois, acting through their respective Attorneys General, (collectively,
“the States”) on the one hand, and The Goldman Sachs Group, Inc., as well as its current and
former subsidiaries and affiliates (collectively, “Goldman Sachs”) on the other hand. The United
States, the States, and Goldman Sachs are collectively referred to herein as “the Parties.”
RECITALS
A.
The United States Attorney’s Office for the Eastern District of California
conducted an investigation of the marketing, structuring, arrangement, underwriting, issuance,
and sale of residential mortgage-backed securities (“RMBS”) by Goldman Sachs. Based on that
investigation, the United States believes that there is an evidentiary basis to compromise
potential legal claims by the United States against Goldman Sachs for violations of federal laws
in connection with the marketing, structuring, arrangement, underwriting, issuance, and sale of
RMBS.
B.
The States, based upon their independent investigations of the same conduct,
believe that there is an evidentiary basis to compromise potential legal claims by California and
!llinois against Goldman Sachs for state law violations in connection with the marketing,
structuring, arrangement, underwriting, issuance, and sale ofRMBS.
C.
Goldman Sachs has resolved potential claims by the State ofNew York for
alleged violations of New York law in connection with the marketing, structuring, arrangement,
underwriting, issuance and sale of RMBS by Goldman Sachs. The terms of resolution of those
potential claims are memorialized in a separate agreement, attached hereto as Exhibit A.
D.
Goldman Sachs has resolved civil claims, potential and filed, by the Federal
Home Loan Bank of Chicago (“FHLBC”), alleging violations of state securities laws in
connection with private-label RMBS issued, underwritten, and/or sold by Goldman Sachs and
purchased by FHLBC. The terms of the resolution of those claims are memorialized in a
separate agreement, attached hereto as Exhibit B.
E.
Goldman Sachs has resolved civil claims, potential and filed, by the Federal
Home Loan Bank of Des Moines, acting as successor-in-interest to the Federal Home Loan Bank
of Seattle (“FHLBS”), alleging violations of state securities laws in connection with private-label
RMBS issued, underwritten, and/or sold by Goldman Sachs and purchased by FHLBS. The
terms of the resolution of those claims are memorialized in a separate agreement, attached hereto
as Exhibit C.
F.
Goldman Sachs has resolved civil claims, potential and filed, by the National
Credit Union Administration Board, as Liquidating Agent of U.S. Central Federal Credit Union,
Western Corporate Federal Credit Union, and Southwest Corporate Federal Credit Union
(collectively, the “Credit Unions,” and the National Credit Union Administration Board solely in
its capacity as liquidating agent for each Credit Union and the Credit Unions collectively, the
“NCUA”), alleging violations of federal and state securities laws in connection with private-label
RMBS issued, underwritten, and/or sold by Goldman Sachs and purchased by the Credit Unions.
The terms of the resolution of those claims are memorialized in a separate agreement, attached
hereto as Exhibit D.
G.
Goldman Sachs acknowledges the facts set out in the Statement of Facts set forth
in Annex 1, attached hereto and hereby incorporated.
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H.
In consideration of the mutual promises and obligations of this Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1.
Payment. Goldman Sachs shall pay a total amount of $3,260,000,000.00 to resolve
pending and potential claims in connection with the Covered Conduct, as defined below (the
“Settlement Amount”). As set forth below, $2,385,000,000.00 of that amount will be deposited
in the United States Treasury, and the remainder is paid to resolve the claims of the States, the
State of New York, FHLBC, FHLBS, and NCUA, pursuant to the subsequent provisions of this
Paragraph 1.
A.
Within fifteen business days of receiving written payment processing instructions
from the Department of Justice, Office of the Associate Attorney General, Goldman Sachs shall
pay $2,960,000,000.00 of the Settlement Amount by electronic funds transfer to the Department
of Justice.
i.
$2,385,000,000.00, and no other amount, is a civil monetary penalty recovered
pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (“FIRREA”), 12 U.S.C. §1833a. It will be deposited in the General Fund of
the United States Treasury.
11.
$575,000,000.00, and no other amount, is paid by Goldman Sachs in settlement of
the claims of the NCUA identified in Recital Paragraph F, pursuant to the
settlement agreement attached hereto as Exhibit D, the terms of which are not
altered or affected by this Agreement.
B.
