Tuesday, April 27, 2010

Sense and Nonsense at the Goldman Hearings

Posted by Jeff Lipshaw

Thoughts in no particular order:

1.  Ben Heineman, the former Senior V.P. and General Counsel of General Electric has some thoughtful comments on the difference between legal and right (at the Harvard Forum on Corporate Governance and Financial Regulation), and how Goldman Sachs ought to be approaching that issue from a public relations standpoint.  I'm not even sure the Goldman Sachs market making was wrong, much less illegal, but I agree with Ben that there's no mileage at this point in Wall Street taking the "millions for defense but not a penny for regulation" posture.

2.  As many readers know, I was a big firm, big case litigator for the first ten years of my career, and as I mentioned to someone in the last few days, when I see somebody walking down the street with a Redweld file or a big litigation briefcase, or a I see a deposition transcript, my stomach (21 years later) still turns over.  That's what these hearings do to me as well.  I'm from Michigan, and I've known Carl Levin and his extended family for years (his wife Barbara was an associate in my law firm the summer of 1978 when I was a summer clerk and he was still the president of the Detroit City Council and running for the Senate against Marvin Esch), and I think he's a smart good guy with tons of menschiness.  But he is a politician through and through, and there's no winning and, indeed, very little reason, when politicians are doing the front of the house rather than the backroom stuff.  The Congress has no basis for moral superiority if we are really going to start looking at how the sausages of the markets and legislation get made.  I was an industry representative at a meeting the automotive suppliers held with the two Michigan senators back in about 1998, and I remember Senator Levin telling the group why he wouldn't support NAFTA:  it was the usual "good is the enemy of the perfect" rationalization.  Said he, when everybody is a free trader, I'll support being a free trader.  I remember thinking, "wait a minute, Senator, would you take the same position on affirmative action?  That is, preferences are vile, and so I'll simply wait until everybody is colorblind."  No, you can't win by reasoned argument or facts with people who buy ink by the barrel, and you can't win with senators who want to create sound bites for their constituencies.

3.  Why does the conversation between the Senate Committee and the Goldman men (see next comment) remind me of the bumper sticker "My Kid Beat Up Your Honor Student"?

4.  Why are all of the Goldman witnesses young to middle-aged trim athletic looking white men?

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