This post was updated at 7:30 p.m. ET.
Referring to its conduct as "abysmal," "unacceptable," "egregious," and "disturbing," the federal panel created to probe the causes of the financial crisis slapped Goldman Sachs with a subpoena on Friday for its "very deliberate effort to run out the clock" in failing to turn over key documents and make company executives available for interviews with federal investigators.
The Financial Crisis Inquiry Commission turned to the subpoena after "multiple requests" and "months" of stalling by Wall Street's most profitable firm to turn over requested information.
Goldman Sachs missed at least seven deadlines, requested extensions that were subsequently missed at least three times, and was threatened with a subpoena on at least three different occasions, according to a summary of the back-and-forth provided by the financial crisis panel. The requests for information stretch back to January.
The panel's vice chairman, former Rep. Bill Thomas, said during a conference call with reporters on Monday that the months-long delay appeared to resemble "an agreed upon strategy."
Sullivan & Cromwell LLP serves as Goldman's lead outside counsel in representing the firm before the investigative panel. Most of Goldman's communications with the FCIC went through the law firm, according to two sources.
The panel's chairman, former California state treasurer Phil Angelides, reminded reporters that the panel has been tasked by Congress to investigate the roots of the worst financial crisis since the Great Depression, adding that the investigative panel wouldn't allow Goldman to continue its "especially egregious" tactic of delaying the release of key documents.
"We're not going to allow the American people to be played for chumps here," Angelides said.
Thomas said that he wasn't seeing Goldman's apparent "commitment to trust and integrity."
"Seems to me they have more to cover up than we thought," he added ominously.
Goldman Sachs, the nation's fifth-largest bank by assets, is alone in its apparent refusal to work with the panel, Thomas and Angelides said.
"We will issue additional subpoenas," Thomas threatened.
Thus far, most of the firms at the heart of the worst financial crisis since the Great Depression have voluntarily turned over documents and allowed crisis investigators to interview their employees. Thomas said at least "half a dozen" other investment banks voluntarily supplied the requested information and made employees available for interviews "as quickly as we asked for it."
The panel's requests of Goldman were not "inordinate" compared to its requests of other Wall Street firms, Thomas said.
Whereas other firms turned over documents and answered questions in the manner in which they were requested, Goldman instead turned over 2.5 billion pages of documents, or five terabytes of data, Thomas said.
The document dump began on May 18, more than four months after the firm's chairman and chief executive Lloyd C. Blankfein first testified before the panel on Jan. 13.
"Their conduct has been extraordinary," Angelides said of Goldman's refusal to cooperate. "They are the outliers."
By comparison, the commission had received 4.5 million documents to date, FCIC spokesman Tucker Warren said.
"We did not ask them to pull up a dump truck to our office and dump a bunch of rubbish," Angelides said. Thomas said it amounted to "deliberate obfuscation."
Both men said that the documents turned over -- and the manner in which they were presented to the commission -- amounted to the firm deliberately trying to evade the commission's many requests.
"They're aware of what our budget is and resources are," Angelides said. The panel has an $8 million budget.
"I suspect they're spending more on their lawyers than we have in our budget," Angelides said of Goldman.
The examiner who investigated the collapse of Wall Street investment house Lehman Brothers, the most expensive bankruptcy in U.S. history, spent $38 million in preparing his exhaustive report. That's for just one company. Angelides's commission is looking at the entire financial crisis.
Congress came up with the $8 million figure.
The subpoena -- which "was not issued lightly," according to Thomas -- requests documents pertaining to Goldman's activities in derivatives, securitization, and in making markets for its clients. It also requests interviews with the firm's top officers, including Blankfein, president and chief operating officer Gary D. Cohn, chief financial officer David Viniar and chief risk officer Craig Broderick.
Specifically, the subpoena requests information on Goldman's securitization activities linked to home mortgages, credit derivatives, its transactions with bailed-out insurance giant AIG, and the firm's Abacus deal.
The Securities and Exchange Commission alleges Goldman defrauded investors on the Abacus deal. Goldman denies anything improper took place.
Goldman's outside counsel, Sullivan & Cromwell, is headed by H. Rodgin Cohen, a prolific attorney who during the height of the financial crisis in the fall of 2008 advised both Goldman Sachs and AIG on a variety of issues, according to a profile on his firm's Web site.
Both Angelides and Thomas implored Goldman to work with the panel "for the good of the country." The financial crisis led to the worst economic downturn since the Great Depression. More than eight million jobs were lost.
"If Goldman Sachs wants to stand visibly in front of the people," Angelides said, "that's their choice."
Thomas added that the firm's behavior didn't "reflect their commitment to work with us," adding that the firm was playing a "game" of delaying without appearing to oppose the commission.
The firm is "saying one thing and doing another," he added.
This is at least the panel's third forceful subpoena compelling firms and executives to comply with its requests. The FCIC's first such subpoena was issued to Moody's Corporation in April for the firm's delay in producing documents and allowing investigators to interview Moody's Investors Service personnel. Its second subpoena was issued last month to famed investor Warren Buffett, compelling his June 2 testimony before the FCIC. Both parties complied.
The FCIC has issued a dozen subpoenas, but most were issued in order to allow the requested parties to side-step confidentiality agreements that would have otherwise barred them from sharing sensitive information, the panel said.
In a statement, the FCIC said it issued its subpoena to Goldman for "failing to comply with a request for documents and interviews in a timely manner."
"In seeking documents and testimony from public agencies and companies, the Commission has made it clear that it is committed to using its subpoena power if there is a lack of, or delay in, compliance," the statement noted. "Failure to comply with a Commission request is viewed with the utmost seriousness, as the Commission will not be deterred from getting desired information."
A Goldman spokesman said the firm is complying with the investigatory panel's requests.
"We have been and continue to be committed to providing the FCIC with the information they have requested," a Goldman spokesman said in an e-mail.
Goldman Sachs faces a litany of federal and state investigations.
On April 16, the Securities and Exchange Commission charged Goldman and one of its employees with defrauding investors by creating and selling exotic securities tied to subprime home mortgages in 2007 without disclosing that they were handpicked by a hedge fund that was betting on them to fail.
Since then, members of Congress have called for further investigation. Governments across Europe have done the same; the U.K. Financial Services Authority opened a probe into the firm.
The Senate Permanent Subcommittee on Investigations held an April hearing probing the firm's practices in the runup to the financial crisis. Several Senators accused the firm of fraud and of putting its own interests ahead of its clients.
"Our clients' interests always come first," Goldman says on its website.
"We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced, against us with respect to offerings of CDOs," the firm warned investors in its latest quarterly filing.
"We believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on our financial condition," Goldman said in its filing. But those proceedings "might be material to our operating results for any particular period, depending, in part, upon the operating results for such period.
"Given the range of litigation and investigations presently under way, our litigation expenses can be expected to remain high."
The firm turned a $3.5 billion profit in the first quarter off $12.8 billion in revenue, according to company filings with federal regulators. Its traders didn't lose money on a single day last quarter.
Of the 63 trading days in the three-month period ending in March, Goldman Sachs generated revenue of at least $25 million on every single day, according to its quarterly filing with the SEC.
On nearly three out of every five days, Wall Street's most profitable firm generated revenue exceeding $100 million trading stocks and bonds, and creating and entering into derivatives contracts.
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