I have to admit I love to beat up on Goldman; I do it for The Daily Beast and on CNBC every chance I get. I also have to admit cheering Matt Taibbi on when I first read his Rolling Stone article.
But in the end it does no one any good to travel in conspiracy theories. Is Goldman too powerful? Maybe. Was it too big to fail back in September? Given the size of its balance sheet, Goldman’s demise would have made Lehman’s look insignificant. (And while we’re at it, conspiracy theorists, let’s put to rest once and for all that Lehman was allowed to die to remove one of Goldman’s main competitors. Yes, Lehman was competitive with Goldman in the bond market, but the only reason to bail it out was to keep the systematic risk from infecting Goldman. In letting Lehman go under, the government actually put Blankfein and company in greater peril.)
A bigger issue lost in all the back-and-forth about the firm’s connections, trading habits, and where Lloyd Blankfein was the night of September 15, 2008 when Lehman went bust, is that the American taxpayer is right this very moment subsidizing Goldman’s risk taking. That’s a scandal no one seems to want to talk about.
This blog is no longer active as of October 31, 2011
