With the revelation that Goldman Sachs was peddling exotic instruments to help Greece hide its runaway debts as recently as November, something must be done, Simon Johnson writes. US authorities clearly aren't going to raise a finger—a few phone calls around Washington will ensure that the Fed looks the other way—so the European Commission must take up the issue. Remember, “a single rogue bank can bring down the world’s financial system.” His recommendations for the audit follow.
The EC, Johnson writes on Baseline Scenario, should look into:
- Which other eurozone countries covered up their financial situation with Goldman's help, and how.
- Whether Goldman's actions in Greece were deliberate and "premeditated."
- The actual state of Greek debt.
- Whether Goldman execs "condoned" activities that undermined the Greek and European economies.
- Whether Goldman pursued the same sort of creative accounting with private firms.
- Whether anyone involved thought the deal was anything more than a "sophisticated form of scam."
For more on Johnson's ideal audit, click here