I am no finance guy. But I understand a con when I see one. Ok so let me see if I understand this SEC lawsuit. The Abacus product was something akin to a legal sports betting deal. Some are betting for the product; some are betting against. Perfectly legal. Goldman Sachs is like the bookie—gets paid regardless. But the problem is that one of the guys (John Paulson) pushing the “bet against” side is also responsible for determining what goes in that fund. So he is basically like Pete Rose betting against a team he manages and is controlling who is in the game and who is not. And if I understand correctly, Goldman’s defense is that the bettors are savvy and know that Pete Rose is gambling and managing at the same time.
McConnell has some nerve trying to sell us on the idea that we don't need tough derivatives reform. And how about Hatch trying to suggest that it would "stifle innovation." I always thought that kind of innovation was called fraud.