$10,000,000.00, and no other amount, will be paid by Goldman Sachs to the State
of California pursuant to Paragraph 6, below, and the terms of written payment instructions from
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the State of California, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of California, Office of the Attorney General.
C.
$25,000,000.00, and no other amount, will be paid by Goldman Sachs to the State
of Illinois pursuant to Paragraph 7, below, and the terms of written payment instructions from the
State of Illinois, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Illinois, Office of the Attorney General.
D.
$190,000,000.00, and no other amount, will be paid by Goldman Sachs to the
State of New York pursuant to the settlement agreement attached hereto as Exhibit A. Payment
shall be made by electronic funds transfer within fifteen business days of receiving written
payment processing instructions from the State of New York, Office of the Attorney General.
E.
$37,500,000.00, and no other amount, will be paid by Goldman Sachs to FHLBC
pursuant to the settlement agreement attached hereto as Exhibit B. Payment shall be made
within ten business days of the execution of that settlement agreement, as set forth therein.
F.
$37,500,000.00, and no other amount, will be paid by Goldman Sachs to FHLBS
pursuant to the settlement agreement attached hereto as Exhibit C. Payment shall be made
within ten business days of the execution of that settlement agreement, as set forth therein.
2.
Consumer Relief. In addition, Goldman Sachs shall provide $1,800,000,000.00 worth of
consumer relief to remediate harms resulting from alleged unlawful conduct of Goldman Sachs,
comprised of $1,520,000,000.00 worth of consumer relief as set forth in Annex 2, attached
hereto and hereby incorporated as a term of this Agreement, and $280,000,000.00 worth of
consumer relief as set forth in Appendix A to the settlement agreement between Goldman Sachs
4
and the State of New York, attached hereto as Exhibit A (“NY Agreement Appendix A”). The
value of consumer relief provided shall be calculated and enforced pursuant to the terms of
Annex 2 and NY Agreement Appendix A. An independent monitor will determine whether
Goldman Sachs has satisfied the obligations contained in Annex 2 and NY Agreement
Appendix A (such monitor to be Eric Green) (the “Monitor”), and Goldman Sachs will provide
the Monitor with all documentation the Monitor needs to do so, excluding all privileged
information. Any costs associated with said Monitor shall be borne solely by Goldman Sachs.
Notwithstanding the fact that Goldman Sachs bears the costs associated with the Monitor, the
Monitor shall be fully independent of Goldman Sachs. Goldman Sachs will refrain from
retaining the Monitor to represent Goldman Sachs in any capacity prior to two years after the
date upon which Goldman Sachs satisfies the consumer relief obligations set forth in Annex 2
and NY Agreement Appendix A. Goldman Sachs will also refrain from engaging the Monitor as
a mediator in any matter to which Goldman Sachs is a party until Goldman Sachs satisfies the
consumer relief obligations set forth in Annex 2 and NY Agreement Appendix A.
3.
Covered Conduct. “Covered Conduct” as used herein is defined as the creation,
pooling, structuring, arranging, formation, packaging, marketing, underwriting, sale, or issuance
prior to January I, 2009 by Goldman Sachs of the RMBS identified in Annex 3, attached and
hereby incorporated. Covered Conduct includes representations, disclosures, or non-disclosures
to RMBS investors made in connection with the activities set forth above, where the
representation, disclosure, or non-disclosure involves information about or obtained during the
process of originating, acquiring, securitizing, underwriting, or servicing residential mortgage
loans included in the RMBS identified in Annex 3. Covered Conduct does not include:
(i) conduct relating to the origination of residential mortgages, except representations,
5
disclosures, or non-disclosures to investors in the RlVIBS listed in Annex 3 about origination of,
or about information obtained in the course of originating, such loans; (ii) the servicing of
residential mortgage loans, except representations, disclosures, or non-disclosures to investors in
the RMBS listed in Annex 3 about servicing, or information obtained in the course of servicing,
such loans; or (iii) representations, disclosures, or non-disclosures made in connection with
collateralized debt obligations, other derivative securities, or the trading ofRMBS, except to the
extent that the representations, disclosures, or non-disclosures are related to the offering
materials for the underlying RMBS listed in Annex 3.
4.
