The Securities and Exchange Commission inspector general has agreed to a request from Rep. Darrell Issa, R-Calif., to probe the timing and political motivations of the SEC’s $550 million settlement with Goldman Sachs in a mortgage securities fraud case:

SEC Inspector General H. David Kotz agreed in April to a request from U.S. Representative Darrell Issa, a California Republican, that he probe whether politics prompted the lawsuit against Goldman Sachs. Today, in response to another request from Issa, Kotz said in a letter to the congressman that he will broaden the probe to review the agency’s July 15 accord with the New York-based bank. Issa requested that Kotz examine whether there was any political reason that the SEC’s announcement of the settlement came two hours after the Senate approved legislation overhauling financial regulation.

Aside from the timing, many observers scoffed at the settlement. The $550 million settlement is pocket change compared to Goldman’s $162 billion in assets that are readily convertible to cash. Goldman’s stock soared with the SEC announcement, and the fraud case against the company was persuasive — Goldman failed to inform investors that the supposedly neutral counterparty in a series of deals — a firm owned by hedge fund manager John Paulson — would get a massive financial windfall at their expense if the investments failed, as they did.

And new revelations in a Wall Street Journal article suggest politics may have influenced the SEC’s decision to settle, which was made by a vote of 3-2 along party lines:

People familiar with the matter say Republican Commissioner Kathleen Casey questioned the SEC staff Thursday on their decision to abandon the strongest fraud charge and strike a settlement involving a lesser allegation, and given that, how the SEC could justify such a large penalty on a lesser charge. The political split over the case comes at a time when the agency remains undenew revelations in a Wall Street Journal articler fire for its policing of the financial markets during the financial crisis. The SEC commissioners often split on party lines over policy decisions, but rarely do so on such high-profile enforcement cases.

Goldman Sachs is seemingly coated in political Teflon, as any number of accusations of malfeasance have failed to stick to the financial firm. (It may help that a huge number of Goldman alums are working in the Obama administration.) But the results of this investigation could potentially be very significant.