- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
In a previous blog, I expressed the fear that in the aftermath of the financial crisis we were going to see either the innocent punished or guilty men convicted of the wrong crimes, or maybe both.
A topical case is Goldman Sachs, an investment bank which weathered the crisis better than most, only taking Fed money when all the other dominos had already fallen, repaying it extremely quickly, and facing accusations ever since of having been too clever for its own good.
The latest charge is that they foisted a type of complex securities known as Collateralised Debt Obligations – essentially, securitised mortgage packages - on their unwitting clients, in spite of the fact that the underlying assets were of extremely poor quality, as Goldman were allegedly fully aware.
If Goldman is guilty of outright deception, it should face the appropriate penalty. But here, as in many other cases we read of, the charge amounts to one of simply catering to the greed of corporate clients who ought to have known better.