— From NBC's Ali Weinberg
Both liberal and conservative bloggers use today's news that Goldman Sachs knowingly sold derivitives that were designed to fail as a vehicle for explaining why financial regulatory reform should or shouldn't pass.
AMERICABlog's Joe Sudbay applauded the Securities and Exchange Commission for filing criminal charges against Goldman Sachs, writing, "Finally. Finally. There may be some accountability on Wall Street." Sudbay acknowledged that "This is only a civil suit. Many of these big bankers should probably be in jail, so I'm holding out for criminal charges. But, the SEC showed it has some teeth."
Also in the vein of regulatory reform, Daily Kos's mcjoan notes that a letter from Sen. Mitch McConnell suggesting all Republican Senators would filibuster the Democrats' regulatory bill actually leaves some loopholes for Republicans who may end up signing on to the bill.
"It seems that not every Republican is ready to jump on the political suicide bandwagon of protecting the banksters," mcjoan writes, explaining that "Susan Collins signed on to McConnell's opposition letter, though the letter stops short of threatening a filibuster of the bill, and calls for more 'bipartisan' negotiations."
Hot Air's Ed Morrissey focused on Goldman's recent support of the Obama administration's financial reform plans, which the Washington Examiner's Timothy Carney today wrote "indicated that major financial 'reform' proposals will help Goldman's bottom line." Morrissey also cites the Wall Street Journal, which wrote of a stipulation in the bill in which the FDIC can guarantee corporate debts. The WSJ called the provision "an even more explicit taxpayer backstop than anything Fannie Mae and Freddie Mac enjoyed during the housing bubble, and one that's available to a virtually unlimited number of firms."
Morrissey made the opposite point of those claiming that the Goldman revelation emphasizes the need for the financial regulation reform legislation: "Hopefully, the Goldman Sachs charges will put a brighter light on this mainstreaming of federal bailouts," Morrissey wrote. "We don't need to codify bailout strategies; we need to end them. Financial reform should make an absolute end to the necessity of bailouts its primary goal. Instead, we're getting more "too big to fail" thinking, along with Congress' natural inclination to grant itself powers the Constitution never intended it to have," he continued.
National Review Online's Daniel Foster lampoons a rather brash email sent from one of the traders accused of selling desinted-to-fail derivatives to European banks. In a 2007 letter, Fabrice Tourre wrote: "Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!" Similarly, an email on February 11, 2007 to Tourre from the head of the GS&Co structured product correlation trading desk stated in part, "the cdo biz is dead we don't have a lot of time left."
"Anyone whose e-mails are subject to review by the SEC probably shouldn't say things like this," Foster quips.
— From NBC's Ali Weinberg