Gambling at Goldman? Shocked, Shocked!

bankers

“I’m shocked, shocked to find that gambling is going on in here!” Captain Renault famously exclaims in Casablanca, only then to be secretly presented with a bribe from the winnings.  Why did this scene come to mind when I heard about the shenanigans of Goldman Sachs this past week?

It did so, I suspect, because few are any more shocked than Renault, whatever their protestations to the contrary.  So Goldman bundled together dodgy portfolios and then bet against them?  So it had the Ratings Agencies in its pocket, along with the Triple A ratings they gave to worthless securities?  So it is now once again posting huge profits?  So authorities are shocked, shocked?  We’ve heard this record before.

Actually, there’s something fresh about the suit that is being brought by the Securities and Exchange Commission against Goldman.  Here’s a column at 538 noting that Goldman is being charged, simply, with lying to its investors. That’s something we can all understand.

What we are seeing, a bit more clearly than usual, is that the Wall Street firms are giant casinos, playing their investors for suckers. In gambling, of course, the House always wins.  “Are you sure this place is honest?” asks a customer after seeing Rick’s roulette wheel acting a little funny.  “Honest?” Carl, the flustered manager, replies.  “As honest as the day is long!” And then, I believe, makes the sign of the cross.

Another classic that will help us sort through this sordid mess is John Steinbeck’s Grapes of Wrath.  Actually, the idea of big eastern banks owning the mortgage of an Oklahoma farm sounds a bit quaint now.  Today the banks would have persuaded someone else to invest in the future real estate prospects of the Joads’ farm and then, knowing that excessive cotton farming and drought conditions have made the land all but worthless, allowed a billionaire to come along, package together all such farm mortgages, and bet against them.

Banks, Steinback tells us, “breathe profits; they eat the interest on money. If they don’t get it, they die the way you die without air, without side-meat.” 

So who do we go after?  According to Steinbeck, there’s no one to get.  Or at least that’s what the tenant farmer is told by the bulldozer operator who is demolishing his house:

“Who gave you orders? I’ll go after him. He’s the one to kill.”
“You’re wrong. He got his orders from the bank. The bank told him, ‘Clear those people out or it’s your job.’ ”
“Well, there’s a president of the bank. There’s a board of directors. I’ll fill up the magazine of the rifle and go into the bank.”
The driver said, “Fellow was telling me the bank gets orders from the East. The orders were, ‘Make the land show profit or we’ll close you up.’ ”
“But where does it stop? Who can we shoot? I don’t aim to starve to death before I kill the man that’s starving me.”
“I don’t know. Maybe there’s nobody to shoot. Maybe the thing isn’t men at all. Maybe, like you said, the property’s doing it. Anyway I told you my orders.”

Framed this way, no one sounds responsible, which means that everyone escapes accountability.  It appears that Senator Republican Leader Mitch McConnell, notorious for his opposition to financial regulation, is still trying to keep things that way.  For a while he was arguing that Democratic attempts to regulate the banks were in fact promises to bail out the banks should they ever get in trouble again. A fund for liquidating failed banks paid for by the banks was described as a bailout fund paid for by the taxpayers–a ploy so cynical that even some in his own party were embarrassed.   

Which means that we probably need to shift from Grapes of Wrath to George Orwell’s 1984.   After all, there we learn that things are always the opposite of what they seem to be: War is really Peace, Freedom is really Slavery, Ignorance is really Strength.

The citizenry in 1984 are either cowed or tortured into believing.  We don’t have their excuse and need to demand that Congress take strong action.

If you want to smile a little over the situation, incidentally, here’s a song about the Goldman Sachs transactions, produced by NPR as a 1950’s or 1960’s musical (let’s say The Producers).  I was alerted to it by Frank Rich of the New York Times.

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