Last week, the Securities and Exchange Commission brought civil fraud charges against Wall Street investment bank Goldman Sachs. The charges arise from the bank marketing collateralized debt obligations (CDOs) to customers without disclosing that a major hedge fund investor, and Goldman client, John Paulson had made a series of bets against the securities. (The SEC did not announce any charges against Mr. Paulson.)
The announcement of the charges comes at a volatile time for the financial industry. With the Senate set to take up its version of a sweeping revamp of the financial services industry, the allegations against Goldman are certain to have a prominent place in the debate.
Appearing this afternoon on Chicago’s WLS radio station, Illinois Senator Dick Durbin seemed downright excited about the allegations:
The timing was perfect. We’re about to take up the financial regulatory reform bill. The banks are saying Oh, this is totally unnecessary. We have everything worked out. Now we find out the Securities and Exchange Commission has stepped up and charged Goldman Sachs, one of the biggest, with involvement in some trading that really turns out to be very suspicious.
Ah yes, the “timing was perfect.”
Odd how that happens in DC, from time to time. According to the New York Post, Barclay’s banking analyst Roger Freeman came out and stated what is on a lot of Wall Street minds this weekend:
Barclays banking analyst Roger Freeman comes right out and blasts the SEC effort as “a well-timed, and perhaps not coincidental, effort to sway some on-the-fence Republicans” to get tough on financial reform.
“Targeting GS, given the flurry of anti-Wall Street press that has centered around that firm, offers the publicity that the administration needs at this critical juncture,” Freeman says in a note to clients today.
Big Government has detailed many of the problems with the current financial “reform” proposal. (See here, here and here, for example.) As the bill’s details become known and understood, even moderate GOP Senators like Scott Brown and Susan Collins had recently announced their opposition.
Of course, that opposition was announced before the current allegations were announced.
Indeed, the “timing was perfect.”
Update: Erick Erickson at Redstate has more on the suspicious timing of the charges. Within minutes of the announcement of the charge, all parts of the Democrat Industrial Complex were able to move quickly to capitalize on the allegations. The New York Times and Organizing for America, respectively had full coverage of the charges and a sophisticated e-mail action alert based on them. Giving the benefit of the doubt that the independent agency hadn’t tipped off these folks about the charges, everyone involved should get little plaques for most productive workers of the year!
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