> Everyone is attacking GS, from utterly clueless uneducated morons to utterly devious dumb politicians with a private agenda.
The above assumes that all attacks are baseless.
The SEC charges appear to be trumped up but GS was a major beneficiary of the AIG bailout. GS should lose money when it's counter-party risk assessment is wrong, as it was in the AIG case.
I don't think the SEC charges are trumped up, myself, but as neither a professional economist, lawyer, or trader, my opinion is necessarily superficial.
You might be interested in some remarks from a friend of mine, whose identity I prefer to keep private but who has given me permission to repost. He is a senior VP of derivatives trading at another Wall Street firm, albeit a much smaller one than GS, so weight as you feel appropriate.
Goldman will settle the civil suit. The SEC has them bang to rights on Rule 10b-5 violations, and anyone familiar with securities regulations knows this. They will claim that they are going to settle because it's in their shareholders' interests.
They've been trying to spin this by saying that they're market-makers. The WSJ had an editorial on Wednesday arguing this (probably assisted in the writing by GS), the execs said as much in Washington, and a friend of mine who works there, probably repeating an internal memo, made the same argument. It goes like this - if you buy GE stock and it goes down, you can't sue the NYSE or the broker.
The reason it's crap is that there is a huge difference, both conceptually and from a regulatory standpoint, between origination/new issues/primary market on the one hand, and secondary market trading on the other. GS are arguing as though the former is part of the latter. It isn't.
Not quite. Populist and pavlovian attacks are baseless. But intelligent ones are not. Personally, I not only distrust the SEC, but I also believe that "should" is a word to be left out of the discussion. What matters is what can be implemented, not what is morally right. It's like realpolitik applied to the context of Wall Street.
The above assumes that all attacks are baseless.
The SEC charges appear to be trumped up but GS was a major beneficiary of the AIG bailout. GS should lose money when it's counter-party risk assessment is wrong, as it was in the AIG case.