Goldman Sachs and the Liberal Funk

Remember the Volcker Rule? It was designed to get commercial banks out of proprietary trading — i.e., the practice of making money from speculative bets of their own instead of making money based on selling actual services to their clients. It got watered down considerably before the final financial reform bill was passed, but it was still there and it still held out some hope of limiting the casino atmosphere at investment banks like Goldman Sachs unless they gave up their commercial bank designation. So what’s Goldman going to do about this? Charlie Gasparino reports:

The big Wall Street firm has moved about half of its “proprietary” stock-trading operations — which had made market bets using the firm’s own capital — into its asset management division, where these traders can talk to Goldman clients and then place their market bets….By having the traders work in asset management, where they will take market positions while dealing with clients, Goldman believes it can meet the rule’s mandates, avoid large-scale layoffs and preserve some of the same risk taking that has earned it enormous profits, people close to the firm say.

….People close to Goldman say Goldman will now be weighing other similar moves — taking traders out of the firm’s brokerage division and moving them to other areas of the firm where they can deal with clients and circumvent the rule.

That didn’t take long, did it? If this sticks, Goldman and others will essentially be completely unaffected by this new regulation. Sadly, I suspect this is going to end up being true of much of the rest of the bill too. It was worth passing, but only barely.

On a related note, I think this partly explains why liberals are in such a funk right now. The conventional wisdom is that we ought to be pretty happy. As Jon Cohn says, liberal dejection is hard to figure: “This seems totally nuts, purely on the merits. Obama and the Democrats passed a major stimulus that cut taxes for the middle class and invested heavily in public works. They saved the auto industry, created a new regulatory framework for the financial industry, and enacted comprehensive health care reform.”

That’s true, but think of this in a different way. Prior to 2008, what kinds of things had been on the lefty wish list? What made our hearts sing? A temporary tax cut and a one-time investment in infrastructure and energy projects? Nope. Bailing out General Motors? Nope. Financial industry reform? Nope. Before 2008, Wall Street reform was barely even on anyone’s radar. It’s purely a reaction to a crisis, not the culmination of a long campaign by populist liberals — and in any case the final result was watery enough that it’s highly unlikely to change Wall Street in any serious way.

So that leaves healthcare reform. And watered down or not, that really is a big deal. But among big ticket items on the lefty wish list, that’s it. That’s all we got. And I hardly have to tell you that not every lefty is as enthusiastic about its final form as I am.

So in terms of setting liberal hearts aflutter, there’s basically been just one thing — and not much hope of getting anything more for the rest of Obama’s term. And to tot up against that, we’ve had an almost complete acquiescence to the Bush/Cheney vision of national security; an escalation of the war in Afghanistan; the reappointment of Ben Bernanke; a couple of very moderate Supreme Court picks; an obvious unwillingness to back a serious energy bill; and indefensibly slow progress in naming new appointments. All of these things can be justified individually, but if you put ’em together and weigh them against a single major piece of liberal legislation you don’t get a very pretty picture. And that’s the picture a lot of liberals are seeing.

MORE HARD-HITTING JOURNALISM

In 2014, before Donald Trump announced his run for president, we knew we had to do something different to address the fundamental challenge facing journalism: how hard-hitting reporting that can hold the powerful accountable can survive as the bottom falls out of the news business.

Being a nonprofit, we started planning The Moment for Mother Jones, a special campaign to raise $25 million for key investments to make Mother Jones the strongest watchdog it can be. Five years later, readers have stepped up and contributed an astonishing $23 million in gifts and future pledges. This is an incredible statement from the Mother Jones community in the face of huge threats—both economic and political—against the free press.

Read more about The Moment and see what we've been able to accomplish thanks to readers' incredible generosity so far, and please join them today. Your gift will be matched dollar for dollar, up to $500,000 total, during this critical moment for journalism.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.