Bailout

Goldman?s settlement strategy

By Felix Salmon

I believe Mark DeCambre’s sources: Goldman Sachs is seeking to settle with the SEC — and with the hedge fund which invested in the “shitty” Timberwolf deal, too. More generally, if you bought any toxic assets off Goldman during the financial crisis, now is probably the best possible time to sue them for losses. And if you hold Goldman stock, definitely keep an eye on those class-action suits.

Goldman would dearly love to avoid the enormous embarrassment that would certainly accompany any lawsuit, especially if Goldman executives ended up having to endure hours of cross-examination from lawyers who will surely have worked out the best lines of attack from the 11-hour Senate hearings. The total amount it pays out in lawsuit settlements might be large, but it surely doesn’t want to risk going up against a jury, now that it’s had a taste of what public opinion feels like.

Memo to Planet Money, then: check the underwriter on that toxic asset you bought for half a cent on the dollar. If it turns out to be Goldman Sachs, you might be in for a windfall profit!

Full post as published by Macroprudential on April 29, 2010 (boomark / email).