It's nice that some official government entity has finally realized that pure, unadulterated fraud was at the heart of this mess we experienced. Yes, you can blame all kinds of government interference in the market for sparking it - artificially low interest rates, relaxation of margin limits, encouragement of minority home ownership all played a role - and of course lax regulation generally - but had all contracts been honestly entered into, there would have been no bubble and no crash.
But only a civil suit, from the SEC? What the hell's our crack A.G. doing? Maybe with all the beefed up enforcement in the Civil Rights division he really can't afford to dedicate the resources necessary to bring criminal complaints. Yet it's really not very complicated - either you were honest about what you were selling, or you weren't. If you know the product you are selling is fundamentally flawed, and you don't disclose that, you're probably guilty of fraud.
But by going after the firms, rather than the individuals, the government is already conceding ground. Firms have massive resources to fight any charges. Plus, when you prosecute a firm, you're punishing the innocent as well as the guilty. But if Justice were to go after the individuals involved they'd have to fund their own defense, and lots of them would start talking. It's the old drill - charge-upon-charge are piled on until the accused is looking at about 335 years in total. The U.S. Government has been screwing people this way for years - now that we've had a deep and painful recession brought on by fraud, the DOJ is suddenly getting religion? Bullshit.
Never has a "witch hunt" been more justified. We need heads on poles, looting and burning of estates. Many of the bad guys are no doubt already broke, particularly the street hustlers who were on the front lines originating the crap, but many no doubt have tales to tell and names to name - particularly in the Spanish speaking enclaves - come on Mr. A.G. Holder, you must have lots of Hispanic investigators working in that diverse department of yours!
But my theory is that Obama has no interest in pursuing individual fraud charges, as that would undercut his push for financial reform. After all, if not just existing laws but the common law
can be brought to bear in prosecuting these shenanigans, then why do we need some new regulations? The left sees this crisis as an opportunity to more organically insinuate the government into the corporate power structure, so that the money these firms control can be co-opted to support the progressive agenda. Mere criminal complaints, grounded in the common law, is hardly the path to revolution.
Of course if Obama were
to initiate a wave of prosecutions Republicans would howl in protest accusing him of Stalinism (or more likely and more stupidly "fascism") because, for all the Wall St. money that went to Obama, Wall St is still the Republicans' bread-and-butter. I wonder though if Obama will notice the joy that this little civil action against Goldman - however puny it might be in the long run - has brought to his nemeses throughout the vast middle of the nation - the Tea-Partiers, more or less? If so - if it occurs to Obama that he can actually make real friends among middle Americans by fighting for them rather than running through a check-list of progressive causes - the Republicans are toast.