Wednesday, December 30, 2009

Being Goldman Sachs XIV

Witnessing what is reported here up close in a very successful real estate broker friend's office ten years ago, I have long said that if the government wouldn't have backed home ownership through "no doc" loans through Fannie Mae and Freddie Mac and if banks and mortgage companies would not have given such loans, the American public would not have been able to receive these mortgages turned bundled derivatives by the like of Goldman Sachs, where it hedged on its investment, gaining on the front end in fees and the back end in bailout billions, the financial crisis would not have occurred.

While Goldman Sachs may not have been obligated to "disclose its secret bets to its investors," the American people should not have been obligated to secure these bets to the tune of billions. Here we have an investment bank turned commercial bank hedging as the former and receiving FDIC protection without the deposits of the American people. The FDIC is supposed to secure deposits not risky investments. To think that the Financial Times bestowed Goldman Sachs CEO Lloyd Blankfein with the "Person of the Year" is shameful.

May the new year bring real banking reform.

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