Those watching the Goldman Sachs congressional hearing on CSPAN Tuesday may have noticed that it was reminiscent of a scene out of the Godfather, where the big bosses shook down the under bosses in a meeting of financial powerbrokers. Although it was pitched as an investigation, it resembled a great gladiator spectacle with the Goldman Sachs executives starring as gladiators while the lions of the Senate ate them alive and provided little chance for them to do much else besides state vehement denials
The Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin (D) of Michigan spearheaded the interrogations as the senate panel stood down Goldman Sachs CEO Lloyd Blankfein, and other Goldman officials, calling attention to vulgarity laden e-mails that referred to bad securities that Goldman Sachs decided to sell short while their analysts continued to promote them to their customers to buy. This allegedly occurred just before the financial markets eviscerated in 2008. The securities held the volatile mortgages of sub prime loans, and the senators accused the firm of purposely packaging these securities called derivatives, to make money on short sales while the markets were collapsing around them.
The Goldman Sachs executives, constantly under fire, maintained their innocence and reminded the Senate that the market collapsed because of long term lending practices and not because of short term profit taking, but it was a tough sell as the paper trail of e-mails seemed to contradict much of the testimony of the executives.
The hearing appeared to be a showcase of political power more than a fact finding effort on the housing crash, and was mysteriously scheduled the same time that Congress was trying to pass a sweeping 1700 page financial regulatory package and subsequently pass all blame for the crash on Wall Street firms before the November elections.
Although there is much evidence of wrongdoing by Wall Street executives, the irony of the hearings is that it is much like culprits prosecuting other culprits, as broader analysis of the financial crash almost two years ago reveals wide spread policy mismanagement by the Federal Reserve Board, congressional mandates over the years attempting to manipulate the markets, and executive branch agencies strict enforcement of the policies were as much to blame as Wall Street recklessness and banking strategies, yet not a single audit of congressional wrongdoings has taken place or probably ever will. As usual, grandstanding will triumph over solutions as long as Washington is in charge of the economy. Once again, politics has vanquished all hopes of making a speedy recovery of economic growth in America.