By Matt Hawes<\/p>\n
With Goldman Sachs in the news due to SEC complaints, we’re sure to hear even more about how President Obama is a crusader for the little guy against Wall Street interests.<\/p>\n
The Washington Examiner’s<\/em> Tim Carney thinks otherwise, and this recent article<\/a> lays out how Goldman Sachs is standing behind financial reform legislation.<\/p>\n The nation’s largest investment bank, famously cozy with top government officials in both parties, has tipped its hand to its shareholders, indicating that major financial “reform” proposals will help Goldman’s bottom line.<\/p>\n “Given that much of the financial contagion was fueled by uncertainty about counterparties’ balance sheets,” Goldman Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in a letter at the beginning of the annual report<\/a>, “we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions.”…<\/p>\n If you take Blankfein and Cohn’s word, stricter federal liquidity and capital requirements would amount to regulators doing Goldman’s work for Goldman. They want Uncle Sam to mitigate “uncertainty about counterparties’ balance sheets.” That is, they want the government to reduce the risk that Goldman’s debtors or insurers will run into trouble.<\/p>\n This is an odd function of government: Making Goldman Sachs feel safer in its business dealings….<\/p>\n Also at play in Goldman’s call for stricter capital requirements and standardization of derivatives: the confidence game. Much of America has lost some faith in the markets. Regular investors are still a bit scared of the stock market. Financial firms are lending less. Goldman thrives on free-flowing capital.<\/p>\n If Obama signs a financial “reform” and declares that it now safe to enter the waters of the stock market, that’s good news for Goldman.<\/p>\n Restoring public confidence in the markets should be the job of those who profit from your investing in the market — it should not be the job of the federal government….<\/p>\n<\/blockquote>\n\n