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What do you think the regulators should ask Goldman Sachs?
Tuesday, April 27, 2010
Questions for Goldman
In the same vein as those questions for financial reformers, CNN gives us questions for Goldman Sachs. Personally, I don't really like the first two questions. "Is this the work of a single employee?" I'm not sure what that question is supposed to accomplish. I suppose if this was all one person's "fault" we could throw them in jail and swallow the key and all feel better, but I think we already knew the problems are systematic. Pointing fingers at individuals just seems silly to me. "How should Goldman and other banks be regulated to ensure these conflicts of interest are not hurting investors?" Isn't that exactly the problem? Goldman has always had too much in put into how they should be regulated. We should not ask them because they, like all firms, are interested mainly in maximizing their profitability above all else. The second two questions though, "You've spent a big chunk of money on lobbying efforts this year. What are you trying to accomplish?" and "The slogan on your Web site is 'Our work enables growth.' How does a company that generates much of its business from trading help the economy grow?" could be informative, or at least uncomfortable for Goldman to answer (especially under oath). The public would either get a straight answer, a lie (illegal in this instance), or no answer which would only serve to raise suspicions further and make reform easier.
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I would to see them ask Goldman Sachs about what they think fraud is and were they committing any? As well as if they knowingly mislead investors. I would like to see them answer if what they do to bend the rules so its not fraud and illegal; and why is that OK? Overall i would just like to see their mindset on the whole fraud/illegal/immoral topic.
ReplyDeleteObviously asking Goldman if they have specifically done anything illegal will not get them to admit anything at all. It seems clear that they were front running their customers and other shady business practices. Trying to get them to answer questions about the morality of their actions might be a better approach. I'd to ask them (in a more subtle way) how they felt about misleading their own customers for their own gain.
ReplyDeleteI feel that asking questions about moral integrity, illegal practices, or even misleading customers will not get any solid answers. Both the individuals involved as well as the company want to protect their reputations as much as possible and ensure that their futures are not jeopardize by the things that are said in court or to the media. I think it would be best to ask the company or employees what their regrets were and the steps they are taking to make sure that those mistakes/ regrets don't reoccur.
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