CONGRESSIONAL Republicans have concluded that screaming foul about the banking bailout and blocking financial reform is a clever strategy for the fall elections.
This approach ignores some pretty basic history: that the banks imploded while Republicans held Congress and the White House; that President George W Bush started the rescue; that many Republicans voted for the bailouts; and that they stabilised a financial system that was perilously close to collapse.
More important, it’s a distraction from the very real reasons the nation needs to tighten the rules governing finance. They were on vivid display in a hearing room just down the hall from the Senate floor where Republicans voted the day before to block debate on a Democratic financial reform bill.
Current and former Goldman Sachs officials tried to defend their practice of trading incomprehensible mortgage-based investments of little demonstrable economic value and enormous destructive capacity. Instead, they underscored why much of this work should be curtailed.
The Securities and Exchange Commission has accused Goldman of defrauding clients by selling them a complex instrument without telling them it was designed so another client could bet against it. Testifying before the Senate subcommittee on investigations, Goldman executives denied withholding information. They insisted there was nothing wrong with selling mortgage-backed products while placing bets against them.