Prosecutors with the Manhattan District Attorneyâ€™s office have issued a subpoena toÂ Goldman SachsÂ for information related to the companyâ€™s trading of mortgage bonds backed by subprime loans.
The subcommittee, led by Sen. Carl Levin (D-Michigan), conducted a two-year long probe into key causes of the financial crisis.
The 365-page report of their findings catalogs what the authors describe as conflicts of interest and heedless risk-taking that pushed the country into economic turmoil.
â€œUsing emails, memos and other internal documents, this report tells the inside story of an economic assault that cost
millions of Americans their jobs and homes, while wiping out investors, good businesses, and markets,â€ Levin said.
The senators faulted investment bank Goldman Sachs for â€œcreating and selling structured finance products that foisted billions of dollars of losses on investors, while the bank itself profited from betting against the mortgage market.â€
The report puts internal communications between executives on display that the subcommittee concluded show how Goldman used net short positions to benefit from the downturn in the mortgage market, and designed and sold subprime collateral debt obligations (CDOs) that led to the bank profiting from the same products that caused substantial losses for its clients.
Goldman executives were called before the subcommittee during its investigation and refuted such charges. But according to Levin, his team uncovered 3,400 instances in which the term â€œnet shortsâ€ was used in company documents, which refers to an investment position that will benefit when the underlying asset loses value.
In April, Levin called on federal prosecutors to investigate not only whether Goldman Sachs misled and deceived investors, but whether company executives committed perjury in their testimony before the subcommittee.
In addition to the Manhattan District Attorneyâ€™s office, the U.S. Justice Department, the Securities and Exchange Commission (SEC), and the New York Attorney General have reportedly begun their own investigations into Goldman Sachsâ€™ dealings during the run-up to the mortgage meltdown.