Goldman Sachs CEO Blankfein Hires Defense Lawyer
Wednesday, August 24, 2011
News of Goldman Sachs’ top executive hiring a defense attorney caught investors off-guard on Monday, causing Goldman’s shares to fall in value and leaving Wall Street wondering what’s next for the nation’s largest investment bank.
Lloyd Blankfein, chief executive of Goldman, has retained the services of high-profile Washington defense attorney Reid Weingarten of Steptoe & Johnson LLP, at a time when the Department of Justice is still investigating the bank for its role in the financial crisis of 2007-2009. Weingarten has previously defended officers of both Enron and WorldCom.
Legal experts said the hiring was an indication that Blankfein is taking the federal probe seriously. But, they added, the move does not necessarily mean that government prosecutors will take any action against Goldman or its leaders.
In April, a bipartisan report from the U.S. Senate Subcommittee on Investigations slammed the work of Goldman Sachs, accusing the firm of “engaging in massive conflicts of interest, contaminating the U.S. financial system with toxic mortgages and undermining public trust in U.S. markets in the months leading up to the financial crisis.”
In February 2010, when it was revealed that Blankfein a $9 million pay package, and Jamie Dimon, CEO of JPMorgan, was raking in $17 million for the year, President Barack Obama defended the bonuses, telling Bloomberg, “I know both those guys; they are very savvy businessmen. I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.” Just weeks earlier, Blankfein had admitted that Goldman Sachs had engaged in “improper” behavior in 2006 and 2007 when it bet against the very mortgage-based securities it sold to investors as sound investments.
After word got out about Weingarten’s hiring, Goldman shares fell sharply in the final minutes of regular trading, finishing down 4.7% at $106.51, their lowest level since March 2009. The stock dipped again in after-hours trading to $105.45, before bumping up to 106.86 at the end of trading on Tuesday.
-David Wallechinsky, Noel Brinkerhoff
Goldman CEO Hires Prominent Defense Lawyer (by Andrea Shalal-Esa, Reuters)
Goldman’s Shares Tumble as Blankfein Hires Top Lawyer (by Susanne Craig and Peter Lattman, DealBook)
Is the Justice System Finally Closing in on Goldman Sachs over Financial Fraud? (by David Wallechinsky and Noel Brinkerhoff, AllGov)
Why No Prison for Banksters Who Caused Financial Crisis…Yet? (by David Wallechinsky and Noel Brinkerhoff, AllGov)
Obama Defends Bank CEO Bonuses (by Noel Brinkerhoff, AllGov)
Goldman Sachs CEO Admits “Improper” Hedges (by Noel Brinkerhoff, AllGov)
Goldman Sachs and Others Investigated for Betting Against Securities They Created (by Noel Brinkerhoff, AllGov)
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