This is seriously speculative stuff on my part. But I wonder if the other shoe that Carl Levin says is about to drop on Goldman has to do with its failure to disclose the fact that it received a Wells Notice from the SEC last July about the Abacus deal.

Yes, the bank claims it was immaterial, just as it claims was its lack of disclosure of hedgie John Paulson's role in helping to design the CDO to go south so he could profit by shorting the deal was immaterial.

In fact, Goldman makes a practice of hiding behind the ambiguities of materiality. Remember, it claimed it didn't have to disclose the help it got from Uncle Sam in 2008 through the AIG bailout because that, too, was immaterial.

However, it's really hard to see how Goldman can claim the Wells Notice about Abacus wouldn't have mattered much to investors, which is essentially the test of materiality, when the bank's stock price fell 13 percent on the news last Friday, shaving about $10 billion off the bank's market value.

Sure, the disclosure of the notice wouldn't have necessarily produced that extreme a reaction. But surely it might have produced a loss half that big. Wouldn't $5 billion in market cap be material? 

The bank's current market cap is $87 billion. Just for argument's sake, let's say Goldman's cap was a nice round $100 billion when the notice arrived. The accounting rule of thumb for materiality (which by the way the SEC emphasizes isn't its own gauge) is a hit to earnings of somewhere between 5 percent and 8 percent. Yes, when you apply a price multiple to that, you get a much bigger hit. Still, it's hard to believe an auditor would buy a lack of disclosure here if it were doing its job.

Maybe a court would disagree. But somehow I don't think Carl Levin would.

As Michelle Leder pointed out the other day, other companies that are over $50 billion in market cap have disclosed the existence of Wells Notices in the past, including General Electric, Bank of America, UBS, units of both Berkshire Hathaway, and JP Morgan Chase.

What makes you so special, Lloyd? Or do you alone do God's work?