I decided to start this thread to vent some of my angst regarding the current investigation into the financial practices that the market makers at Goldman Sachs engaged in during the recent economic collapse. In the following paragraphs I will raise two points (out of the countless many that popped in my head while watching the trials) for discussion. I may raise more points as time goes on but it is getting late here in the Southeast and I have a busy day ahead of me. Now on to my rant.

First off let me say that there is no love lost here for those who are currently being grilled by the senate sub committee. While I do believe that the market makers in question made some ethical choices that are, to say the least in the gray area, they were only doing their job; make money for their employer. In the financial world that they live, risk is a part of the game and those that manage it best come out on top. After all, do you blame the shark for eating the slow and injured seal?

Point#1: Disclosure. Many of the senators partaking in this witch hunt repeatedly tried to nail down the suspects on whether or not they fully disclosed their position on the trades that they were making (when was the last time you saw a politician answer a tough and stick question in a straight forward manor?). I liken this to a game of poker. When you bluff someone repetitively only to sucker them into a losing hand, do you tell them what your plan is? Of course not, is is their job to protect their money and sniff you out. It is the same case here. I thought that is what the many (probably thousands) of employees that work for the government regulatory agencies were supposed to be doing, but as it turns out they would rather watch ****. Which leads me to my next point, regulation.

Point#2: Regulation. While it is currently acceptable (in the public's eye) to chastise those that profited from the economic collapse, they were only doing what they were programed to do. In my mind the real fault lies with those that were supposed to keep these guys in check, the overseers. First lets start at the root of the problem (which by the way was also one of, if not the, major contributor to the Great Depression) cheap and easy to borrow money. Some time back the government, in it's infinite wisdom, decided to lower the standards on those applying for home loans.

Those in office contested that everyone deserves to live the American dream and therefore deserves a big fat house, even if they could not afford it. Well this opened the flood gates. Seeing the opportunity to make money, those with business savvy did what any red blooded capitalist would do; try to get in on the action. Mortgage lending companies started to pop up everywhere offering no money down loans with cute, fancy names like ARMS and variable rate ARMS. And worst of all, they didn't even have to prove how much they made or even if they had a job. This practice continued for the better part of a decade, some may argue that it was even longer, with not a word from the ones paid to oversee these practices.

Now that there was an over abundant supply of mortgages, it was the market makers job to move them. They did this by packaging them up into funds that they could then sell off to others and make a profit in the process, that is a market makers job; to make the market.

Some have postured that those who were orchestrating these deals, and the overall market for that matter, would regulate themselves. That is like hiring a pedophile to run your day care and then being surprised that the children are being molested (I am not trying to make light of crimes against children, merely illustrating a point). Whether you want to believe it or not, greed is a part of the game. With no one keeping these guys in check, they had the run of the town. So should we be blaming the wolf of the rancher who left the sheep unattended in the field overnight?

Point being it is the regulators dropped the ball on this one and more regulation is not the answer. What good will more regulation do if they couldn't see this coming? Granted, lots of people and some of the brightest minds on Wall Street didn't see it coming but there is an old saying that nothing lasts forever.

DDT