Most of us here want to believe that the current market ills were all the fault of those big, bad Republicans. And while I believe that our best chance at meaningful regulation comes from the Dems, and certainly, the Republicans have their share of answering to do for this debacle, we must confront the Democratic Party's complicity in the unwinding of our economy. A cadre of very powerful and well placed Democratic appointees helped destroy, and then, bail out Wall Street. And they have benefited from both scenarios. And many of these Democratic masters of the universe have something in common. They are current or past employees of Goldman Sachs.
Matt Taibbi over at Rolling Stone has a piece that implicates both Goldman Sachs and the Dems in the internet, housing/credit, and commodities bubbles. It's well worth a read.
Basically, it states that Goldman Sachs preyed on it's customers expectations of low risk investing in the products it offered, then lobbied to change the regulations to allow much more speculative investing. This allowed them to take billions in profits and bonuses as the money poured into these newly created markets by institutional investors who had always trusted in these companies to provide sound guidance. The real kick in the teeth is that because of Goldman's well placed alumni, they are profiting from the bailout that follows the bust they helped create. Who are they? Robert Rubin, one of the architects of this disaster, and Henry Paulson, Bush's last Treasury secretary and former Goldman CEO, are the most prominent, but there are many others. To quote Taibbi
"The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman."
This article has got Goldman's attention: a press release states Taibbi's piece is "an hysterical compilation of conspiracy theories" with a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Now I am no conspiracy theorist, but these guys have some serious stroke. And where do they invest their money? In the Democratic party. Guess who was Obama's leading private corporate campaign donor? That's right. Goldman Sachs employees gave $981,000. (Compare to McCain's $230,095.) Their total to the Democratic party? $4,452,585. What will they get for the money? That will in part be up to Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.)
Of course, this is bigger than just Goldman Sachs. We are seeing a culmination of the revolving door practice in government. Regulators hope to get jobs on Wall Street after their term ends (or when the job is offered, which, they hope, comes first), so they are reluctant to rule against their future employers. Former Wall Street employees who become regulators are loath to lose standing in their circle, and also act to protect stock holdings and options which they have accumulated. Also, I think that they certainly share a world view, having been acculturated by their experiences. (The Fed is staffed at the board level with virtually 100% ex-investment bankers from a VERY limited number of companies, chief of which is of course Goldman. This is nothing but a recipe for corporate nepotism).
Taibbi is pessimistic, stating that those outside of the world of government and finance have very little chance to influence what changes are made in oversight. But I think we have a chance. If the netroots can make a big enough noise, our officials will at least have to listen. What we need is a focused message that demands an achievable goal that can be aimed at policy makers who will be supportive of real regulation. So I ask you to read the article and post what you think we should ask for. How about we start with the reinstatement of Glass-Stegall?