Fight For Financial Reform

robertreich.org — The real scandal isn’t Wall Street’s unlawful acts but legal acts that have reaped the Street a bonanza and nearly sunk the rest of us. It’s good we finally have an SEC on which three out of five commissioners are willing to enforce laws already on the books. Hopefully other enforcement agencies (CFTC, FDIC, and the Fed) will follow suit. But we also need to make illegal the recklessness that’s now legal. The Dodd bill now being considered in the Senate is a step in the right direction. Yet despite the hype, it’s a very modest step. It leaves out three of the most important things necessary to prevent a repeat of the Wall Street meltdown.

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huffingtonpost.com — The Securities and Exchange Commission suit against Goldman Sachs is civil, not criminal, but it's a start. Far-seeing critics have long maintained that at the root of this financial crisis was not just regulatory failure or mistaken financial strategies but deliberate fraud—and that before this is over, senior financial executives need to be brought before the bar of justice.

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baselinescenario.com — On a short-term tactical basis, Goldman Sachs clearly has little to fear. It has relatively deep pockets and will fight the securities “Fab” allegations tooth and nail; resolving that case, through all the appeals stages, will take many years. Friday’s announcement had a significant negative impact on the market perception of Goldman’s franchise value — partly because what they are accused of doing to unsuspecting customers is so disgusting. But, as a Bank of America analyst points out, the dollar amount of this specific allegation is small relative to Goldman’s overall business and — frankly — Goldman’s market position is so strong that most customers feel a lack of plausible alternatives.

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nytimes.com — Last October, I saw a cartoon by Mike Peters in which a teacher asks a student to create a sentence that uses the verb “sacks,” as in looting and pillaging. The student replies, “Goldman Sachs.” Sure enough, last week the Securities and Exchange Commission accused the Gucci-loafer guys at Goldman of engaging in what amounts to white-collar looting. The main moral you should draw from the charges against Goldman, though, doesn’t involve the fine print of reform; it involves the urgent need to change Wall Street. For the fact is that much of the financial industry has become a racket — a game in which a handful of people are lavishly paid to mislead and exploit consumers and investors. And if we don’t lower the boom on these practices, the racket will just go on.

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