Obama’s Newest Villain: Goldman Sachs

by Lurita Doan

The Obama Administration, once again, is in need of a villain to serve as a political piñata, and it is now clear that Goldman Sachs has been selected to fill the villain void.

Careful observers will note that Team Obama  is never content to argue the potential benefits of their increasingly dodgy legislation (e.g. Stimulus, Healthcare, Cap and Trade).  Obama is no fool; he understands that his wealth redistribution schemes, his desire to grow government, to provide new kickbacks to Unions, and to crush small business growth are so antithetical to most Americans that passage and support require that a villain be found that can be blamed for any and all possible evils.

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Already, we have seem Team Obama single out CEOs of automotive manufacturing corporations, financial industries, drug manufacturers, and health insurance companies for special, public floggings.  So, it should come as no surprise that, once again, President Obama has found a convenient, new villain, Goldman Sachs, to be publicly flogged and abused, to help drive support for the President’s complicated, new, financial regulations and bank oversight legislation.

Cynical minds must wonder at the timeliness of the SEC’s charges of fraud levied against Goldman Sachs . Consider the exhaustion of Congress after the recent healthcare reform struggle.  As a result, the legislation for financial reform, among other proposed reforms,  had been lagging and moving lethargically in the Senate.  With another election cycle approaching, legislators were finding it hard to rally interest in, yet another, bloated piece of legislation which did little to address the Wall Street abuses that initially caused the interest in the financial reform.

All 41 GOP senators were united, voicing strong language against a useless, toothless piece of legislation, and their objections began to garner support.  Even Obama apologist,  Paul Krugman, weighed in, saying that no reform was better than the lame legislation currently being considered.

But then, just as Financial reform was crawling on its belly, going off to die, the “crisis” with Goldman Sachs suddenly occurred.  How remarkably convenient!   Suddenly, the financial reform legislation has new life, and a pitchfork campaign to further demonize Goldman Sachs is in full gear.

As with  many of their previous efforts, there will likely be repercussions and unintended consequences that Team Obama may have underestimated.

First, Goldman executives are unlikely to go willingly and compliantly to the gallows as so many other executives have done during the last year.   It seems that  Goldman was caught off guard, for they have not yet rallied to launch an effective public opinion campaign to combat the attacks.

Perhaps, Goldman foolishly assumed that  their generous, political campaign contributions of  approximately $34 million dollars were sufficient insurance.   For example, in 2008, Goldman Sachs’ individuals and affiliates  made donations of approximately$105,000.00 to Senator Chris  Dodd and   approximately $55,000 to Senator Max Baucus to name but a few.  And, they donated a whopping  $994,000.00 just to Barack Obama during the last campaign cycle, perhaps thinking these generous donations would serve as ample protection money.  Wrong.

Will any Goldman employee be similarly so stupid as to ever contribute another penny to Team Obama?  At the same time, pity the poor Goldman shareholders who must be furious with management for being so conciliatory to Team Obama, participating in any number of glorified photo ops when summoned to the White House in order to help push a flawed economic agenda.

Goldman executives have been exposed as chumps, and there is a good likelihood that  a one day loss of 13% of shareholders’ value in Goldman will focus shareholder attention and ire as nothing has before.

Watch as Goldman shareholders start questioning the wisdom of nearly $1 million in campaign donations to Obama.  Others will question the process: how objective can the Administration, and members of Congress, be when they are so clearly beholden to the financial largesse of Goldman Sachs?

The Goldman Sachs case may become a primer for what happens when there is a too-close relationship between Wall Street and the White House and between Wall Street and Congress.   But, before all of that, it should become the primer for campaign donations and what not to do.

The $34million that Goldman spent on capaign donations for the 2008 election for protection didn’t work.  Trying to game the system with political donations, especially to a group that is hostile to the free market system, is a bad bet.

Expect the public flogging of Goldman Sachs to go on for some time.  It will only stop when the Obama Administration moves on to Immigration Reform or Cap-and Trade, when they will, once again, select a new villain to spur along bad legislation.


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Posted Apr 19th 2010 at 5:29 am in Congress, Featured Story, Financial Services, Healthcare, Obama, Politics, Regulation | 99 Comments