Obama delivers Goldman's head on a platter

The SEC's charges against Goldman Sachs show how the president has finally gotten his regulators to squeeze Wall Street.

By TheStreet Staff Apr 16, 2010 3:30PM

TheStreetBy Dan Freed, TheStreet

 

The American public wanted a head, and its president finally delivered what may be the only one that would suffice.

 

No single firm can be said to symbolize Wall Street in the mind of the public as much as Goldman Sachs (GS), which was accused of fraud by the Securities and Exchange Commission Friday.

 

Whatever corporate America may think, President Obama wasn't looking to make Wall Street CEOs into his enemies. If that were his mission, he wouldn't have hired Tim Geithner as his Treasury secretary. Geithner likes to brag about how he has never worked on Wall Street, but a profile of Geithner by Gary Weiss makes the best case I have seen that Geithner was a tool of the big banks he was supposed to regulate as New York Federal Reserve chairman.

 

As The New York Times has reported, former Citigroup (C) boss Sandy Weill once tried to lure Geithner away from the Fed to run Citigroup.

 

Mary Shapiro, Obama's choice to run the SEC, may have been an even bigger joke.

 

Geithner has shown that he could not ascend as high as he did if he had no spine. Obama had to embarrass him by pushing octogenarian former Federal Reserve Chairman Paul Volcker to the front of his regulatory team, but since then, Geithner has adopted a tougher tone on regulatory reform.

 

One good example of the new toughness is the increasing likelihood that the vast, unregulated over-the-counter derivatives market will finally be subject to policing.

 

Shapiro, on the other hand, had spent most of her career in various "self-regulatory organizations." In other words, it was her job to watch and make sure the cops weren't coming while the firms she was officially regulating stole all the jewels.

 

Any doubts about whether Shapiro was bought by Wall Street disappeared when the SEC tried to settle with Bank of America (BAC) for $33 million after finding that its leaders never bothered to tell their investors about what turned out to be a roughly $15 billion hole in the balance sheet of Merrill Lynch.

 

But it now appears that Obama has gotten the memo from the public and passed it on to Shapiro. Here's what it said: GET GOLDMAN OR YOU'RE FIRED.

 

She got it, and she got 'em. Guess she'll be keeping her job.

 

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