My hunch would be that Goldman is much less worried about this specific case than about what else the investigators might find once they get into the bank’s affairs and start sniffing around.
As Lewis puts it: “Goldman Sachs is, to put it mildly, unhelpful when asked to explain exactly what it did, and this lack of transparency extends to its shareholders.”
A big bank can usually ignore its shareholders, but the authorities are unlikely to just ask nicely and then leave it at that. In the US, it is a crime to lie to a federal agent, and it’s often this that sends people to jail over financial matters. (Martha Stewart would have got away with insider trading; it was lying to the Feds that landed her in the clink.) No bank wants the Feds sniffing around, asking its employees awkward questions — and although this case is for the moment only a civil suit, that could change pretty fast.
So the question is: Will the Feds find anything? I’m not going to hold my breath. One of Lewis’ subjects notices that when his trader at Goldman has anything awkward to say, she says it over her cellphone, because landline calls from the bank are taped.
“If a team of forensic accountants went over Goldman’s books,” one insider observes, “they’d be shocked at just how good Goldman is at hiding things.”
If there were to be any evidence of illegal activity at Goldman, it would be buried very, very deep.
In The Hitchhiker’s Guide to the Galaxy, a notice ordering the demolition of someone’s house is found “on display” in a lightless, stairless cellar, in the bottom of a locked filing cabinet, in a disused lavatory, with a sign on the door saying: “Beware of the leopard.”
The SEC will be lucky if it’s as obvious as that.
John Lanchester is the author of Whoops! Why Everyone Owes Everyone and No One Can Pay.
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