Regulatory Capture — Exhibit A
Goldman Sachs made out on the housing bubble twice: it f—ed the investors who bought their horsesh-t CDO’s by betting against its own crappy products, then it turned around and f—ed the taxpayer by making him pay off those same bets.
–Matt Taibbi, “The Great American Bubble Machine”; Rolling Stone (July 9-23, 2009)
Too subtle for you? Try this one, from Taibbi’s blog:
Imagine a meat company that bred ten billion rats, fattened them on trash and sewage, ground their bodies into chuck, and then sold it all as grade-A ground beef to McDonald’s and Burger King, right under the noses of the USDA. [Securitized subprime mortgages] are exactly the same thing, only with debt instead of food. We’re eating it, they’re counting the money.
Looking for a culprit for today’s financial mess? (plus today’s oil price roller coaster, plus the ’90’s Internet stock bubble, plus AIG’s black hole for taxpayer dollars — plus a lot more).
Taibbi makes a damning — and compelling — case that Wall Street’s fingerprints — and specifically, Goldman Sachs’ –are everywhere.
The piece reads like the stuff of conspiracy novels, which even Taibbi acknowledges at the end.
However, much of what he alleges — the players, their business practices, the regulations they lobbied for (and thwarted), who profited — is a matter of public record.
The more I see and read, the more I’m convinced that slow, creeping regulatory capture is the meta-problem at the root of all our other financial problems. Taibbi’s piece is Exhibit A.
Read it, and decide for yourself.