In the case of the Securities and Exchanges Commission complaint against Wall Street’s top investment bank, Goldman Sachs, it’s hard not to wonder if this isn’t a classic case of Gangster Government in action. There is a truly remarkable confluence of factors that indicate that the whole thing stinks to high heaven.
There is the obvious question of the timing of the SEC complaint. Goldman has known of the federal probe for months, but said nothing publicly about it. The SEC enforcement division, which conducted the investigation and brought the charges, is the same bunch that couldn’t be bothered to investigate Bernie Madoff despite solid evidence that he was up to no good. This is also the same enforcement division that repeatedly ignored appeals by others within the agency and without to probe Robert Allen Stanford, then saw its own Fort Worth, Texas, enforcement office chief go to work for Sanford. And this is the same SEC that traditionally does not file complaints without a unanimous vote of the five commissioners. In this case, the three Democratic commissioners voted to file the charges, the two Republicans opposed doing so.
Not surprisingly, Republicans on the House Oversight and Government Reform Committee — led by Rep. Darrell Issa, R-Calif., the ranking minority member — have asked the SEC for records of all communication concerning the Goldman complaint between its commissioners and staff with White House aides, Democratic members of Congress and their staffs, and staff of the Democratic Senate and House campaign committees. Nobody will be surprised in the weeks ahead when the requested documents are either said not to exist, or are provided in dribs and drabs, thus delaying the process just long enough for congressional Democrats to ram the Obama-Dodd financial reform bill to passage and, with President Obama, to head into the 2010 midterm campaign claiming to have successful challenged Wall Street’s biggest target.
Then there is the fact that even under the worst case scenario, Goldman isn’t exactly fighting for its life. For one thing, as the Washington Examiner‘s Michael Barone pointed out, the SEC complaint looks flimsy, at best. Odds are that Goldman, which just announced a first-quarter profit of $3.5 billion, will make a token settlement payment and be on its way. As Wall Street’s biggest investment bank, whose executives invested nearly a million bucks in Obama, and with its alumni filling multiple key financial policy and regulatory jobs in the White House and elsewhere in the executive branch, Goldman will then demonstrate the truth of what one of its unnamed executives told Politico: “We’re for regulation. We partner with regulators.”
