Wall Street: Goldman Sachs and Business As Usual

[marmar]

from the Working Life blog:



Wall Street: Goldman Sachs and Business As Usual

by Jonathan Tasini
Monday 19 of July, 2010


As the dust has settled a bit from last week's slap-on-the-wrist to Goldman Sachs, it's worth making this point again: nothing much has changed.

After the first few hours of the news that Goldman would pay $550 million to make the SEC go away, it became pretty clear that the government had nicked Goldman but certainly had not changed the fundamental dynamic on Wall Street. Sunday's NY Times had this relevant quote, though it was buried at the very end of the story "The Men Who Ended Goldman's War":

"It’s become pretty clear what Goldman has become, and this settlement is an outgrowth of it," says Charles Geisst, a finance professor at Manhattan College and author of "Collateral Damaged," a book on the financial crisis. "But a fine is not going to bother these people, quite frankly. A fine is like passing around the church collection plate and collecting a few extra bucks for sins.

"This is unlikely to change much at all," he adds. "I think it will be business as usual right away.

"They’ll just surround themselves with extra lawyers."(emphasis added)

Two quick points to make. First, we make the mistake, in my opinion, of looking at the "evils" of Wall Street as the result of actions by "evil" people. There is no doubt that there has been, and will be, corruption and greed on Wall Street, and in the broader financial services sector. But, that is true in any big institution.

But, second point, I believe that we are headed for the inevitable next financial crisis largely because we have not changed Wall Street, and its role in our economy, from its pre-financial meltdown posture.When Geisst speaks about "business as usual", I do not think of trading derivatives (which, in theory, will be more closely scrutinized).

In the good 'ole days of Wall Street pre-2007-2008, what was Wall Street's most financially lucrative role in the economy? I think of the endless effort to raise capital to finance leveraged buyouts or takeovers--which have resulted in the destruction of hundreds of thousands of good-paying, decent jobs for the sake of "efficiency" and/or to maintain a higher stock price (mainly because the CEO or other top executives would personally reap huge windfalls from a higher stock price).

We have changed not one iota of that mindset. We have not chopped Wall Street down to its proper size. We have not instilled in our debate--from the White House, down through Congress, through the punditry, into the business community--the idea that the deploying of capital and wealth is something that must be done to better the people, not simply to be "efficient" for the sake of the "free market". Bankers have an important role to play in society--but only if the rules are set up to raise living standards for the many, not the few.

Until we do, I do not believe we, the people, should think for one moment that the robbery we have lived through for over 30 years will cease. It will come packaged in different forms that people can't understand until it's too late.


http://www.workinglife.org/blogs/view_post.php?content_id=14934