A Fancy Fandango

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If you live in a cave like me and spend your time watching Senate hearings, last week's hearings on Wall Street ‘reforms' probably made you even more disgusted with how things are done in Washington, if that's possible. There is a fancy dance going on.
A U.S. Senate committee hauled in a group of executives from the investment bank Goldman Sachs and questioned them about certain trades of securities.
I know little, if anything, about arcane and sophisticated financial transactions. However, I was somewhat enlightened by the explanations of those smart young men from Goldman. I at least came away with some grasp, however slight, of how a securities market is created and how these products are traded.
Trouble is, I'm not sure many of the senators doing the questioning had any understanding of the business. Senator Levin sounded accusatory and full of righteous indignation. However, understanding the issue wasn't important - scoring political points by pitting the man in the street against Wall Street was the objective. Somehow I don't think that's going to work anymore.
I hold no brief for Goldman Sachs, but it seems to me the elephants in the room no one mentioned are Fannie Mae and Freddie Mac. They originated the millions of bad mortgages and forced these on the banks. This goes back to the Carter and the Clinton administrations and the Community Reinvestment Act. If you haven't been following this saga, banks were obliged to give loans to persons who had little to no assets, no employment, no sources of revenue and almost no down payment. The banks knew these people would not be able to pay these mortgages. The bad mortgages were bundled together and traded by companies such as Goldman. Some people who sold the product bet against the product - that is, that it would lose money, as it eventually did when the housing bubble burst.
The suit against Goldman began as just a civil suit by the Securities and Exchange Commission, with various experts saying that no laws were broken, nevertheless, the department of justice has now launched a possible criminal investigation. It's unclear that any indictments will result, but if they do, several in Congress and the administration should also be in the dock.
What is very strange is that Goldman and people in this administration and in Congress have an extremely cozy relationship. People leave Goldman and go into the administration. People leave the administration or Democrat congressional offices and head right to Goldman. It is a revolving door.
Goldman recently hired Greg Craig, the former White House counsel. Goldman Chief Executive Lloyd Blankfein visited the White House at least four times before the SEC suit was filed. Former Treasury Secretary Henry Paulson, a former Goldman employee, designed the $700-billion-plus "mother of all bailouts" and steered $10 billion to Goldman. So, as with Fannie and Freddie, they keep their profits and get taxpayer money to cover losses.
So, qui bono? Who benefits by this public prosecution?
Goldman employees have given heavily to the Democrats. The Democrats received over $814,000 from 388 Goldman employees. The President received almost one million from them during the 2008 campaign.
The Democrats do very well across the board with banks and financial institutions. At Lehman Brothers, 310 employees donated $642,000 to them, and over at Morgan Stanley, 500 employees gave $834,000 to the Democrats. At Fannie and Freddie, employees by a 6 to 1 margin, donated to the Democrats, contributing over $222,000.
They also cleaned up at other big banks and financial firms, including Bank of America, Bear Stearns, UBS, Wells Fargo, Barclay's Capital and Citibank/Citigroup. Over 2,550 employees sent the Democrats over $5 million. In comparison, Republicans received less than 40 percent of that amount. So who is the Party of Wall Street?
The Goldman Sachs Foundation has shelled out $35.5 million to liberal nonprofit groups, largely to environmental organizations. Goldman supports the cap and trade bill. In 2006, Goldman paid $23 million to purchase a 10 percent interest in the Chicago Climate Exchange, the only U.S. exchange that trades in carbon offsets. Experts say the U.S, carbon emissions market could be worth $1 trillion annually by 2020, but it won't generate much profit at all unless the government FORCES corporations to take part in the trading scheme, which some believe is a giant scam. However, Goldman lobbies hard for carbon controls. Qui bono?
If the financial "reform" package passes as is, big banks will benefit, and smaller competitors will be at a disadvantage. Goldman supports the legislation. Who benefits?
What was discussed at during those White House visits? Did Goldman and the administration map a path forward with a wink and a nudge? Who benefits? Hey, all the actors benefit and they are dancing like crazy.
Some alarmists might even look at this and cry ‘corporate fascism.'
The really outrageous part is that the public is cynically viewed by this administration as easily fooled into blaming those meanies on Wall Street. But anyone who takes the time to look closely can see that the genesis of this mess can be found right in the halls of Congress.
Copyright©2010SheilahPepper