President Obama pronounced that "because of this (financial reform) bill the American people will never again be asked to foot the bill for
As if to prove him wrong,
Blankfein, you may recall, was at the meeting in late 2008 when
Although the financial reform bill may have clipped some of Goldman's wings -- its lucrative derivative business may require Goldman to jettison its status as a bank holding company, and the access to the Fed discount window that comes with it -- the main point is that the Goldman settlement reveals everything that's weakest about the bill.
The American people will continue to have to foot the bill for the mistakes of
The bill contains hortatory language but is precariously weak in the details. The so-called Volcker Rule has been watered down and delayed.
On every important issue the legislation merely passes on to regulators decisions about how to oversee the big banks and treat them if they're behaving badly. But if history proves one lesson it's that regulators won't and can't. They don't have the resources. They don't have the knowledge. They are staffed by people in their 30s and 40s who are paid a small fraction of what the lawyers working for the banks are paid. Many want and expect better-paying jobs on
Why do you think Goldman got off so easily from such serious charges of fraud?
Reliance on the discretion of regulators rather than structural changes in the banking system plays directly into the hands of the big banks and their executives and traders who contribute mightily to Democratic and Republican campaigns. The flow of money virtually guarantees that regulatory agencies won't be adequately staffed to enforce the law, that penalties for violations won't be overly onerous, and that all loopholes (What's a "derivative"? What has to be listed on exchanges? Exactly how much capital must be on hand for which transactions? How are the various forms of predatory lending to be defined?) will be easily stretched in future years.
Make no mistake: As long as there's no fundamental change in the structure of
Goldman's share price, as well as those of
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(c) 2010 Robert Reich