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Source link: http://archive.mises.org/12503/a-theory-on-why-the-sec-hit-goldman/

A Theory on Why the SEC Hit Goldman

April 18, 2010 by

The theory goes that the SEC slammed Goldman hard in order to push the case of R. Allen Stanford – who ran a $7 billion Ponzi scheme – out of the headlines. The SEC delayed investigating Stanford for 13 years.

{ 12 comments }

Sean A April 18, 2010 at 6:33 pm

My theory is that several considerations played a role including the following:
-To gain public favor for the new financial regulation bill in the senate
-To diffuse public awareness of the blatant connections between MoneySACKS and the government, including many high ranking members of the SEC who formerly worked for Goldman.
-The corollary of the last, to clear the way for soon-to-be implemented special interest clauses through the negotiation with Sachs execs and the members of government (“former” execs or partners)
-To draw attention away from the Federal institutions dealing with the financial sector.
-and for our Ponzi Scheme here

It is possible to kill many birds with one stone.

danny April 19, 2010 at 9:18 am

Sean A, I believe this is exactly right. Too big too fail doesn’t mean too big to throw under the bus. The system will sacrifice its young for the sake of the protecting the system. If need be, they will send Goldman the way of Lehman & Bear Sterns (with some high level perp walks for effect) if they think this will help deflect criticism from the real culprits.

LOL government April 19, 2010 at 8:12 pm

The simplest answer is that the Goldman Sachs board of directors decided to have the SEC do a sham prosecution for publicity. It was too obvious that Goldman controls the government, so they a doing a mea culpa media ploy. The question is whether Americans are dumb enough to fall for the publicity stunt.

H. Reardon April 20, 2010 at 12:14 pm

Exactly. This is a civil suit which won’t result in any significant punishment. A fine, maybe. Meanwhile, it provides cover for the financial reform bill. The bill allows the exec branch to take over any institution it deems a risk. Who will make these decisions–GS through its gov’t plants. It will codify GS’s ability to take down its competitors. The only hope ‘we the people’ have is if foreign govt’s take out GS on their own turf.

Bruce Koerber April 18, 2010 at 8:14 pm

Goldman Sachs And The Financial Crisis.

How does this work as a propaganda tool? With that as the starting question the true nature of this ‘announcement’ becomes more obvious.

The unConstitutional coup can feel the ground shaking and it needs both diversionary cover and something that deflects attention away from its counterfeiting operation (Federal Reserve) and all of its bribery schemes.

Will this ‘announcement’ buy some time? Will the indoctrinated masses who listen to the propaganda spewed out by the bought-and-paid-for main stream media settle down a little and ‘trust’ that the government is ‘regulating’ itself?

Ask yourself if the pervasive destruction caused by Goldman Sachs can possibly be resolved in the fascist climate of ‘Too Big To Fail.” In other words, this announcement is a farse, a smokescreen, and an insult to every American citizen.

Audit the Fed and expose the economic terrorism of the unConstitutional coup – that is the solution to the crisis in the financial markets!

Ohhh Henry April 18, 2010 at 9:12 pm

I assume that the VP being investigated, I think he is originally from France, is an outsider or considered unpopular within GS in some way that makes him expendable. Better to throw one scapegoat over the side and appease the mob than to let them tear the whole bank down.

Tim April 19, 2010 at 6:37 am

Ohoho the boss is getting his caporegime whacked.

Jake April 19, 2010 at 3:31 pm

Let me add another possible motivation:GS may want this lawsuit, brought against it by the SEC which it probably to a large extent controls, to protect it from a bigger lawsuit from less docile litigants. Much like one contains a forest fire by lighting smaller fires to “back burn”, consuming the main blaze’s fuel in a controlled manner, Goldman could be seeking to use this lawsuit to head off REAL lawsuits from the investors they’ve conned.

Here’s how it might play out, the SEC (infested with GS cronies) sues GS, the whole things get’s big air time in the media, the masses get to feel vindicated and consoled that at least these people will be held accountable for their wrongs, all these other motivations get addressed, and then, once the topic settles down a little, the suit is relatively quietly settled. GS pays a fine that sounds immense but amounts to something like 15 minutes worth of earnings, and a hidden, never mentioned, condition of the settlement (no doubt in light of GS’s fine cooperation with the SEC), is immunity for GS from any 3rd party lawsuits concerning their behavior over the past 10 years or what ever. This flies with the general public as they could pretend such suits would be akin to double jeopardy, and the public is pitifully accepting of government receiving all the reparations for wrong doings while the wronged are taxed to pay for the collections.

Thus, I think Goldman could be running to it’s daddy for a stern lecture instead getting it’s nose bloodied on the playground by all the other kids who they’ve ripped off.

brad April 19, 2010 at 7:22 pm

to continue your hypothesis about immunity; it would make sense since Gordon Brown seems to be on a political tear to use GS for his relection campaign. him along with other EU countries appear to be making a case for an international lawsuit. your theory makes GS look like a scared little boy who is attempting to run home to mommy rather than face the angry mob converging on his doorstep.

bill greene April 21, 2010 at 2:01 am

I agree that the government’s suit against Goldman is planned to be just a slap on the wrist but that it will marketed, or spun, as a vigorous effort by Obama to keep Wall Street in line and punish them for the mortgage melt-down. Obama will look like a populist hero fighting the robber barons.

But just how stupid do they think we are? Isn’t Tim Geithner still running the Treasury Department?

To their credit, last eveniing, CNN, ran a news special on “The Revolving Door” and featured the names and pictures of about a dozen characters such as Rubin, Geithner, and other GS and SEC insiders.

michael pond April 27, 2010 at 6:14 pm

Head of SEC…former Goldman Boy…priceless. Jake has hit the nail on its head!!!

K Ackermann April 30, 2010 at 4:15 pm

I think there are many theories, but after listening to GS, I’d say they left the door wide open.

I don’t think their risk management is a great as everyone claims. They appear to be no different than Martha Stuart – cash in the franchise name for a quick buck.

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