Robert Stein 1924-2014

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Monday, April 26, 2010

The Guilty of Goldman and Abul Ghraib

One constant in outrageous behavior by American organizations is that only underlings are punished. Just as top people escaped responsibility in the Abu Ghraib tortures, the only culprit named so far in the massive Goldman Sachs fraud is a 31-year-old trader named Fabrice Tourre, who is on leave and facing Congressional grilling tomorrow.

Even after filing civil charges, the SEC, according to a former government regulator, has not "kicked into gear fully, or they'd be naming [Chairman Lloyd] Blankfein and other senior leaders of Goldman...they've only gone after a junior person. And if they were really in gear, there would be criminal charges here."

At the end of the day in the Abu Ghraib disgrace, Don Rumsfeld and Dick Cheney were embarrassed, the general of the military prison was demoted to colonel, but it was only low-ranking officers and soldiers who were put on trial and punished.

Rumseld said later he had twice offered to resign but that President Bush had refused to let him until after an election debacle two years later, and Jay Bybee, author of a Justice Department memo defining torture down, was named a Federal judge.

Now Blankfein, Goldman's leader, is deploying an army of lawyers and lobbyists to defiantly defend his firm, admitting only that it "participated in things that were clearly wrong and have reason to regret."

As Congress closes in on a financial regulation bill, the only certainty is that, whatever is put in place to curb excesses of greed that have damaged so many investors, those in charge will face no worse fate than taking their hundreds of millions in ill-gotten bonuses and retiring to a gilded life of leisure.

"Crime doesn't pay" is an old American aphorism. In the 21st century, it does--very well.

Update: David Brooks describes Goldman Sachs' choices in the Congressional hearings: "The firm can claim to be dumb but decent, like the rest of the establishment, and emphasize the times it lost money. Or it can present itself as smart and sleazy, and emphasize the times it made money at the expense of its clients. Goldman seems to have chosen dumb but decent, which is probably the smart narrative to get back in the establishment’s good graces, even if it is less accurate."

And a lot safer for its top brass.

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