The SEC's civil suit against Goldman Sachs is all over the news today. And for good reason. Of all the big banks it was Goldman that made it through the financial meltdown with the littlest difficulty... Unless of course you count making a permanent enemy out of Matt Taibbi, who has gone after Goldman hard (again for good reason). However, I think the most insightful thing I've read about the whole SEC suit comes from Heidi Heidi Moore in the Big Money
But wait. By focusing on Goldman, the SEC completely buried the lede: Paulson & Co. was the giant hedge fund that allegedly created and shorted the toxic mortgage bundles.
If the SEC's complaint holds up, that's even bigger news than Goldman's problems. You'll remember Paulson & Co. from absolutely everywhere on TV, in newspapers, and the media, in which the fund has been referred to exclusively in heroic terms for being among the first to see and bet against the subprime crash. The fund, run by John Paulson, made more money than anyone else on the subprime housing crash—the funds were up about $15 billion in 2007, the Wall Street Journal reported at the time. Paulson himself profited richly, with around $3.7 billion in personal profit. Paulson & Co. has grown to $29 billion under management and a Canadian firm even created a special product allowing regular investors like you and me to make the same bets Paulson makes.
Financial regulatory reform is supposed to hit the floor of the Senate on Monday (though that might change with a just released letter signed by all 41 Republican Senators opposing the regulations - bad timing guys?). I hope that reform is not just focused on a few bad banks. Americans love villains. They are easy to pinpoint and easy to hate. Bernie Madoff was (and probably still is) a scumbag who screwed a lot of people out of their money. A lot of banks did worse though, and because it is easier to hit (both figuratively and literally), understand, and blame a human being than it is a company, a lot of rage generated by banks was focused on Bernie. Now that the American Government is focused on the banks. I hope they take off their blinders. Because - as everyone who watches House knows - you can replace a liver or a heart, but if the system is infected that's only going to buy you until the next commercial break.