All That Glitters Is Not Goldman

In a move that seemed more Orwellian than any scheme Orwell ever conceived in his novels, the Republican animal farm in Washington came out against financial reform designed to regulate the very Wall Street firms the tea party movement is mad at to protect them from government control that would have prevented the necessary bailouts the Republicans profess to be against. The entire Senate Republican caucus - including Scott Brown, who would not be a senator today if Emily's List hadn't forced Martha Coakley on Massachusetts voters (thanks, ladies!) - came out against the financial reform legislation proposed by congressional Democrats because of a fund designed to pay back creditors of failed firms, calling it a bailout - even thought the only beneficiaries of such a fund would be investors screwed by the financial firm, not the firm itself. It seemed the Republicans had found some convoluted way to get people opposed to Wall Street excesses to oppose a bill designed to prevent future excesses.

Then the latest Goldman Sachs scandal broke.

The Securities and Exchange Commission is suing Goldman Sachs, alleging that the securities firm misled investors involved in a group of mortgages by saying that an objective party the group of mortgages underlying a series of credit default obligations when in fact a hedge fund run by one John Paulson had put together the mortgage package and bet against it, knowing it would fail and thus reaping a benefit.

Paulson - who is not related to former Goldman Sachs chairman and former Treasury Secretary Henry Paulson - is not a defendant in this indictment, but his underhanded effort to profit off other people's losses is only the latest in a series of Wild West-style deals that have rocked the brokerage houses and investment banks of the nation's financial system. By announcing this suit filing at the same time that the Senate Republican caucus announced its opposition to the financial reform bills pending in Congress, the Obama administration has put Mitch McConnell and company on the defensive, leading them to explain their curious and dubious reasons for their opposition at the same time people like John Paulson are getting rich off unfair financial practices.

Let's see Republican wortmeister Frank Luntz come up with a catchy phrase to help Republicans answer to this revolting development.

Story Updates

A few updates on stories I've commented on this week. . . .

Gay marriage appears to be in trouble in New Jersey. State Senate President Richard Codey (D-Essex) postponed a vote in the legislature's upper house when it became apparent that the measure did not have enough votes to pass. He sent it to the Assembly, "I understand their desire to make sure this receives the thorough attention it deserves and therefore I have agreed to postpone tomorrow's vote until further notice."

In other words, don't hold your breath. The Assembly will consider it January 4, the first Monday of the new year. A new Assembly takes office on January 12.

Meanwhile, in Washington, Republicans object to an provision of the financial regulatory reform bill that passed the House yesterday. A $150 billion fund would be set up to pay for the dissolution of companies deemed too big to run the risk of failure, which the G.O.P. equated to a perpetual bailout fund. Despite eagerness among Senate Democrats to pass a financial reform bill, key differences between Senate and House proposals may make it difficult to get a bill to President Obama's desk any time soon.

Democracy inaction. :-O