Everybody loves to hate Goldman Sachs. The newly released emails may further strengthen the Wall Street titan's vampire squid image. The charges on Goldman has weakened Wall Street and will clearly help the Obama administration push the financial regulations. A big gainer here, however, is the markets regulator, which had earlier failed its job.
The Securities and Exchange Commission, during 2007 and 2008, was largely seen as an incompetent government agency, which could not "regulate" the exotic derivatives and their risk levels that led to the economic crisis. Its failure in unraveling ponzi-king Bernie Madoff, despite repeated red flags, was a huge disgrace. Then there were other scams that broke later, including Allen Stanford's.
In the second half of 2009, the agency was back on its feet by grilling Galleon -- a fairly large hedge fund, which routinely traded on insider tips like most other influential hedge funds -- leading to a series of arrests. By investigating a Goldman director for insider trading and then charging a civil fraud case against the firm, the regulator has restored its own credibility.
After the dust settles on Goldman, an issue that needs to be addressed is the role of this agency, whose top executives, as we now learn, were watching porn as markets and the economy roiled. Instead of being a postmortems expert, the SEC should aim to efficiently regulate the markets real time. It should simply strive to be the "markets regulator."
Also read: Goldman Sachs: A GSE Hedge Fund At Its Best
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