Home > Government intervention, Public Choice, Regulation > SEC vs Goldman: Bootlegger and Baptist model

SEC vs Goldman: Bootlegger and Baptist model


I’ve written about the Bootlegger and Baptist model of regulation before.

What does that have to do with SEC vs Goldman?

You’d think Goldman would shun government regulation in it’s derivative desk, right? Well, if you think, like I do, that the derivatives trade is drying up, then why wouldn’t they want to lose it? They made most of the money they were going to make off of it already. So no big loss.

Now think about this quote from Brad Sherman, D-CA, a member of the House Financial Services committee:

How can Democrats get out ahead of the Goldman Sachs story politically?

We can say, “No taxpayer money to Wall Street firms, their creditors and the counterparts.” Then we go to the voters and tell them there’s no money for Wall Street, but regulation instead. If you can’t run on that slogan, you’ve got a problem.

But there are serious problems with the Dodd bill. The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority. (Emphasis added)

Who wouldn’t give up a tapped resource for the chance to get unlimited bailouts? No rational person in the world would pass on that kind of opportunity. Now remember that Goldman recently acquired the services of Greg Craig, Obama’s former White House counsel. Who better to know the ins and outs of what is going on at a politically motivated SEC investigation?

No doubt, Craig will get Goldman off the hook for any real malfeasance. Goldman will not pay out anything, they will keep all the money they made and best of all, they get plunder the Treasury at will.

So lets look at the players:

Bootleggers: Goldman Sachs

  • What do they care about image anyway right?
  • Unlimited Bailouts at the discretion of the POTUS, whom they already bought.
  • More than likely, the SEC charges will not amount to any fine, or if there is a fine, it will be minuscule compared to what they made over the last year, thanks to Fed money.

Baptists: Obama and the Democrats

  • They get to appear tough on Wall Street.
  • They want to pass the Dodd bill, which wouldn’t have stopped the crash from happening if it would have been passed 5 years ago.
  • They get to appeal to the emotions of their base, Democrats would think Obama sold them out, maybe stop some of the hemorrhaging of support.
  • They will try to campaign on the Dodd bill instead of Healthcare, because of Obamacares horrible approval numbers.
  • They get to use this to write lots of new regulations to help their buddies. This isn’t capitalism, it’s Mercantilism.

Of course there are more benefits for both Goldman and Obama, but these are just a sampling. The important point is how wrong the “mainstream” view of regulation is. Goldman actually wants the Dodd bill to pass. They can’t come out and say it, because all those “intelligent” Democrats would think twice, like they should have before Obamacare was rammed down. No doubt, the NYT will do an article on how Goldman benefits from the Dodd bill, AFTER it passes, like they did with Obamacare. Of course by then the deed will be done.

Will Democrats be lulled into believing that Obama want to “get tough” with Wall Street? Probably, they bought into his fraud of “post-partisanship” and Hopenchange didn’t they? Meanwhile, the Taxpayer (yes, capitalized for a reason) will get the shaft. Goldman will be in a better position than they are now, thanks to a regulatory morass, they they helped write.

Of course, I’d be remiss if I didn’t point out the hypocrisy of the Right in all this as well. They started the bailouts. They have just as much blood on their hands as the Left. It’s just, that at this time, the Democrats have the most to gain politically.

Update:

Want to add a link to Charles Rowley’s blog. Dr. Rowley has an excellent article on Goldman, which gives more insight into why I call it mercantilism.

Goldman Sachs, indeed, is the harbinger of America’s corporate future in the absence of some unlikely reversal of political economic direction.  Goldman Sachs is the perfectly designed two-way sewer,  pumping excrement in and out of privately-networked  political markets  and in and out of  politically-networked private markets.

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  1. TeakWoodKite
    April 25, 2010 at 21:34

    Neat. Tanks.

  1. April 23, 2010 at 20:27
  2. July 16, 2010 at 19:32

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