- The Washington Times - Tuesday, April 27, 2010

ANALYSIS/OPINION:

The Securities and Exchange Commission’s recent civil fraud charges against Goldman Sachs, the left’s favorite bank, are more than a little suspect - but not for the reasons you might expect.

It’s unclear what will happen with the case, involving an exotic investment gone bad, but at the same time, it’s clear that the unveiling of the civil action just happened to coincide with President Obama’s declaration of war on Wall Street.

There are other unusual “coincidences,” too.

Evidence has surfaced that as Goldman’s attorneys tried to cut a deal with the SEC over the potential charges, Goldman Chief Executive Lloyd Blankfein visited the Obama White House at least four times.

The decision whether to sue the bank was so controversial within the SEC that members split 3 to 2 on filing the lawsuit. Chairman Mary Schapiro, an Obama appointee, and the two Democrats on the commission voted yes, while the two Republicans voted no.

Add to this that Goldman just hired former Obama White House counsel Gregory B. Craig, the lawyer who helped President Clinton send 6-year-old Elian Gonzalez back to communist Cuba a decade ago.

Then factor in that Goldman is a creature of the political left and a natural ally of the Democratic Party. It is a big-government lovers’ bank that despises the unbridled competition of laissez-faire capitalism. Akin to Fannie Mae in that it generates private profits but forces taxpayers to cover its losses, Goldman loves bailouts and feeding at the public trough.

Former Goldman employees - including Henry Paulson, President George W. Bush’s liberal, tree-hugging Treasury secretary - designed the $700-billion-plus “mother of all bailouts” in 2008 and then promptly steered $10 billion from the Troubled Asset Relief Program to the bank. Goldman veteran Neel Kashkari oversaw the doling out of bailout funds.

Goldman funds the left almost exclusively, so, as the left likes to say, follow the money.

According to the Center for Responsive Politics, Goldman’s employees gave the president $994,795 during the last election cycle, making the employees of the bank the Obama campaign’s largest private-sector financial backer. The nearly $1 million sum is “more than the combined Goldman haul of every Republican running for president, Senate and the House,” according to one report.

In the current election cycle, Goldman’s political action committee and employees have lavished $693,675 on federal candidates and parties, with roughly 70 percent of the total sum going to Democrats.

Goldman has an unfortunate history of caving in to left-wing pressure groups, such as Jesse Jackson’s Citizenship Education Fund and the extremist Rainforest Action Network. Its corporate foundation’s donations go exclusively to the left, according to a study that appeared in the August 2006 issue of the Capital Research Center’s newsletter, Foundation Watch.

In 2004, the Goldman Sachs Foundation shelled out $35.5 million to liberal nonprofit groups, mostly to environmental organizations such as the Nature Conservancy and the Wildlife Conservation Society. There were no recorded contributions to conservative or free-market public-policy organizations. None.

Is it possible that the highly profitable, politically connected Wall Street insiders’ bank is willingly taking a hit from a political ally in order to reap untold benefits from new legislation? Such collusion is hardly beyond the realm of possibility.

Goldman stands to come out ahead if President Obama’s proposed new financial regulatory superagency is created. The bank thrives on complexity and backroom dealing and profits from regulation that puts its smaller competitors at a disadvantage.

It’s the same principle as when Wal-Mart supports increases in the minimum wage. Wal-Mart pays well above the legal minimums already, so it costs nothing to support mandatory increases that have the effect of snuffing out smaller competitors such as mom-and-pop retailers.

The House version of the financial measure would create a permanent $4 trillion bailout fund; the Senate version has no dollar limit. Both would make the fleecing of the American taxpayer official government policy.

The legislation also would limit consumer choice, enrich trial lawyers by banning arbitration agreements, grant the government unprecedented power to seize financial firms and do nothing to reform the housing-bubble-creating Fannie Mae and Freddie Mac.

Meanwhile, Goldman supports mandatory government limits on carbon emissions and probably would reap huge profits from a cap-and-trade emissions-control policy. In 2006, Goldman paid $23 million to purchase a 10 percent interest in the Chicago Climate Exchange, the only U.S. exchange that conducts trading in carbon offsets.

Experts say the U.S. carbon-emissions market could be worth $1 trillion annually by 2020, but trading in carbon offsets won’t generate much profit unless the federal government forces corporations to participate in the trading scheme. It’s in the interests of Goldman, which as of 2007 had committed at least $1 billion to “carbon assets” alternative-energy projects, to lobby hard for carbon controls.

Needless to say, if Goldman loses the SEC suit, it can afford to pay hefty fines. To Goldman, this is just a cost of doing business.

With high-profile Goldman serving as villain, the president might get the public relations boost he needs to ram his unneeded so-called Wall Street reforms through Congress. What’s a little play fight between friends?

Is this a case of the Obama administration hanging the capitalists with the rope the capitalists sold them, or is there more here than meets the eye?

Terrence Scanlon is president of Capital Research Center, a think tank that studies the politics of philanthropy.

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