Cooperation. Until the date upon which all investigations and any prosecution arising
out of the Covered Conduct are concluded by the Department of Justice, whether or not they are
concluded within the term of this Agreement, Goldman Sachs shall, subject to applicable laws or
regulations: (i) cooperate fully with the Department of Justice (including the Federal Bureau of
Investigation) and any other law enforcement agency designated by the Department of Justice
regarding matters arising out of the Covered Conduct; (ii) assist the Department of Justice in any
investigation or prosecution arising out of the Covered Conduct by providing logistical and
technical support for any meeting, interview, grand jury proceeding, or any trial or other court
proceeding; (iii) use its best efforts to secure the attendance and truthful statements or testimony
of any officer, director, agent, or employee of any of the entities released in Paragraph 5 at any
meeting or interview or before the grand jury or at any trial or other court proceeding regarding
matters arising out of the Covered Conduct; and (iv) provide the Department of Justice, upon
request, all non-privileged information, documents, records, or other tangible evidence regarding
matters arising out of the Covered Conduct about which the Department or any designated law
enforcement agency inquires.
6
5.
Releases by the United States. Subject to the exceptions in Paragraph 9 (“Excluded
Claims”), and conditioned upon Goldman Sachs’ full payment of the Settlement Amount (of
which $2,385,000,000.00 will be paid as a civil monetary penalty pursuant to FIRREA,12 U.S.C.
§1833a), and Goldman Sachs’ agreement, by executing this Agreement, to satisfy the terms of
Annex 2, as referenced in Paragraph 2 (“Consumer Relief’) and Paragraph 4 (“Cooperation”),
the United States fully and finally releases Goldman Sachs, each of its current and former
parents, subsidiaries and affiliated entities, and each of their respective successors and assigns
(collectively, the “Released Entities”), from any civil claim the United States has against the
Released Entities for the Covered Conduct arising under FIRREA, 12 U.S.C. § 1833a; the False
Claims Act, 31 U.S.C. §§ 3729, et seq.; the Program Fraud Civil Remedies Act, 31 U.S.C.
§§ 3801, et seq.; the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et
seq.; the Injunctions Against Fraud Act, 18 U.S.C. § 1345; common law theories of negligence,
gross negligence, payment by mistake, unjust enrichment, money had and received, breach of
fiduciary duty, breach of contract, misrepresentation, deceit, fraud, and aiding and abetting any
of the foregoing; or that the Civil Division of the Department of Justice has actual and present
authority to assert and compromise pursuant to 28 C.F.R. § 0.45.
6.
Releases by the California Attorney General. Subject to the exceptions in Paragraph 9
(“Excluded Claims”), and conditioned solely upon Goldman Sachs’ full payment of the
Settlement Amount (of which $10,000,000.00 will be paid to the Office of the California
Attorney General, in accordance with the written payment instructions from the California
Attorney General, to remediate harms to the State, pursuant to California Government Code § §
12650-12656 and 12658, allegedly resulting from unlawful conduct of the Released Entities), the
California Attorney General fully and finally releases the Released Entities and their successors
7
and assigns from any civil or administrative claim for the Covered Conduct that the California
Attorney General has authority to bring or compromise, including but not limited to: California
Corporate Securities Law of 1968, Cal. Corporations Code § 25000 et seq., California
Government Code§§ 12658 and 12660, California Government Code§§ 12650-12656,
California Business & Professions Code § 17200 et seq., California Business & Professions
Code§ 17500 et seq., common law theories of negligence, payment by mistake, unjust
enrichment, money had and received, breach of fiduciary duty, breach of contract,
misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The California
Attorney General executes this release in her official capacity and releases only claims that the
California Attorney General has the authority to release for the Covered Conduct. The
California Attorney General agrees that no portion of the funds in this Paragraph is received as a
civil penalty or fine, including, but not limited to any civil penalty or fine imposed under
California Government Code § 12651. The California Attorney General and Goldman Sachs
acknowledge that they have been advised by their attorneys of the contents and effect of Section
1542 of the California Civil Code (“Section 1542”) and hereby expressly waive with respect to
this Agreement any and all provisions, rights, and benefits conferred by Section 1542.
7.
