Goldman Sachs Under Fire, BoA Lives
This morning, the Securities and Exchange Commission (SEC) formally announced fraud charges against prominent banking firm Goldman Sachs. The SEC says that Goldman Sachs neglected to disclose important details of a major sale conducted in 2007. The deal in question involved a “collateralized debt obligation”, which eventually cost investors upwards of $1 billion. Goldman Sachs allegedly used this opportunity to allow a hedge fund to profit immensely on the financial crisis of the last few years.
As might be expected, the announcement caused Goldman Sachs stock to drop sharply in the early hours of the market. Some related banks also took hits, and the market in general has declined.
However, some good news from the banking sector has also come out in the same time frame. Nationwide financial giant Bank of America, which had suffered immensely through the last year, announced that it has taken a critical turn back into profitability.
Bank of America was one of several banks deeply involved in the financial recovery programs of 2008 and 2009; last year, the company had to pay no income taxes because it actually lost money after repaying its government loans.