Washington – The congressional panel investigating the causes of the financial crisis said Monday it has subpoenaed documents from Wall Street giant Goldman Sachs because of the company’s failure to voluntarily comply with a request for documents and access to executives for interviews.
It marked only the second time that the Financial Crisis Inquiry Commission has resorted to a subpoena in pursuing a sweeping examination of the roles of major institutional players in the meltdown that crippled the global economy.
In a three-paragraph statement, the panel declined to say what material it had subpoenaed or whom it was seeking to question.
Goldman spokesman Michael DuVally said: “We have been and continue to be committed to providing the FCIC with the information they have requested.”
Goldman previously turned over about 2 million subpoenaed documents to the Senate Permanent Subcommittee on Investigations. At a marathon hearing in April, the Senate panel confronted Goldman Chief Executive Officer Lloyd Blankfein and six other company executives with evidence that it had peddled risky mortgage securities while secretly betting billions of dollars on a housing downturn that would sink their value.
The FCIC faces a December deadline for delivering a report on its findings to Congress. Democratic Chairman Phil Angelides and Republican Vice Chairman Bill Thomas warned last year that it would consider issuing subpoenas to any company or institution that stalled in voluntarily producing requested materials.
In April, angered over foot-dragging by Moody’s Investors Service, the FCIC subpoenaed documents from the credit ratings agency, leading to a hearing on its role last week.
Under the law creating the commission, a subpoena only can be issued with at least seven votes from the panel of six Democrats and four Republicans.
Blankfein testified to the commission in January along with the CEOs of Morgan Stanley and JPMorganChase.
Goldman, the only Wall Street firm to safely exit the subprime mortgage market before the housing crash, has been at the center of several federal inquiries into possible misbehavior.
In a series last November, McClatchy reported that Goldman had sold more than $40 billion in mortgage securities backed by dicey home loans in 2006 and 2007 without telling investors that it was betting that similar securities would default
On April 16, the Securities and Exchange Commission filed a civil fraud suit accusing Goldman of allowing a longtime client, the hedge fund Paulson & Co., to rig an offshore deal so that it could bet against the mostly subprime mortgage securities. Paulson reaped a $1 billion profit, while two European banks together lost about $1 billion.
The U.S. attorney’s office in Brooklyn, N.Y. also is considering whether to formally open criminal investigations into the mortgage dealings of Goldman and other major banks.
In addition, the office of New York Attorney General Andrew Cuomo is investigating whether Goldman and seven other banks misled credit ratings agencies to win top investment-grade ratings that would attract pension funds and other institutions to buy risky mortgage securities.
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