Goldman Sachs Hires Former White House Counsel Gregory Craig

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Embattled investment bank Goldman Sachs (GS) reportedly has lawyered up with a former top legal adviser to the Obama administration, a move that comes as its legal troubles spread overseas with the U.K. opening an investigation into the bank's actions.

Goldman has signed up Gregory Craig, a former White House counsel who served during the first year of Obama's presidency, according to a report on Politico. Craig was reportedly ousted from his position for pressing to establish a line-in-the-sand deadline for closing the controversial detention center in Guantanamo Bay, according to the report.

Craig, who landed at Skadden, Arps, Slate, Meagher & Flom, will provide "advice and process" to Goldman, and wasn't hired solely for his connections, a source told Politico.

Maybe Goldman should try the same tactic in the U.K.

Britain's Financial Services Authority announced Tuesday it would launch a formal investigation into the investment bank. This move follows actions by the Securities and Exchange Commission, which slapped fraud charges on Goldman last week over allegations it misled investors when it created and sold them toxic securities comprised of bundles of subprime mortgages without informing them that the securities were designed to drop in value.

"Following preliminary investigations the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations," the agency stated, noting it will work with the SEC as it conducts its review.

Maybe Goldman could find one or two former attorneys General to represent them in the U.K. But they may want to stay away from England's Lord Goldsmith, who has his own troubles to deal with.

On top of the legal woes in Britain, Goldman may also find itself facing an expensive political firestorm there. Opposition groups are pressuring Prime Minister Gordon Brown to halt the government's use of Goldman's advisory services until U.K. regulators wrap up their investigation, according to a Bloomberg report.

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