Look, everyone and his brother is jumping on the “Goldman is evil” bandwagon these days. Even the Rupert Murdoch’s Wall Street Journal is talking about Goldman Sachs like they are “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Well, I’m not. I’ve got news for you: you’re barking up the wrong tree.
It’s the U.S. government we should be pointing fingers at. While Goldman is crying out thank you sir, may I have another as everyone piles on, the U.S. government, which often seems bought and paid for by Wall Street and is the one actually running things here, is getting off scot-free.
Here’s a question for you, if Goldman made out like bandits from the AIG fiasco, who do you think allowed that? Government.
When Goldman’s Lloyd Blankfein was the only person in the room from Wall Street as AIG’s fate was debated, who do you think allowed him? Government.
When TARP funds were disbursed to re-capitalize Goldman and other banks, who made that decision? Government.
When Goldman repaid its TARP funds, paving the way for them to then hand out record bonuses, who do you think allowed this? Government.
When Goldman sold asset-backed securities to investors when it was net short the mortgage-backed market, whose rules do you think allowed this? Government.
Forget about Goldman Sachs. Start worrying about government.
They are the ones who regulate the financial services industry. Government is the one which makes laws governing how financial services companies can and cannot operate. Government is also the one which can change the ground rules going forward to help prevent a recurrence of this sort of financial crisis in future.
As my good friend Marshall Auerback says the advantages firms like Goldman have are “symptomatic of the problem, but they are not the problem.” The problem is Government and its cozy relationship with the industry it is supposed to regulate and control. The government is captured by the financial services industry, plain and simple. This is why the global financial system is a shambles. The question is: what are you going to do about it?
It seems like the only thing most people are going to do is sit around and whine about Goldman and big banks making a shed load of cash. Then, they’ll get all riled up and angry at Goldman and the rest of Wall Street and try and tax these people to level the playing field. Doesn’t sound like a very comprehensive solution to me.
How about this: stop elections in America from being controlled by money. We can eliminate private funding of the electoral process. Of course, Barack Obama wouldn’t be so happy about this since he owes his election to private funding. And, free market zealots will be shouting down this proposal from the word go. But, so what? Isn’t it obvious that money drives the political process in the United Sates? Do you have any better ideas?
Here’s another one: let’s get rid of Political Action Committees (PACs) too. Aren’t these just vehicles through which big money can be channelled into supporting one candidate over another. You might want to have a look at the Top All-Time Donors list to see what I mean. By the way, for you Goldman-haters, GS is in 4th place with $30 million donated, right behind our friends at the National Association of Realtors.
And, let’s round out my trifecta of suggestions with a ban on a bunch of lobbying activities. If it were up to me, I’d ban activities like this and this. Why should lobbyists, who usually represent corporate interests, get a seat at the table when you and I don’t? Sure there are consumer lobbyist groups like the AARP too, but I would restrict their contacts to government as well. And employees of big business should be barred from moving directly from an interested company/law firm to a regulatory.government role and vice versa. They are like lobbyists who are actually inside government: interested parties who will not be able to take arms length decisions.
So, yes, Goldman is living high on the hog. But the last time I checked, it was Congress and the President who are actually supposed to be looking out for our interests in this representative democracy. Right now, our legislative and executive branches are filled with people who are incentivized to look after the interests of big business and NOT after the interests of individual Americans.
If you want change we can believe in, start focusing in on the right people: Congress and the President.