While policymakers will have taken up the debate over financial reform in the halls of Congress, Money Morning readers have been posting comments to our Money Morning Facebook page and writing in to our e-mail mailbag at firstname.lastname@example.org with their thoughts on the Goldman Sachs Group Inc. (NYSE: GS) case and the relationship between Washington and Wall Street.
A week after the Securities and Exchange Commission brought fraud charges against Goldman Sachs, President Barack Obama yesterday (Thursday) blamed the financial meltdown on both Washington and Wall Street in a speech in New York and urged Wall Street giants to stop fighting reform.
"One of the most significant contributors to this recession was a financial crisis as dire as any we've known in generations. And that crisis was born of a failure of responsibility — from Wall Street to Washington — that brought down many of the world's largest financial firms and nearly dragged our economy into a second Great Depression," Obama said.
Obama acknowledged the public outrage at big financial players, many of which were in attendance. Executives from Goldman, JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS) were just a few of the Wall Street firms on hand to hear Obama push t limit risky investment practices.
"A free market was never meant to be a free license to take whatever you can get, however you can get it," Obama said.
Obama said the only businesses that should fear reform are those engaged in manipulative or deceitful conduct.
Meanwhile, opponents say Obama is using the case that's being brought against Goldman to gain public support, while ignoring the contributions of government sponsored Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to the financial crisis.
"How many times will President Barack Obama mention Fannie/Freddie in his speech on 'reform'?" Brad Dayspring, a spokesman for Rep Eric I. Cantor, R-VA, said in an e-mail to The New York Times. "Zero. Not once. Guess it remains the Democrats' dirty little secret."
Money Morning readers also are placing blame and are questioning Washington's relationship with Wall Street executives. The following is a sample of the insights, comments and concerns readers voiced by readers.
Goldman Getting What it Deserves?
I say it's about time. I have suspected them for the past few years of monetary manipulation, and they are way too big for their britches. They are supposed to be a bullion bank, correct? They should be just that, and nothing else. Now they must pay for their wayward business practices.
— Holly J.
Washington/Wall Street Revolving Door
I guess [Goldman Sachs'] campaign contribution of $975k didn't keep them out of trouble. Guess I'd be disappointed also.
So, is Mark Patterson, former Goldman Sachs lobbyist, still chief of staff to Treasury secretary Timothy Geithner? And, how about Adam Storch, after spending five years working in Goldman Sachs's business intelligence unit, which reviewed contracts and transactions for signs of fraud, was named to become the first chief operating officer in the Securities and Exchange Commission's Enforcement Division. I think his appointment to the top job in regulating his old company should raise some serious issues of conflict of interest.
And, didn't Obama appoint Robert Hormat[s], previous Goldman Sachs Vice Chairman, to be Under Secretary of State for Economic, [Business,] and Agricultural Affairs.
— Roni R
A Bold, Necessary Move by SEC
The SEC doesn't file civil actions on a whim – and I'm glad that this country has at least one entity policing the massively blatant fraud at hand. Am I the only one that reads the allegations with crystal clear clarity? Wake up people! Goldman's denial is laughable – or should I say nauseating given their billion-dollar Ponzi scheme. Sickening.
The truth will come out – just like it has with Enron and all the others. They're no different. Thank you SEC for being the only one to stand up and not let your pockets be padded like all others.
— Posted on Money Morning Web site 4/21/10 by "Wakeup"
I am disappointed that the case is a civil fraud charge. Is it the law in U.S. that there is no criminal fraud charge?
— Ken L.
MM: The SEC doesn't have criminal authority and it has not been confirmed if the U.S. Department of Justice is conducting an investigation.
(**) Money Morning editors reserve the right to edit responses for grammar, length and clarity when posting on our Web site. Please include your name and hometown with your email.
News and Related Story Links:
- The New York Times:
Obama to Wall Street: "Join Us, Instead of Fighting Us"
- Money Morning:
How to Profit From the "Evil Genius" of Goldman Sachs