The Federal Reserve - Lapdog to Goldman Sachs

Xelebes said:

Isn't this a bit like the bit on property rights? Of course corruption is doing a poor job, because corruption is by default a demonstration of doing a poor job. However, it must be important to note on which poor job is being refered to. The question of asking whether or not the Federal Reserve did a good job in responding to the crisis should not be confused with the question of whether or not there is corruption in the Federal Reserve that needs to be addressed. They are two distinct questions.

Click to expand...

Well, I think it did a poor job in handling the crisis, as well. Special treatment was afforded some firms, particularly Goldman Sachs. And that special treatment was taking place before the crisis (which is one of the reasons Goldman Sachs was in potentially dire straits) and has continued since.

And yeah, corruption is always a bad job.

robeiae said:

Well, I think it did a poor job in handling the crisis, as well. Special treatment was afforded some firms, particularly Goldman Sachs. And that special treatment was taking place before the crisis (which is one of the reasons Goldman Sachs was in potentially dire straits) and has continued since.

And yeah, corruption is always a bad job.

Click to expand...

And see, that is not the question. Giving special treatment due to connections is not a bad job if the entire criterion for doing a good job for the question being asked is whether or not it responded appropriately to the crisis. Which it largely did. That all said, the corruption does need to be addressed, but we need to be focused on the corruption itself and see if and what, like a listing ship that weathered a storm, holes need to be patched or balances need to be added.

robeiae said:

And the decision of the New York Fed to grant "primary dealer" status to MF Global? Do you have an issue with this?

Click to expand...

I guess we'll never find out.

But seriously, I think the case of MF Global is a pretty strong example of corruption, and by extension, not doing a good job. The special treatment Corzine got isn't supposed to happen. And it's sort of amusing to me that this is so difficult for some to admit, even though it seems obvious. After all, no one wants to actually argue the reverse, that there's no problem with the way MF Global was handled and that there's nothing to criticize, in that regard.

I'm not arguing that MF Global was handled appropriately - it wasn't.

But the essence of the OP's argument is basically, "OMG, some of these guys used to work together at the same company. That's terrible!"

That, by itself, is evidence of nothing.

Xelebes said:

And see, that is not the question. Giving special treatment due to connections is not a bad job if the entire criterion for doing a good job for the question being asked is whether or not it responded appropriately to the crisis. Which it largely did.

Click to expand...

Pardon, but no it did not imo. And part of the reason why it did not is that it covered the collective asses of Goldman Sachs, JP Morgan, and so on. Wrongly. Unfairly. Inappropriately.

You can disagree of course, but that's just a different opinion.

Still, through it all runs the obvious special treatment of certain individuals and the institutions they work for/control. And Goldman Sachs--and its alumni--is at the top of that list.

I would humbly suggest that if Corzine had taken over Bear Stearns in 2006 or so, the latter would have been protected by the New York Fed and would still be in business today (well okay, Corzine might have sunk it later).

clintl said:

But the essence of the OP's argument is basically, "OMG, some of these guys used to work together at the same company. That's terrible!"

Click to expand...

No it's not.

Goldman Sachs should go down the path of Bear-Stearns, IMO. I don't think anyone here is arguing in favor of this horrid example of gigantic private corporate malfeasance. Or that the relevant regulatory authorities have done the job they are supposed to do in regards to GS.

But I still don't have from anybody a sensible answer about what should be done, other than "smaller government", or some iteration thereof.

caw

Don said:

Metaphorically, the evil scientists in Mordor on the Potomac should not be allowed to build monsters they won't bother to control and set them free to ravage the population, then claim that their monsters' behaviors aren't their fault. And the population should quit pretending that the monsters sprung unaided from the soil like any other natural creature.

Click to expand...

So we're back to my suggestion?

kuwisdelu said:

I discussed it briefly. I said get rid of Wall Street.

Click to expand...