Classic Liberal Blog

So the SEC is going after Goldman Sachs. Interesting ...

SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.

This announcement comes right as Obama starts his latest push - The Wall Street Fat Cat Crackdown!

But wait ... Goldman Sachs was President Obama’s top Wall Street contributor during the 2008 election cycle, donating nearly $1 million to his campaign. In fact, Obama has lots of Wall Street buddies! (Not to mention that the Democrats are darlings of Wall St. in general.)

And ... Goldman Sachs is backing Obama's Wall Street crackdown too!

Goldman rallies for Obama in Wall Street 'reform'

In his self-styled war against Wall Street, President Obama appears to have a powerful ally: Goldman Sachs.

The nation's largest investment bank, famously cozy with top government officials in both parties, has tipped its hand to its shareholders, indicating that major financial "reform" proposals will help Goldman's bottom line.

They want Uncle Sam to mitigate "uncertainty about counterparties' balance sheets." That is, they want the government to reduce the risk that Goldman's debtors or insurers will run into trouble.

This is an odd function of government: Making Goldman Sachs feel safer in its business dealings.

Another pillar of Obama's financial reform is the "Volcker Rule," which would restrict the trading banks can do.

[But] almost any deal Goldman would make could be tied to a client, meaning the Volcker Rule couldn't touch Goldman, even if it cramps the style of smaller, less well-connected banks.

Goldman is lobbying hard on financial regulation, but that doesn't mean they're lobbying "against" regulation.

Now, the media and politicians are gonna be yappin' their traps about this, screaming "Regulation!" "Free markets!" ... But it's all a bunch of baloney. Because ...

What the American economy can be best described as, is corporatism - the alliance of big-business and a technocratic government. See here for a thorough understanding: There’s Nothing Free About Corporatism.

Big business loves big government! After all, who do you think is behind some of the most restrictive regulations (creating barriers to entry)? Why do you think big business spends so much money on the political process?

I've got news for you ... Businesses make investments, not contributions. And when you make an investment, you expect a return on your money. Right?

The Left is delusional when they think government is cracking-down on big business, and the Right is blind to the corporate corruption that takes place, especially concerning regulations and contracts with the government.

It's not a coincidence that Obama's out bad-mouthing one of his top contributors. No, it's by design. A big charade. Both Goldman and the government are merely playing their parts.

The Federal Reserve is a giant scam. Its origins are corrupt, and its actions have been nothing short of disastrous. But it's all good for somebody ... Isn't it? The White (Goldman Sachs) House.

There are no coincidences ... especially in politics.