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UNI Global Union said today that the civil fraud suit brought by the US Securities and Exchange Commission against Goldman Sachs for its role in the mortgage deals that pushed the global financial system to collapse is an important step in the fight to bring about proper regulation.



The SEC suit relates to a collateralized debt obligation (CDO) tied to subprime mortgages that Goldman sold to some investors just as the housing bubble was bursting. Hedge fund manager John Paulson, who took the short position, made about US$ 1 billion by betting against the mortgages.



The SEC said in a statement that “Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.”



"They should change their name to ‘Goldman Lacks’ as they have fallen so short of the ethical and business standards required to deserve our trust,” said UNI General Secretary Philip Jennings.



According to a report from the Wall Street Journal, the Securities and Exchange Commission “is investigating whether other mortgage deals arranged by some of Wall Street's biggest firms may have crossed the line into misleading investors.”



Goldman reported first-quarter earnings of US$ 3.46 billion on Tuesday. Forty-three percent of its revenue for the quarter, or US$5.49 billion, was set aside for pay and bonuses.



“Regulators have to take a stand against the investment bankers," Jennings said. "It’s time to end the greed, lies and deceit of today’s investment banking world, get tough and tame the financial masters of the universe. From subprime securities to Greece they have ‘gamed’ the system to suit their insatiable greed.”



The collapse of the housing market in the US was one of the key factors in the global financial crisis as the failure of complicated mortgage deals packaged as investments set off a chain reaction of banking collapses in the United States and other countries around the world.



The deals were emblematic of an increasingly byzantine financial system that bankers used to hide many of the risks that ultimately materialized.



Jennings was in Iceland last week where a truth commission report revealed a tangled web of corruption and smoke and mirrors reporting that masked all the weaknesses in the country’s banking system and led to its ultimate collapse.



“Having seen the devastating consequences on Iceland’s economy, we owe it to working people everywhere to put rules in place to stop the greed and manipulation in the world of finance,” Jennings said.