Goldman Hires Obama's Ex-White House Counsel to Defend Bank Against Fraud Charges

by Jason Leopold, Truthout report

This article was published by Truthout.

Truthout / CC BY-NC 3.0

Wall Street banking behemoth Goldman Sachs, which was charged with securities fraud last Friday over its role in the subprime mortgage meltdown, has hired President Obama's former White House Counsel Greg Craig to defend the company, according to a report published late Monday by Politico.

Reporters Eamon Javers and Mike Allen, citing an unnamed source, reported that Craig was hired “in recent weeks to help in navigate the halls of power in Washington.”

“Whatever the reason for his hiring, Craig will presumably be a key player in the intricate counterattack Goldman Sachs officials in Washington and Manhattan improvised during the weekend — a plan that took clearer shape Monday as Britain and Germany announced that they might conduct their own investigations of the firm,” Politico reported.

As Truthout reported, Craig was ousted last November after he fell out of favor with some Obama administration officials, including White House Chief of Staff Rahm Emanuel, because Craig backed public disclosure on documents and photographs related to the Bush administration’s use of torture against alleged terrorist detainees and his role in pushing the White House to shutter Guantanamo within a year.

Craig’s efforts, originally championed by the administration, led to blistering attacks against the Obama White House by former Vice President Dick Cheney and Republican lawmakers who accused the president of giving aid and comfort to the “enemy.”

Craig is no stranger to high-profile cases. He represented fomer President Bill Clinton during his Senate impeachment trial. was also instrumental in working closely with Karl Rove’s attorney, Robert Luskin, and House Judiciary Committee Chairman John Conyers and his staff that resulted in Bush’s former political adviser testifying before the panel behind closed doors about the firings of nine federal prosecutors in 2006 and the apparent political prosecution of former Alabama Gov. Don Siegelman. Craig also arranged a similar deal for former White House Counsel Harriet Miers.

As Goldman's attorney, Craig will have defend the bank against allegations  that it created a a mortgage-based derivative called Abacus 2007-AC1 at the urging of a client who bet the housing market would collapse. The trader earned $3.7 billion and Goldman, which did not disclose to investors that it created the instrument, lost $1 billion, according to a civil suit filed last week against the company by the Securities and Exchange Commission following a nine-month investigation.

Despite the allegations the SEC levled against the firm in a civil complaint last week, Goldman still intends to dole out about $5 billion in bonuses, the Times of London reported.

Separately, Newsweek reported earlier Monday that Sen. Carl Levin, the chairman of the Senate’s Permanent Subcommittee on Investigations, has obtained new documents that link “certain actions to specific people” at Goldman Sachs related to deals the company made that precipitated the housing market crash.

Levin’s office wouldn’t disclose the substance of the documents he has obtained nor would his staffers identify the individuals at Goldman the Michigan Democrat intends to name as having played a direct role in the collapse of the bank and the financial collapse that ensued.

But come next week, according to an unnamed legislative official quoted by Newsweek, Levin believes the information he has collected will result in “another big shoe to drop on Goldman.”

Levin’s subcommittee is scheduled to hold hearings next week where Goldman’s Chief Executive Lloyd Blankfein will testify about what he knew and when he knew it. It’s unknown if Craig, who returned to private practice after his departure as White House counsel last year, will accompany Blankfein to the hearing.

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