Goldman Shares Jump After DOJ Said To Weigh Lowball 1MDB Settlement

So much for finally holding Goldman Sachs accountable.

Anyone who feared Goldman might suffer a massive fine or, worse, criminal penalties (possibly involving current and former senior executives such as Hillary Clinton’s very close friend, Lloyd Blankfein) can breathe a sigh of relief.

Goldman shares jumped 2.5% Friday morning after Bloomberg reported that the DoJ is seeking a settlement of between $1.5 billion and $2 billion for Goldman’s involvement in the 1MDB affair.

That substantially less than most analysts had anticipated. Earlier this year, senior Malaysian officials made a big show of demanding that Goldman pay back all of the money stolen from 1MDB with interest, as well as any fees that the bank collected for its work underwriting three separate bond offerings that helped seed the fund. In total, the sum demanded came out to about $7.5 billion.

We know now that senior Goldman bankers, including then-CEO Lloyd Blankfein, signed off on the deals, ignoring warnings from the compliance department about Malaysia’s point man for the project, the mysterious financier Jho Low. Which may explain why even the DOJ is now rushing to get this episode in the history books.

Low is now an international fugitive, and at least one Goldman banker has pleaded guilty and agreed to cooperate with the government; a settlement could be announced as soon as next month (though the bank also faces charges in Malaysia), although BBG’s sources warned that the terms of the deal could change.

It’s unclear from the report whether the DoJ will also seek a guilty plea from the bank, which could be a game-changer if it happens.

The notion that the DoJ is going easy on Goldman is hardly a surprise. Attorney General William Barr has reportedly directly involved himself in the case, which is unusual because his former law firm, Kirkland & Ellis LLP, represents Goldman, and Barr had to secure a waiver to excuse this conflict.

But this type of special treatment would be nothing new to Goldman: After all, its alumni occupy some of the most powerful jobs in the world. Goldman is the very definition of ‘too big to jail’.