The SEC's just been caught colluding with the banks it's supposed to regulate

Matthew Yglesias wrote in Vox, The SEC's just been caught colluding with the banks it's supposed to regulate

"Reuters finance blogger Felix Salmon had a post earlier this week headlined 'Yes, the SEC was colluding with banks on CDO prosecutions.' This ought to be huge news. The Securities and Exchange Commission is one of the main agencies that's supposed to be regulating Wall Street. But they've been essentially caught red handed working together with Goldman Sachs to make it look like Goldman was paying a huge fine when really they're paying a small one. Sadly, though, the story probably won't get much attention from the general public because the CDO prosecution issue is a little obscure and it hasn't really been in the news for years."

"What is now looking clearer and clearer is that the settlements were not as advertised. The banks paid money — in Goldman Sachs' case $550 million — not to settle one CDO suit, but to settle all the CDO suits. So rather than Goldman paying $550 million for wrongdoing around the Abacus CDO and then facing 10 more charges related to 10 other suspicious CDOs, it was paying a price of $55 million per CDO to settle all 11 cases. Except the SEC didn't want to look like it was letting the banks get away with a slap on the wrist, so it worked out an arrangement whereby both sides would publicly act as if only one case had been settled while agreeing under the table that all claims were now resolved."