Friday, April 15th, 2016

Goldman is Captain Ahab’s Whale in Moby Dick

Americans are rightfully disgusted by politicians and businesses and particularly Wall Street  is that no one is held responsible for the behavior that launched a crushing recession and threw 8  million people unemployed in America. It all started with Wall Street and perhaps will end with Wall Street. Wall Street has ruined the economy and its problems has bailouts, financed by taxpayers. Meanwhile, virtually no one in Goldman Sachs, Citi group, AIG, Merrill Lynch, Bank of America, Lehman Brothers, Bear Stearn, General  Motors, has been charged with anything other than human greed, which is not a crime. No one has paid for the consequences of these collective actions. These fat cats bankers whose lust and greed for money has caused several debacle from time to time in history say they are sorry, but no one has paid a dime and paid a restitution to society.

Securities and Exchange Commission harpooning Goldman Sachs in the guts is a major thrust in the sense of assignment of responsibility. The SEC has been a marginal player in the rescue of banks is mainly a watchdog  in the problems of liquidity and solvency and oversight.

But today, the SEC is showing his teeth by charging Goldman Sachs with fraud with the way mortgage backed securities were treated in 2007.  SEC has alleged that in  2007, Goldman has built a security called a chattel, or CDOs, and than convinced customers to invest in this sector as a good investment. At the same time, in agreement with the SEC, Goldman worked with another client – a large hedge fund player- in an other derivatives deal that has to  gain if the value of CDOs declines. Goldman would benefit in any way, but investors have lost more than 1 billion dollars because the company hired “essential information”, according to the SEC. Goldman however, denies these charges and may vigorously fight the charges in court. The case may be difficult to prove, and it is important to note that SEC filed only civil  charges against Goldman and there is nothing in the criminal matters, which would be have been more serious thing to deal with.

In the final act, however, Democrats will gain politically in November as they come up for re-election  bids to and face voters who are  so angry against Wall Street and Washington both. So far, voters have been waiting for billions of  dollars of government intervention in the economy make its way to them. Much of this money was funneled to banks like Goldman, hoping they will turn to consumer and start lending reviving the economy. But consumers do not see it that way. To be fair, the government’s action has almost certainly helped to prevent a crisis much worse. But unemployment is still very high and small businesses cannot still borrow, the big banks are doing better than most other companies in the country.

If Goldman can give the Obama administration and Democrats in Congress a victory it would be very helpful from the standpoints of politics as well. From a purely political standpoint, Goldman is Captain Ahab’s Whale in Moby Dick.

Poll numbers are showing lack of confidence in banks at or near historic lows, and many Americans feel resentment towards donors than do business that generate Commissions of luxury but not actually produce something of value. Goldman case, probably may not be resolved by election day in November, but could be even better for Democrats: We can confirm that they are finally going after Wall Street without running the risk of a verdict that they did nothing and no one was held accountbale for this huge financial crisis since Great depression.

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