With the US government and the American public desperately seeking the financial reform of Wall Street, has Goldman Sachs just become another scapegoat of the 2008 financial crisis?
By: Ringo Bones
After surviving relatively unscathed from the 2008 global financial crisis, Goldman Sachs was once again put under the US Securities and Exchange Commission’s microscope. Most likely due to the financial firm’s publicly revealed promise to pay exorbitant executive bonuses after profiting a little over 3-billion-dollars during the first three months of 2010 that revealed anomalies in the financial firm’s proprietary trading of derivatives. After the SEC filed fraud charges, the UK financial watchdog immediately followed suit to investigate Goldman Sachs’ affiliates on British soil. Despite of the financial firm’s somewhat questionable reputation when it comes to shady dealings of derivatives like CDOs, has Goldman Sachs just became Capitol Hill’s latest financial crisis scapegoat?
The primary reason why Goldman Sachs got further SEC scrutiny is probably due to the Obama Administration’s proposed Wall Street reform on financial regulations. The gist of which includes: 1) Consumer protection for stock investors, 2) More SEC oversight on derivatives trading and 3) Set up a fund to lessen the of a large-scale financial meltdown in case it happens again. Will this proposed White House financial reform of Wall Street nothing more than biting the hand that feeds then albeit gently? After all, it is primarily the capital gains tax collected from Wall Street financial firms – and contributions come presidential election time - that made the periodic titanic political battle between the Democratic Party and Republican Party a possibility.
The Capitol Hill versus Goldman Sachs saga just went into another unexpected plot twist when the firm’s CEO, Lloyd Blankfein, was summoned before the Capitol Hill’s investigative committee after allegedly placing the financial firm’s profits before their clients. Senator Carl Levin (D-Michigan), Governmental Affairs Subcommittee on Investigations chairman, managed to add color to the proceedings after his expletive-laden grilling of Goldman Sachs’ executives over the e-mails pertaining to the “Shitty Timberwolf Deal”. Ironically, Senator Levin could be blamed for the current Goldman debacle because he further enabled the laissez-faire policy of the US government when it comes to a genuine Wall Street financial regulation reform after he fully endorsed the Gram-Leach-Bliley Act back in November 4, 1999. Passing the Gram-Leach-Bliley Act more than likely made Goldman Sachs the “evil” financial firm that it is today.