Porn buff probes Goldman

By Katie Kieffer

What does one Securities and Exchange Commision (SEC) staffer addicted to porn say to another SEC staffer addicted to porn when he realizes 33 probes have outed their on-the-job prurience?

“Thank goodness for Goldman Sachs!”

Clearly, the aforementioned is a joke. Sadly, my joke contains a spark of truth. Sen. Charles E. Grassley (R-Iowa) requested an investigation into the SEC, and 33 probes found that many SEC staffers – including 17 senior-level employees making six-figure incomes – used government equipment and time to indulge their addiction to porn. This video from ABC News explains more.

Lucky for the SEC, it can divert attention away from its own internal corruption by bringing a civil fraud case against Goldman Sachs and positioning itself as a “watchdog” federal agency for the American people.

TIME Magazine leads the “mainstream” or left-wing media in headline stories that portray Wall Street and Goldman Sachs as criminals, Americans as the victims and government regulators as the saviors. I have no doubt Michael Moore is feverishly working on a new action thriller starring the superhero, “SEC Man,” who ends Wall Street’s “corruption” with increased federal regulation.

Here is a brief summary of the SEC’s case against Goldman Sachs from CBS News:

In 2007, Goldman undertook to create a complex mortgage-backed security for one of its hedge fund clients, Paulson & Co. Paulson wanted to bet against the mortgages in the portfolio on the assumption that the subprime market would collapse, which it did, meaning billions in profits for the fund.

Goldman tapped ACA as a third party to select the mortgage assets that would be included in the security, know as a collateralized debt obligation. Paulson also made recommendations to ACA on which mortgages to include in the portfolio.

The SEC case hinges on two key allegations: that Goldman misled ACA by not disclosing Paulson’s intention to bet against the portfolio and that Goldman deceived other investors by not disclosing Paulson’s role in selecting the mortgages in the security.

New York Stock Exchange traders dealing in Goldman Sachs shares. Image credit: Reuters.

However, there are several key points that left-wing media giants like TIME Magazine consistently leave out of their attacks against Goldman Sachs:

President Clinton appointed former Goldman Sachs Co-Chairman, Robert Rubin, while President George W. Bush appointed former Goldman Sachs CEO, Henry Paulson, to the position of United States Secretary of the Treasury.

No doubt Goldman Sachs employed many unscrupulous traders who took advantage of collateralized debt obligations (CDOs), and sought to profit by betting against the housing market in 2007. But, were they not also riding the economic waves of loose home ownership policies implemented in the Clinton era? Perhaps the government and its regulatory agencies should look internally before they point the finger at Wall Street.

I’m merely pointing out some of these connections between Goldman Sachs and the government to ask why the SEC did not “uncover” Goldman Sachs’ alleged underhand dealings before now. Ironically, the SEC has filed this civil fraud case against Goldman Sachs at nearly the same time that the current administration wants to push forward Sen. Christopher Dodd’s “financial reform bill” to gain more regulatory control over Wall Street.

Senator Christopher Dodd endorses then-Senator Barack Obama in 2008 in Cleveland. Image credit: Rick Bowmer/Associated Press.

According to Investor’s Business Daily, this bill does not propose consistent financial reform rules, but it does require big firms to pay into a Treasury-controlled $50 billion “orderly liquidation fund” for rainy day bailouts.

Remember how Sen. Dodd worked hand-in-hand with the Treasury to include a loophole for AIG bonuses in the stimulus package, and then denied it? How credible is a “financial reform” bill authored by this politician?

As MarketWatch reported last week, an investigation by CNBC reveals that a senior executive at Paulson, Paolo Pellegrini, had informed ACA that Goldman Sachs planned to go short (not long, as the SEC’s case implies) investing in the CDO portfolio named Abacus.

CBS News reports, “ACA was actually responsible for selecting some of the mortgages that brought the portfolio’s value down.” This information could debunk the SEC’s case of fraud against Goldman, as it appears that the parties involved in the CDO either knew, or had reasonable access to, the nature of the risk they were entering.

How credible is a charge from an organization rife with corruption itself? How can the SEC, recently outed for porn-on-the-job problems at every level of the organization, throw the first stone at Goldman Sachs? How do we trust the SEC’s case as anything more than a distraction from public-sector corruption?

Does our already overtaxed, fined and regulated business community need more government regulation – by porn addicts and doubletalking politicians – or would America be better off embracing the free enterprise system of the Reagan era?

This entry was posted on Monday, April 26th, 2010 at 10:58 am and is filed under Economy, Law. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.