Please forgive my cynicism in regards to financial reform.

[kentuck]

The SEC has filed a "civil" suit against Goldman Sachs. All charges against these criminals will be "civil" and not "criminal". In truth, they are no different than Bernie Madoff. They are very similar. But Bernie is in prison. Don't expect justice to be served with these criminals from Goldman Sachs.

The political system in Washington is corrupt. At the present time, there are over 125 former Congressmen and aides serving as lobbyists for these criminals. The $170,000 per year salary as a Congressman was not enough for them? They have less interest in serving the American people than they do in serving themselves. The few folks that are working for the people are out-numbered by the special interests. That is our dilemma.

This suit against Goldman Sachs is nothing more than a political diversion. Neither Party will do what needs to be done. That is the point to where my cynicism has evolved.

In reality, we have neither a Republican Party or a Democratic Party. Neither of them stand for what they say they stand for. The Republicans say they stand for smaller government and lower taxes and balanced budgets, etc. The Democrats say they stand for the people, not the corporations, for working people, for regulating Big Business, for fair progressive taxation, etc. But do either of them really stand for what they say they do? Both pay lip service to their ideas but neither puts them into practice.

I am cynical and I will not belong to a Party of Wall Street. Do not piss on my shoes and tell me it's raining. I may soon be one of those Americans without a Party. The time has come for action.
Call it "framing" or whatever you want. It's the matter of wanting or not wanting to tell the simple truth.

[autorank]

1. It's all one party, The Money Party, that "bipartisan" coalition

http://www.scoop.co.nz/stories/HL0709/S00549.htm

When I hear "bipartisan" I grab my wallet. I know we're being taken for a ride.

The bipartisan coalition did two things to make all this financial mess possible/probable.

1) Repeal of Glass-Steagall
2) Enactment of the Commodity Futures Trading Act

Enabling acts for an era of greed...

[femrap]

2. I'm with

you. What gets me is that the Feds finger a little Goldboy Sucks VP who is French! Egad...it's the fault of a French dude. :evilgrin: :rofl:

I'm of the Have-Not Party. Left and Right mean nothing anymore.

Our entire political system is a sesspool of corrupted scum.

[KittyWampus]

3. In truth, there is a world of difference between Madoff & Goldman Sachs. That you'd make a literal

comparison means you don't know what you are talking about.

Further, the burden of proof on a civil case is lower than a criminal case.

[zipplewrath]

4. It should he criminal

But that'd be a hard case to make based upon what I've read so far. I'm not sure that what they did would qualify under any of the "con man" kind of laws we have. They didn't sell something that didn't exist, and as several have pointed out, all the information was public. They just ignored it when they sold these securities, and so did the buyers. I think the best they are going to get slammed with is this concept of proper disclosure of information. Legally, it's not just enough to disclose, you have to do it properly.

That said, I think it would be valuable to create some laws that would classify these kinds of problems as the conmen that they are. The arguement against it would be that the industry would be afraid to take risks. I'm dubious, they always seem to be willing to take risks. But furthermore, these kinds of risks are the ones I don't want them taking anyway.

[kentuck]

5. How about this argument?

http://roomfordebate.blogs.nytimes.com/2010/04/16/what-goldmans-conduct-reveals/

<snip>
f the allegations against Goldman Sachs are true, then much of the blame for investors’ losses in the Abacus deal can be laid at the feet of an obscure statute passed by Congress in 2000, the “Commodities Futures Modernization Act.”

If we allow the unscrupulous to buy fire insurance on other people’s houses, the incidence of arson would rise sharply.

In one dramatic move, that act eliminated a longstanding legal rule that deemed derivatives bets made outside regulated exchanges to be legally enforceable only if one of the parties to the bet was hedging against a pre-existing risk.

This traditional derivatives rule against purely speculative derivatives trading has a parallel in insurance law, because insurance, like derivatives trading, is really just a form of betting. A homeowner’s fire insurance policy, for example, is a bet with an insurance company that your house will burn down.

Under the rules of insurance law, you can only buy fire insurance on a house if you actually own the house in question. Similarly, under the traditional legal rules regulating derivatives trading, the only parties who could use off-exchange derivatives to bet against the Abacus deal would be parties who actually held investments in Abacus.

[zipplewrath]

6. I tend to agree with this

There is a "skin in the game" problem here. Your proposal would have to make some exceptions for things like the life insurance I purchase "on" my wife. But overall I think it is valid. I think rating agencies have to have some liability for the ratings they make. I think mortgage lenders have to maintain some liability on the mortgages they sell. As we have seen, the "market" will not sort out these issues because the distance between the lie and the consequence is too long.

[kentuck]

7. One of the first rules of insurance...

One must have an "insurable interest". You cannot buy insurance on your neighbor's house. In effect, that was what GS was doing. They were insuring the house and then betting that it would burn down. That is more than unethical.

[zipplewrath]

8. And more insurance than the value

One of the silly parts about this was that people were allowed to buy this "insurance" with no interest in the actual loss. Which meant, in the case of a loss, there was more being "paid out" than was lost. There's an imbalance there that magnifies the problem. Using your metaphor, it was as if one house burned down, they had to burn down 5 more.