Let Goldman Be Goldman

[dtotire]

Let Goldman Be Goldman
By WILLIAM D. COHAN


Poised as we are for the most comprehensive financial reform in this country since the Great Depression, it is time to fess up to the fact that it likely would not have occurred without a concerted effort by the Obama administration and the Democratic-controlled Congress to demonize Goldman Sachs.

There are good reasons, of course, why politicians have seized on Goldman for easy political gain. Among them are: the perceptions that Goldman figured out a way to benefit from the misery of others; that while many Americans were hurting from a recession partly of Goldman’s making, the firm continued to rake in billions in profits and pay out billions more in bonuses; that Goldman seems unable to recognize that but for an 11th-hour rescue by the American taxpayers, in September 2008, it would have gone the way of Lehman Brothers, Bear Stearns and Merrill Lynch; and that Goldman has proved repeatedly that it prefers putting its own interests ahead of those of its prized clients and the rest of us. Another likely reason is that the politicians simply looked at the recent public polling data, which put Goldman’s reputation below that of BP and Toyota, and realized that nothing spells political gold these days quite like bashing Goldman Sachs.

But the byproduct of this very effective, Goldman-centric political strategy, is that the larger issue of the dramatic deterioration of Wall Street’s mores and ethics over the past 40 years has been all but obscured, as has a robust debate about how to change Wall Street’s behavior in the future to prevent a recurrence of the events that led to the 2008 financial crisis. Unfortunately, nothing in the 2,319-page Dodd-Frank bill addresses the dramatic change in Wall Street’s culture away from taking prudent risks with its own partners’ capital toward a culture that rewards bankers and traders for taking risks with other people’s money. This ethic is pervasive across Wall Street, and not just at Goldman Sachs, which as the last major Wall Street firm to go public — in 1999 — retains more of a partnership mentality than do its brethren.

Despite the political haymaking, the truth is that Goldman Sachs did nothing differently in the years leading up to the crisis than did other firms of its stature. Nothing has come to light in any of the very public recent assaults on the firm that also could not be discovered by looking through millions of documents at every other Wall Street firm with large trading and capital-markets businesses.

more:
http://opinionator.blogs.nytimes.com/2010/07/06/let-goldman-be-goldman/?ref=opinion