Ten Reasons the Goldman Settlement Hurts Us
Friday, July 16, 2010 at 6:10PM I did a segment about this on Dylan Ratigan's show earlier today:
1) The fine of $550 million is a drop in the bucket for Goldman. It's about 4% of the $12.9 billion it received from the Federal Government through AIG. (which is only part of the largesse the firm enjoyed courtesy of our government (see my bailout reports.)) It's equivalent to less than $1500 of an average person's salary.
2) Contrary to popular media stories, $550 million is NOT the largest settlement for a Wall Street securities firm we are expected to believe it is, the $650 million settlement with Drexel Burnham Lambert in 1988 was (not to mention the $600 million settlement with Michael Milken bringing that tally to $1.2 billion.)
3) The settlement went along party lines. It was the two Republicans who voted against settling - probably because it involved money, but it's nicer to think it's because it involved no confirming or denying any wrongdoing, and the shutting down of future potential investigations and charges. The Democrats voted for it because they thought it was actually meaningful, or wanting to convey that it was. Not sure which is worse.
4) Mary Shapiro, the Obama SEC head appointee who agreed to a mere $33 million dollar fine on Bank of America's behavior when Ben Bernanke and Hank Paulson pushed its merger with Merill, that was subsequently overturned in courts because it was ridiculous, cast the deciding vote. Way to go, Mary.
5) It took just half an hour to gain approval - that's a fraction of the time it would take to reach a settlement for a marijuana case. All that shows is how absolutely, disgustingly biased against people our justice system is.
6) The settlement closes the possibility of further investigations into any of Goldman's other deals. It closes the possibility of further investigations into similar deals at other firms that participated in the toxic asset shuffle.
7) It validates Tim Geithner's saving of AIG with its backdoor benefit to Goldman and others. (Because of the above, the CDO business remains impervious to investigation or change. If Goldman had been found to have made more than 'a mistake', we might have circled back to the relationship between AIG and Goldman, or AIG and other firms, regarding CDOs, which might have made Tefflon Timmy look bad.
8) It validates the closing of the investigation of AIG by the Department of Justice and the SEC two months ago, showing that not only do we have weak regulators, we have a misguided justice department.
9) The timing coming so close after the announcement of the Senate's approval of the so-called sweeping financial reform package was meant by the SEC (and Obama administration) to show its power and effectiveness, but instead, it showed its complete capitulation to Wall Street. Along with the toothless reform package, the settlement solidifies the status quo on Wall Street.
10) It confirms the fact that our regulators have no interest in examining the types of deals that were central to the financial markets and credit meltdown, anymore.