Releases by the State of Illinois. Subject to the exceptions in Paragraph 9 (“Excluded
Claims”), and conditioned solely upon Goldman Sachs’ full payment of the Settlement Amount
(of which $25,000,000.00 will be paid to the State of Illinois, Office of the Attorney General, in
accordance with the written payment instructions from the State of Illinois, Office of the
Attorney General, to remediate harms to the State allegedly resulting from unlawful conduct of
the Released Entities), the Attorney General of the State of Illinois fully and finally releases the
Released Entities and their successors and assigns from any civil or administrative claim for the
8
Covered Conduct that the Attorney General of the State of Illinois has authority to bring or
compromise, including but not limited to: Illinois Securities Law of 1953, 815 Ill. Comp. Stat.
511 et seq., Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat.
505/1 et seq., Illinois False Claims Act, 740 Ill. Comp. Stat. 175/1 et seq., Article XX of the
Illinois Code of Civil Procedure, 735 Ill. Comp. Stat. 5/20-101, et seq., and common law theories
of negligence, payment by mistake, unjust enrichment, money had and received, breach of
fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding and abetting any of
the foregoing. The State of Illinois agrees that no portion of the funds in this Paragraph is
received as a civil penalty or fine.
8.
Releases by the State of New York, FHLBC, FHLBS and NCUA. The releases of
claims by the State ofNew York, FHLBC, FHLBS and the NCUA are contained in separate
settlement agreements with Goldman Sachs, attached as Exhibits A, B, C and D hereto. Any
release of claims by the State of New York, FHLBC, FHLBS or the NCUA is governed solely by
those separate settlement agreements.
9.
Excluded Claims. Notwithstanding the releases in Paragraphs 5-8 of this Agreement, or
any other term(s) of this Agreement, the following claims are specifically reserved and are not
released by this Agreement:
a. Any criminal liability;
b. Any liability of any individual;
c. Any liability arising under Title 26 of the United States Code (the Internal Revenue
Code);
d. Any liability to or claims ofNCUA, except as expressly set forth in the separate
agreement between NCUA and Goldman Sachs;
9
e. Any liability to or claims of the United States of America, the Department of Housing
and Urban Development/Federal Housing Administration, the Department of
Veterans Affairs, or Fannie Mae or Freddie Mac relating to whole loans insured,
guaranteed, or purchased by the Department of Housing and Urban
Development/Federal Housing Administration, the Department of Veterans Affairs,
or Fannie Mae or Freddie Mac, except claims based on or arising from the
securitizations of any such loans in the RMBS listed in Annex 3;
f.
Any administrative liability, including the suspension and debarment rights of any
federal agency;
g. Any liability based upon obligations created by this Settlement Agreement; and
h. Any liability for the claims or conduct alleged in the following qui tam actions, and
no setoff related to amounts paid under this Agreement shall be applied to any
recovery in connection with any of these actions:
(i)
United States, et al. ex rel. Szymoniak v. American Home Mortgage
Servicing, Inc., Saxon Mortgage, Inc., et al., No. 0: I O-cv-01465-JFA
(D.S.C.);
(ii)
United States ex rel. Mayers v. The Goldman Sachs Group, Inc., et al., No.
14-cv-6989 (CBA) (E.D.N.Y.);
(iii)
United States ex rel. Casady v. American International Group, Inc., et al.,
No. 10-cv-0431 GPC (MDD) (S.D. Cal.); and
(iv)
United States ex rel. [Sealed} v. [Sealed], No. XX CIV XXXX (E.D.
Cal.), [as disclosed to Goldman Sachs].
10
I 0.
Releases by Goldman Sachs. Goldman Sachs and any current or former affiliated entity
and any of its respective successors and assigns fully and finally releases the United States and
the States, and their officers, agents, employees, and servants, from any claims (including
attorney’s fees, costs, and expenses of every kind and however denominated) that Goldman
Sachs has asserted, could have asserted, or may assert in the future against the United States and
the States, and their officers, agents, employees, and servants, related to the Covered Conduct to
the extent released hereunder and the investigation and civil prosecution to date thereof.
11.
Waiver of Potential FDIC Indemnification Claim by Goldman Sachs. Goldman
Sachs hereby irrevocably waives any right that it otherwise might have to seek (and in any event
agrees that it shall not seek) any form of indemnification, reimbursement or contribution from
the FDIC in any capacity, including the FDIC in its Corporate Capacity or the FDIC in its
Receiver Capacity, for any payment that is a portion of the Settlement Amount set forth in
Paragraph I of this Agreement or of the Consumer Relief set forth in Paragraph 2 of this
…
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