What an interesting phenomenon we have. The tittytop of the pyramid shines like Liberty’s torch while the rest of it remains mired in fecal matter. Profits in the financial sector soar even as common folk are turned out of their homes in record numbers.
Of course, their profits were made possible by a massive infusion of taxpayer dollars. (Goldman Sachs says it’s nobody’s business how much money they make. Free enterprise, you know.)
According to Paul Krugman the Obama administration is shocked! Shocked! And pissed that after all the help the government gave them, the financial industry is fighting tooth and nail against anything that resembles reform.
Oh my! What did Obama and his minions expect? It was when the financial industry had its back against the wall and was on the verge of collapse that the issue of reform should have come up. That’s when the administration should have grabbed the industry by the short hairs and laid down terms and conditions for bailing them out, terms and conditions being reform, baby, reform!
But they didn’t, and now they feel it’s too late to do anything about it.
The administration still has a cudgel with which to beat the financial industry into submission—the indictment.
Take Goldman Sachs, for example. Goldman has been racking up obscene profits with their computerized front running.
Front running is an illegal activity that works like this. Let’s say I call my broker and tell him that I was to purchase $100 million worth of stock in ABC Corp. My broker knows that as soon as I place the order, the price of the stock is going to go up So, he sets my $100 million aside and places and order for $100 million with his own money. The price of the stock goes up one or two cents per share. Then he places another order with my money, and the price goes up again, whereupon he sells his $100 million and makes a tidy little profit. Do it over and over, and you make humungous profits.
Goldman has taken this process and automated it using powerful computers and sophisticated programs that can detect a large order and place their own nanoseconds before the original order is placed. The computers, conveniently located next to the NYSE have poured billions into Goldman’s coffers.
Now, if Obama has any moxie, he’d order Attorney General Eric Holder to appoint a special prosecutor to look into Goldman’s illegal front running, and, while he’s at it, do a sweeping and thorough probe into the financial industry as a whole. (This is a job Rudy was born for.)
There’s nothing like a string of CEOs in orange jump suits to ease passage of the necessary reforms.
Of course, that assumes that Obama has the moxie.