Carl Levin: Another ‘Big Shoe to Drop' on Goldman
Washington is suddenly looking very unkind to the firm that used to be known as "Government Sachs." Now the Senate's Permanent Subcommittee on Investigations, led by Carl Levin, Democrat of Michigan, is planning to focus hearings scheduled for next week at least in part on Goldman Sachs's role in the financial disaster. Levin's staff has uncovered new documents "that link certain actions to specific people" at Goldman, according to a senior legislative official who spoke on condition of anonymity. The official would not divulge the nature of the allegation but said that Levin believes it amounts to "another big shoe to drop on Goldman." Spokespeople for Levin said they were not prepared to discuss the nature of the probe, but his committee has been conducting several weeks of hearings and one is planned for April 27 on "the role of the investment banks." "We expect to have some information tomorrow," spokesman Bryan Thomas said Monday.
Levin has been one of the most aggressive Democrats in the Senate in pushing for more dramatic financial reform, and the first week of his subcommittee's hearings focused on the role of high-risk home loans in the disaster, using Washington Mutual Bank (WaMu) as a case history. Further hearings are expected to show how banks like WaMu obtained their know-how and securitization techniques from Wall Street. Last week the Securities and Exchange Commission filed civil fraud charges against Goldman related to the late stages of the subprime mortgage scandal, when some Wall Street firms were creating complex products like "synthetic CDOs" for the sole reason of shorting them and making money on their almost certain failure. SEC Director of Enforcement Robert Khuzami said the firm mislead investors by failing to tell them that a client that was betting against the mortgage market had helped to design a Goldman investment portfolio, "while telling other investors that the securities were selected by an independent, objective third party." Goldman has denied the charges, saying it withheld no material information from investors.
A year ago Levin was critical of what he called the reluctance of the Obama administration to take on Wall Street, saying: "Some of the people around the president needed to be given a push." Levin has also sought to rescind many of the laws that led to deregulation. Chief among them: the 2000 Commodity Futures Modernization Act, which exempted the credit-default swaps that brought AIG—and much of the financial system—to the brink of meltdown. Goldman's role in AIG's near-meltdown also has been a subject of various government inquiries.
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Michael Hirsh covers international affairs for NEWSWEEK reporting on a range of topics from Homeland Security to postwar Iraq. He co-authored the November 3, 2003 cover story, "Bush's $87 Billion Mess," about the Iraq reconstruction plan. The issue was one of three that won the 2004 National Magazine Award for General Excellence.
Hirsh writes a column on Newsweek.com entitled "The World from Washington" focusing on foreign policy issues and serves as Washington Web Editor for Newsweek. He also edited NEWSWEEK's "Issues 2007" special issue, which explores all facets and issues of globalization.
Hirsh was the magazine's Foreign Editor from January 2001 to January 2002, and helped guide Newsweek's award-winning coverage of the September 11 attacks and the war on terror. Before that he was a Senior Editor/Chief Diplomatic Correspondent in the Washington bureau, writing about foreign affairs and international economics. Hirsh was also managing editor for the Newsweek International special issue "ISSUES 2001," the second in a series of three annual reviews of the global economy in the new century.
From September 1998 to December 1999, as Diplomatic Correspondent, Hirsh covered foreign policy, the State Department and the Treasury. He moved to the Washington D.C. bureau in May 1997, previously serving as a senior editor of Newsweek International, covering the same beat.
Prior to joining NEWSWEEK in October 1994 as a New York-based senior writer, Hirsh served as the Tokyo-based Asia Bureau Chief for Institutional Investor from 1992 to 1994. Previously, he was a correspondent for the Associated Press in Tokyo and a National Editor in New York.
Hirsh was co-winner of the 2002 Ed Cunningham Award for best magazine reporting from abroad for Newsweek's terror coverage and contributed to the team of Newsweek reporters who earned the magazine the prestigious 2002 National Magazine Award for General Excellence, also for the magazine's coverage of the war on terror. Hirsh also won a Deadline Club Award in 1997 for investigative reporting on his expose of the IRS's abusive practices, and was one of five finalists for a 1994 Gerald Loeb Award for Distinguished Business and Financial Journalism for his article, "China's Financial Revolutionaries." It profiled the new generation of mainland Chinese businessmen who are striving to build a capitalist financial system from scratch. Hirsh is the author of the nonfiction book "At War with Ourselves" (Oxford University Press, 2003) which explores America's foreign policy and its global role.
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