I agree with Fareed Zakaria. The Goldman scandal is nothing more than an emotionally clouded, knee-jerk reaction. In other words, more motivated by politics than by a long-term, well-thought-out plan to reform finance. But, then again, what else is new? Let the cycle take its course…
Let’s be clear: all the facts are not publicly available, and evidence may be presented in court that documents specific misrepresentations and false claims, proving Goldman Sachs’s guilt. But much of the public debate has struck me as guided more by emotion than careful analysis. Even if some Wall Street practices strike many people as dodgy, even unethical, that’s not the same as illegal. I want financial reform, but I also want our system of government to be characterized by fair play and equal justice—even for people making $10 million bonuses. [link]
Let’s hope, that at the end of it, we have more regulation, and in the right places. If it does happen though, it might be too little, too late. Right now though, it’s too early to tell.
There are, however, two possible advantages of the whole Goldman scandal: First, is the exertion of power by the SEC and the regulators. Maybe they will wake up and start taking responsibility, rather than sitting around watching porn. Second, just the act of going through the motions of prosecuting them (even if unsuccessful) might signal that no institution is Too Big To Fail, and will force the smaller banks to clean up their acts.
Again, too early to tell the outcome.