Their immediate partners in crime: Rockefellers, Du Ponts, Ruperts and the Oppenheimers.

Go look where these names pop up throughout the last 200 years and what roles they played in subjects ranging from World Wars, Wall Street Crash, GM Foods, Pharmaceutical Industry, Banking, Oil etc.

Goldman was also provided with status as a Trading Bank. Under”Fiat Banking Rules” this provision allowed them to lend out (to themselves ?) and charge interest on TEN TIMES THE AMOUNT OF THEIR CASH HOLDINGS – A MAGNITUDE OF TEN. This has resulted in potentially hundreds of billions of dollars of potential ‘future gains’. Unless it is your intent to purposely mislead your readers, I think you need to give more thought to your your numbers.

When investment banks like Goldman Sachs market financial securities like credit based securities and derivatives they should be required to provide accurate and comprehensive information to their investor clients. However, investor clients must exercise responsibility using proper research, analysis, and judgement when making investment decisions.

If the investment bank “short sells” the very same securities it markets to investor clients and benefits from the decline their value, then such outcomes involve questionable ethical behavior. Short selling is not unethical market behavior and assumes high risk for the short seller because if the price of the short sold product increases, then the short seller incurs the loss. If the risks of such investment products were not properly disclosed to investor clients; the investment bank benefits from the decline in their value; and the investment bank knew such products had risks that could cause harm to the investor clients then such activities could demonstrate fraud, deception, or misrepresentation depending on opinion and law.

However, the U.S. federal government performed the most insidious actions during this financial crisis. By providing a myriad of assistances including direct payments, borrowing privileges, and guarantees using public funds, the financial institutions like Goldman Sachs enormously benefited though they were largely responsible for exacerbating if not creating this financial crisis. When economic conditions were favorable, they assumed greater and even excessive risks to maximize profits and compensation for themselves. But when economic conditions became less favorable, they recieved incredible assistance from the government using public funds when responsible economic actors did not cause or propogate such crisis and did not recieve the same level of assistance and therefore suffered.

Furthermore, such assistance creates at least two additional problems for the economy. Since the federal government assistance to financial institutions involved borrowed funds, these funds will require higher level repayment due to interest costs. Though Goldman Sachs and some financial institutions repaid financial assistance to the federal government, others did not or most likely will not including AIG, GMAC, GM, Fannie Mae, Freddie Mac, etc. Such losses will be compensated for by the taxpayer resulting in social or foregone loss/cost.

Some argue that if the government did not intervene to save such entities then the financial and economic system would be worse, but they provide no evidence to support such an argument. It is true, however, many individuals lost their jobs and businesses failed. If the financial system’s actors failed then they would be in the same condition as those individuals and businesses. The U.S. economy suffered through more difficult hardship in the Great Depression Era 1929-1940 but still managed to proceed and become the most successful economy in the world. This economic recession most likely would not have become as severe as the Great Depression assuming very low interest rates to stimulate increased investment and spending and bank deposit insurance to prevent acute withdrawal of funds resulting in financial collapse. The US recession in 1929-1930 became the Great Depression because of inadequate assurance of banking system deposits and improper monetary policies. In addition, this recession will not be as severe as the Great Depression because of the general higher standard of living in 2000s and beyond compared to the 1930s.

The second problem is in the future. By providing failed economic actors with assistance, they develop a sense of entitlement, arrogance, denial, and riskier behaviors. Financial institutions like Goldman Sachs will most probably not learn from their mistakes that led to this financial crisis and will continue to assume greater risks in the future requiring unfortunate and sympathetic actors in government to provide assistance to prevent their failure. This should not be tolerated or supported by the public in general because it rewards failure and productive successful economies should reward those who create and add value and do not undermine or destroy it.

To help prevent such a crisis from reocurrence, better risk controls must be formulated and implemented by the financial system and regulators including but not exclusively the following:

1. Separate investment banks from commercial banks to prevent the aggregation of risk that increases the risk of systemic failure. Investment banks should not be subject to the following suggested regulations (see below 2 and 3) because they assume greater risks and do not maintain deposits like commercial banks. In addition, if investment banks do fail, they will not recieve any financial assistance from the public through any government entity.
2. Maintain or increase capital requirements for commercial banks to 10 percent. This provides some limitation on the amount of borrowed capital to reduce credit risk in the financial system but is not such a difficult requirement resulting in less lending.
3. Significantly increase FDIC insurance premiums for commercial banks based on the level of risk in the assets of a bank(s)to provide sufficient funds to indemnify individuals who lose funds in failed banks. This action also prevents large acute withdrawals of funds from the financial system and reduce the amount of risks banks assume in lending and investing.
4. Create and monitor exchange(s) for derivatives and require 100 percent margin or collateral for the trading participants to eliminate or at least significantly reduce counterparty/default risk in the financial system.
5. Withdraw and recover as much public assistance provided to the financial system as soon as possible.