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Obama vs. Wall Street/Goldman Sachs? Not so much...

Goldman Sachs, accused of civil fraud by the Securities and Exchange Commission, may be Washington's favorite whipping boy right now as both Democrats and Republicans try to run against Wall Street in the 2010 elections. But Goldman stockholders can take heart: As indicated by their embrace of some key proposed regulations and their hiring of key Obama administration personnel, the firm is poised to come out ahead in this regulatory fight.

There's a rule of thumb in Washington: Whenever politicians open up a legislative or regulatory debate, the side with the best lobbyist usually wins. We saw it last year, as the drug industry outspent every other industry in America on lobbying and then ran the table in the health care bill that President Obama portrayed as a broadside against the special interests. Goldman's clout is not measured so much in terms of lobbying dollars -- though I'm sure the firm pays generous fees to its K Street soldiers, notably Dick Gephardt, John Breaux, and Tony Podesta -- but in its direct pipeline to the corridors of power.

Greg Craig, Obama's first White House counsel, has joined Goldman, we learned this week. He may not have too much pull in the West Wing, which drove him out for hewing too close to Obama's campaign promises, but as a former insider he will provide valuable intelligence to the world's largest investment bank.

Rahm Emanuel, White House chief of staff, was paid $35,000 as a consultant to Goldman while also working as Bill Clinton's top fundraiser. Obama's fundraiser and economic adviser Warren Buffett is very long on Goldman, having bet on them in 2008 in the expectation of a bailout. Mark Patterson, chief of staff to Treasury Secretary Tim Geithner, was a Goldman Sachs lobbyist until months before joining Team Obama.

And then there's record-breaking campaign cash: Goldman executives and employees gave about $950,000 to Obama for America -- the most a politician has raised from a single company since campaign finance reform. It's also more than the combined Goldman haul of every Republican running for president, Senate, and the House.

A powerful alumni network plus bundles of campaign cash mean Goldman will get what it wants -- and contrary to the media narrative, what Goldman wants is not laissez-faire.

Politico quoted a Goldman lobbyist Monday saying, "We're not against regulation. We're for regulation. We partner with regulators." At least three times in Goldman's conference call Tuesday, spokesmen trumpeted the firm's support for more federal control.

Vague public calls for "reasonable regulation," of course, are often little more than smoke. But Goldman's annual report explicitly endorsed stricter federal capital and liquidity requirements. Goldman reported on the conference call that it holds 15 percent "Tier 1 capital," meaning it is very liquid and not very risky. Goldman can play it safe, you see, without needing a regulation. But regulations prevent smaller competitors from taking the risks needed to compete with Goldman (and every competitor is smaller).

Read more at the Washington Examiner:


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