Financial experts are in agreement that the Goldman Sachs fraud
revelations are being artificially hyped in Washington in order
to force through president Obama's financial regulatory reform
measures, proposals that will not punish bigger banks like Goldman
and will not protect the American people from the banking cartels
at the centre of the economic meltdown.
"At your request, we have opened an investigation into
the serious allegations that you describe in your letter,"
Kotz wrote to Rep. Darrell Issa (R-Calif.), the ranking Republican
on the House Oversight and Government Reform Committee.
The SEC stated it will seek documents and conduct interviews
to determine if their is any weight to the notion.
Congressman Issa described the situation last week, noting
that there was a "long list of coincidences" that
needed to be investigated:
Obama and the Democratic leadership have denied that the Goldman
case has anything to with their reforms, however, financial
experts disagree.
Wayne State University Law School professor and former member
of the SEC's enforcement division, Peter Henning told Bloomberg
News earlier today that the Goldman case is a "sideshow",
noting that "What's going on today in Washington is really
part of a larger legislative puzzle, and that is pushing through
the financial reform."
The SEC case revolves around allegations that Goldman constructed
a financial instrument based on mortgage-backed securities that
was designed to fail, without disclosing that hedge funder Fabrice
Tourre, who helped build the instrument, had bet on its failure.
Insider emails released by Goldman at the weekend, showing
executives bragging about making profits by betting against
the mortgage market in 2007, provided more evidence.
Both Tourre and Goldman CEO Lloyd Blankfein have today denied
the charges against them at the Senate hearings in Washington.
Goldman is no doubt guilty as sin of large scale fraud, however,
as commentators such
as Mike Whitney have pointed out, the timing of
the whole affair stinks to high heaven with the market having
reached a 12 month high and the economy showing signs of improvement.
Furthermore, other major Wall St Investment banks including
JPMorgan Chase, Merrill Lynch (now part of Bank of America),
Citigroup, Deutsche Bank and UBS were
all doing similar deals to Goldman.
Goldman's dodgy deal is though to have cost around $1 billion,
yet the so called "Repo
105" ruse at Lehman Bros., amounting to $100
billion, has resulted in zero subpoenas, indictments or criminal
prosecutions.
Goldman Sachs is "a political organization masquerading
as an investment bank, and they're sitting at the table with
the top people in government," says Goldman critic Christopher
Whalen, the managing director of Institutional Risk Analytics,
which rates banks and provides customer analytics. He calls
Goldman "the most political firm on Wall Street."
Goldman is also the
most hated and notorious bank on Wall St. If the
government wanted to garner widespread support for it's reforms,
it could do no better than demonizing Goldman in the eyes of
the public.
The case has certainly served as a perfect talking point for
proponents of government reform. Senior White House adviser
Lawrence
Summers and Sen.
Christopher Dodd, D-Conn. have both underscored
the need for the Senate to adopt Obama's financial reform in
the wake of the case.
As critics have consistently highlighted, Obama's
regulation proposals do not go after the big banks,
rather they target traditional community banks, exempting most
of the investment bank and broker dealer activities that were
responsible for the financial collapse.
Again, as Mike Whitney explains:
Obama’s position on the main issues– “Too
big to fail”, OTC derivatives, off-balance sheet operations,
securitization, ratings agencies and CFPA–hasn’t
changed at all. Wouldn’t that be the logical place to
start if Obama was serious about cleaning up Wall Street and
reforming the system? Instead, all of the attention is focused
the headline-grabbing slapdown of Goldman? Sorry, it doesn’t
pass the smell test.
Instead Obama's reform seeks to create a huge new bureaucratic
oversight body, the Consumer Financial Protection Bureau, in
order to "protect" the American consumer.
As Ron Paul and others have tirelessly pointed out, there are
already regulatory bodies that are supposed to do that in the
shape of the STC, the SEC and the Federal Reserve - it was the
abject failure, and/or unwillingness, of those bodies to protect
the consumer that led to the huge financial meltdown to begin
with.
Senator Dodd's own reform bill would empower the Federal Reserve
with more regulatory authority over other banks, financial firms,
insurance companies and even smaller lenders. Obama
has championed Dodd's bill, while completely ignoring
legislation such as Ron Paul's Federal Reserve Transparency
Act, that would put the onus on the regulatory body to be frank
and open and act in the interest of the consumer.
The Goldman case is being used as a political ploy to force
through legislation that will ultimately protect the very banking
elites that engineered the financial crisis for vast profit
and power. When inevitable popular support results, the public
will unwittingly be aiding the further expansion and centralisation
of those that caused the meltdown.
Financial experts are in agreement that the Goldman Sachs fraud
revelations are being artificially hyped in Washington in order
to force through president Obama's financial regulatory reform
measures, proposals that will not punish bigger banks like Goldman
and will not protect the American people from the banking cartels
at the centre of the economic meltdown.
