The Goldman Rule

Scott Wheeler

4/22/2010 12:01:00 AM - Scott Wheeler

by Scott Wheeler and Buckley Carlson

The Man who takes Sach’s of gold makes the rules; ergo, Republicans in Congress should demand an independent, Special Prosecutor to investigate Goldman Sachs because with nearly a million dollars of their money in his hip pocket, Obama appears to be looking the other way from what may be serious rule breaking. Last Friday news broke that the Securities Exchange Commission was suing the Wall Street bank of Goldman Sachs but conspicuously absent was an announcement from the Department of Justice that anyone would be indicted. How curious. Obama has relentlessly attacked big business and Wall Street greed draining every last metaphor from the leftist’s lexicon used to attack Capitalism. The SEC is accusing Goldman Sachs of some pretty nasty stuff according to the Washington Post.

“The suit asserts that Goldman defrauded investors when it sold them a subprime-mortgage investment in 2007 that was secretly designed to lose value. The agency alleges that Goldman created and marketed the investment without telling its clients that Paulson & Co., a prominent hedge fund, had helped the bank assemble the investment while at the same time was placing bets that it would lose value. The bank received $15 million from Paulson & Co. for its services.”

This case sounds like it could have been a test designed in purgatory to try the mettle of a devout populist. But Obama wanted no part of a criminal investigation of his biggest donor of the 2008 election. There could be other problems for the Obama administration as well, Treasury Secretary Timothy Geithner is notoriously close to many top Goldman officials. In fact, prior to his confirmation Geithner’s critics were on record with what they saw as conflicts of interest. In January 2009, financial risk analyst Chris Whalen told Yahoo Finance,

“Geithner is the wrong man for the job because of his decision-making as President of the New York Fed. I believe Tim Geithner only represents part of Wall Street - Goldman Sachs"

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Indeed, Geithner was one of the architects of the Troubled Asset Relief Program and during that time had an unusual number of contacts with Robert Rubin, a former co-chairman of Goldman Sachs and it was Geithner’s decision to bail out American Insurance Group, a controversial move that made Goldman whole at a time when other banks were left struggling or allowed to fail such as in the case of Bear Stearns.

Obama faces potential peril if the SEC lawsuit ends up being a prosecution but confident he has nothing to fear from his Attorney General, he displays his usual hubris by politicizing the affair to his own benefit using it to declare that this is why congress should pass his Wall Street reform bill that, according to critics, would allow him to take over any public company that he deems unstable.

Obama is using the Goldman Sachs case to set a trap for Republicans, hoping that Republicans will do what they are already doing and that is defend Goldman which is a heavy contributor to the Democrats. Republicans can fight back by demanding a special prosecutor to get to the bottom of this matter that the SEC calls fraud and take it a step further by demanding the investigation include political donations and influence peddling this is critical considering the amount of taxpayer money used to bail out the politically connected firms.

The political fallout for Obama could be devastating, after publically chastising a supreme court decision that he says will allow big business more freedom to influence elections, he would be forced to defend himself for taking nearly one million dollars from a big bank that faces possible indictment while Republicans take the high road and lecture Democrats about the evils of big banks, Wall Street and tainted campaign donations.