Yes, We Do Need Goldman Sachs
Print
Comment
Email
RSS
Twitter
Yes, We Do Need Goldman Sachs
Trying to ban “obscene” profits is a bad idea.
By Mark Gimein
Posted Thursday, July 16, 2009 - 10:42am
The conventional wisdom now says that Goldman's profits must be the result of some formula that involves excessive risk. Former Labor Secretary Robert Reich points to Goldman's "value at risk" calculations to conclude that the government should limit Goldman's risk taking. How quickly we forget that just a few months ago virtually all the formulas that were intended to explain the behavior of the bond markets and provide banks with the tools to manage their risk turned out to be entirely useless—or worse. A regulatory regime whose goal is to limit profits, in the hope of thereby limiting risks, is one that merely codifies the same bogus and incompetent thinking about risk that held sway in the financial industry during the mortgage bubble.
Does the financial system need reform? Yes, obviously. Both in how bonds and mortgages are traded and at the ground level of how banks deal with their customers. (And for the Goldman haters: If you think the ethics of Goldman are somehow worse than those of commercial bankers, remember that it's not Goldman that leaves some single mom homeless by slamming her account with $600 in overdraft fees when she made the mistake of using her debit card at the convenience store on the wrong day.) But the way to do it is to keep banks from again making the kinds of idiotic blunders that have left half the banking industry defunct or on life support. The way to keep everything from again going wrong is not to punish Goldman for having been right.
- « first
- ‹ previous
- 1
- 2
- 3
Comments
NO IRONY
LOL -
I am reading this article and thinking to myself, "Mr. Gimein is either a very ignorant business journalist, or a shameless shill for Goldman Sachs."
You pick!
The others commenting were making the connection in the same fashion as myself. Mr Gimein, maybe you should read Andrew Sorkins (New York Times financial journalist) new book, "Too Big To Fail", so that you would know that AIG was given $85 Billion in "emergency funds" per then Treasury Secretary Henry Paulson (former Goldman CEO) in order to pay the money to other banks so they would not fail. Want to guess who the largest receiptient of those funds was? :)
Do not insult me by saying you did not know any of this before sitting down to write this article. Goldman Sachs was in DEEP SH&T if AIG does not get that liquidity injection from the Feds. Now they are flush with cash, and back to taking the very risks that got us into this mess in the first place. And it will be another former Goldman CEO at the head of one of our Fed financial agencies that will tell whoever is President when the next meltdown rears it's ugly head that we MUST save [fill in the blank with Goldman Sachs biggest debtor].
So how long has Goldman had your resume', Mr. Gemein, and when is that job offer coming through.
Your present employer should be ashamed of you, and your conclusions.
Lance M. Haley
screwedus.com
Mark to Market?
Mr. Gimein also quickly downplays the network that "connects the dots between Goldmanites and former Goldmanites" without mentioning the only connection that matters: ex-Goldman CEO Paulson's decision as U.S. Treasury Secretary to funnel $13 billion in taxpayer dollars to Goldman Sachs through AIG. It's good to have friends in high places. Now, a question: Is Goldman Sachs a beneficiary in the change of "mark to market" accounting that benefited the other banks? If that rule hadn't changed would GS be posting profits?
Unconvincing
Any article on Goldman Sachs profits that doesn't at least mention the 13 billion of taxpayer dollars passed through AIG to them or the hundreds of billions of dollars in loan guarantees or, at least, the millions (of taxpayer dollars) they spend on lobbyists to block financial reform is pretty unconvincing. Try again.