The Securities and Exchange Commission is launching a less-than-airtight case against Goldman Sachs (NYSE:GS) because the firm thrived as the economy tanked, former Goldman chief Jon Corzine told investment managers in Washington D.C., Wednesday evening.

"Goldman Sachs, because it's been as successful as it has been, seems to have been a proxy for the whole industry," Corzine said at an annual conference being held by the Investment Company Institute, the national trade association of the mutual fund industry.

Investment Guide 2010

Goldman's Echoes Of Pecora

Tax Havens' Days Are Numbered

Corzine headed Goldman Sachs in the mid-1990s before being ousted amid internal political strife. He was also recently ousted as the Democratic governor or New Jersey amid a failed reelection bid.

The former Goldman boss expressed confidence that his former employer would emerge from its current difficulties relatively unscathed. "I still believe that Goldman Sachs is an outstanding institution...that will self-correct the things that may or may not have gone wrong."

The SEC has accused Goldman and one of its employees of civil fraud for allegedly failing to disclose to clients that mortgage-security products the firm created had been designed with the help of a bearish hedge fund manager, John Paulson of Paulson & Co. (Learn more in The Goldman Sachs Fraud Explained.)

Critics have charged that the SEC's case is a politically motivated bid to whip up political support for financial reform legislation supported by President Obama and Congressional Democratic leaders, including Sen. Christopher Dodd, D-Conn. Goldman may have become a lightning rod because of its success in navigating a financial crisis that destroyed leading rivals Bear Stearns (now a part of JPMorgan Chase (NYSE:JPM)) and Lehman Bros. (now owned by Barclays PLC (NYSE:BCS)). New York-based Goldman Sachs posted a banner first quarter, earning $3.3 billion.

During his remarks Wednesday Corzine also offered some advice for investment companies that may be lobbying against the various financial reform bills wending their way through Congress. "Take what's on the table and run, because if there's another crisis..." Corzine said, his voice trailing off. "There are more good things in this bill than bad."

Addressing the conference after Corzine was Trent Lott, the former Mississippi senator and Republican majority leader, who is now working as lobbyist. Lott said the current lack of bipartisanship on Capitol Hill could spell a protracted fight over financial reform legislation.

"You know you have a problem with legislation when the middle ground is represented by Barney Frank," he quipped, referring to the veteran Massachusetts Democrat who chairs the House Financial Services Committee.

Lott largely blames President Obama for the partisan acrimony that is slowing the financial reform initiative. He suggested the president improve the political climate by learning to become "more pliable" toward the GOP's Congressional leaders. "But I don't think ‘Rahmbo' or Ax would allow it," he said, using the Beltway nicknames for White House Chief of Staff Rahm Emanuel and key Obama advisor David Axelrod.

Related Articles
  1. Investing Basics

    5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  2. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  3. Forex Education

    Explaining Uncovered Interest Rate Parity

    Uncovered interest rate parity is when the difference in interest rates between two nations is equal to the expected change in exchange rates.
  4. Fundamental Analysis

    Using Decision Trees In Finance

    A decision tree provides a comprehensive framework to review the alternative scenarios and consequences a decision may lead to.
  5. Economics

    Understanding Tragedy of the Commons

    The tragedy of the commons describes an economic problem in which individuals try to reap the greatest benefits from a given resource.
  6. Home & Auto

    5 Mistakes That Make House Flipping A Flop

    If you're just looking to get rich quick, you could end up in the poorhouse.
  7. Entrepreneurship

    Top 10 Features Of a Profitable Rental Property

    Find out which factors you should weigh when searching for income-producing real estate.
  8. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  9. Investing Basics

    4 Iconic Financial Companies That No Longer Exist

    Learn how poor management, frauds, scandals or mergers wiped out some of the most recognizable brands in the finance industry in the United States.
  10. Bonds & Fixed Income

    Credit Default Swaps: An Introduction

    This derivative can help manage portfolio risk, but it isn't a simple vehicle.
  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. Can hedge funds outperform the market?

    Generating returns that exceed those provided by the broader market is the goal of nearly every investor. However, the methods ... Read Full Answer >>
  3. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  4. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  5. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  6. How are American Depository Receipts (ADRs) priced?

    The price of an American depositary receipt (ADR) is determined by the bank or other financial institution that issues it. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  2. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  3. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  4. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  5. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
  6. Discount Bond

    A bond that is issued for less than its par (or face) value, or a bond currently trading for less than its par value in the ...
Trading Center