Wow, look at our representatives!  Today the Senators on the Hill really showed us how “about business” they are in proving Goldman Sachs set up its clients to lose money and bet against the same investments they advised.

In watching some of the analysis and commentary from CNN, Ali Veshi made an interesting point that I had to reflect on:

He said, basically:

These proceedings were the most clear form of bipartisanship he had seen this year, and that at the end of the day, these proceedings had done nothing to help paint a clearer picture of what actions were needed moving forward to address the issues of the past.

Hmmm…

And you know, when you think about it, he makes excellent points.

1) Why wouldn’t Democrats and Republicans team up to tackle an easy target common enemy serious abuse by Goldman Sachs?  It is a political gain for both of them because they both get to look like they are advocates for the American people, without tearing one another down for a change .  And the financial institutions and banks make it so easy because they appear profit-oriented with their reports of bonuses, wide profit earnings to close quarters, and complex structures of risk and investment.  And in predictable fashion, most of us are going to fear and even to some degree hate them because we don’t understand what is going on except that they might have messed our money up.

2) We already know that the subprime mortgage market popped on us, and that financial institutions were living in days of happy deregulation.  So I do wonder – what will we gain from finding out that Goldman Sachs did/did not cause this recession?

Ok, I agree that Goldman Sachs right now is about as genuine as that Rolex you bought from Jimmy at that flea market.  Based on the emails being released from Fabrice Tourre to his girlfriend in which he colorfully described the profit being made off of mostly dead investment options, and just knowledge of basic theory on how firms should act in a market – which is that the firm is profit maximizing  – I doubt them when they say what they did not make the recession worse than it already was.  Common sense would tell you that people come to you trusting you to advise them on good investments.  Advising them otherwise when you have knowledge that those investments are likely to go bad is shadier than an oak tree on a hot summer day in Georgia.  And it is clear that Goldman Sachs stood to gain a lot of profit by doing this.

But again, if we figure this out – then what?

I have to say, I believe the allegations from the SEC, the immediate investigation by Congressional Committees, and even the current focus on financial regulation legislation is all posturing for good ol’ Fall 2010.  While I do believe the legislation will serve a purpose if done correctly, this other theatre really leaves me questioning the end goal.

I mean sure, we now see that Democrats and Republicans can agree  on something.  True, we now know that the government is about business on financial reform and taking responsibility (except for the fact that Congress had oversight and the mandate to regulate the markets prior to the recession and housing market bubble burst – and I don’t see any real ownership of that lack of responsibility).

Sure, we see the SEC is taking a no nonsense approach to financial institutions that focus on profit to the point that they forget about the people (maybe the powers that be in that organization could have regulated that porn intake of one of their employees on government computers with the same voracity – but thats in the past right?).  True, blaming someone for what has happened will make us all feel good.

Americans have been victimized by the financial institutions in this country from time to time.

But this means nothing if the only thing these hearings accomplish is a temporary euphoria that makes us complacent about the substantive work that needs to be done in financial reform and other policy areas.

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