Reform America
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Politics & Power

What's new on The American Borders Forum this week? Preview pane at the bottom of the page.

Goldman Sucks...The Life Out Of The Economy

Tuesday the Senate Governmental Affairs Subcommittee on Investigations held hearings with the executives of Goldman Sachs about their role in the financial collapse on Wall Street. Repeatedly the executives refused to answer questions citing lack of personal knowledge and used semantics to answer while not answering the question asked. Despite their unwillingness to directly answer the questions, their non-answers said as much as direct answers ever could have.

One of the executives, Fabrice Tourre admitted that internal documents about the investments promoted by Goldman Sachs were incomplete in disclosing who was involved in selecting mortgage backed securities and that some involved in the selection of the securities were hedging against the success of those securities. In essence they allowed the people betting against the success of the securities to pick which securities were included in packages sold to others as good investments.

For the layman it means that Goldman Sachs created securities that were high risk and sold them to others while making bets against them that would profit Goldman Sachs. By turning high risk mortgages into securities, the investment banks gave incentives to banks to make risky loans to consumers. In some cases as much as 90% of the mortgages used to back the securities were based on ďstated incomeĒ loans where the bank loans the money to borrowers based solely on how much the borrower said they earned each year. By turning risky loans into investment opportunities banks had incentive to make more of those loans so that more bundled loan securities could be sold. Wall Street basically gave the banks every reason to make more loans and hope that people didnít default on them. At the same time Wall Street and specifically Goldman Sachs was betting that the people would default on the loans.

This behavior by Wall Street was in large part responsible for the collapse in 2008. People who trusted investment firms to ethically represent risk to them were swindled by fund managers and executives who made undisclosed bets against the success of the securities they were promoting to their investors. The risks seemingly were designed to fail so that the companies like Goldman Sachs that bet against them would make money.

What comes out of this is that the culture that created these issues at Goldman Sachs was pervasive on Wall Street. Clearly the fact that what they did was legal technically speaking is part of the problem. Legislators need to pass legislation now that will prevent this from happening again. Derivatives, specifically mortgage backed securities need to be outlawed entirely. Investments not based on real assets must be removed from the market. Betting on the future success or failure of average consumers and investors is both unethical and fiscally irresponsible. Exotic investments are only designed to make money for the people that sell them. Investors have consistently paid the price for their highly speculative nature.

Itís time for Washington to clamp down on Wall Street. Regulation is not a dirty word and in the case of Wall Street is absolutely needed. The people who have made billions on the financial woes of others cannot be trusted to manage themselves or our money. Congress needs to act now for the good of all Americans. Call your Senators and Representatives today and tell them to support Wall Street reform. If they donít support reform, vote against them in November.

Troy Wilson-Ripsom | Staff Writer | Give your feedback on this article. | Click icon to Digg this article



Get Involved

Do you sit and yell at the TV when politicians come on? Do you shake your head sadly whenever you see a homeless veteran? Is that all you tend to do?

It's time to put up or shut up America. We all love to talk about how we could do things better or how we would do it if we were in charge. Well, it's time to put your money where your mouth is. If you can think of it, you can write it down. If you can write it down, you can type it. If you can type it, you can e-mail it and if you can e-mail it, you can send it here.

We at Reform America are committed to giving voice to anyone who wants to put their ideas out there to make our nation a better place. As the readership grows, we are able to take those views to a wider and wider audience. Grassroots campaigns begin with voices speaking out. You have opinions. Voice them. We aren't about conservative or liberal. We aren't about pro-this or anti-that. We're about Americans and the First Amendment. Reform America is about politics by, for and of the people. You are the people. You only need to speak up. America is listening. Send your article to: stories@reform-america.net



Have You Been Downsized Due to Outsourcing?

For several years now we have listened to some within the business community tell us that America can't compete on a global scale unless they send our jobs overseas where they can be done cheaper. The question becomes, if we don't have good paying jobs here, how can we sustain our own economy? We want to hear from you. Have you lost your job? Have you been forced into a lower wage job due to outsourcing? Has outsourcing been a success for you? Did you end up in a better job?

Tell us your story so we can make sure the politicians see how outsourcing really impacts the workers who are backbone of America. Send your story to stories@reform-america.net





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