We really admire Roger Lowenstein, and we hate to even remotely be critical of anything he says because he is a million times smarter than us, but there were a couple of lines in his op-ed in the Times this morning that we found bugged us just a little.
Like this one:
The S.E.C. suit charges that the bonds referenced in Goldman’s Abacus deal were hand-picked (by Mr. Paulson) to fail. Goldman says that Abacus merely allowed Mr. Paulson to bet one way and investors to bet the other. But either way, is this the proper function of Wall Street?
And this one:
Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody.
That's not technically true, from John Paulson's standpoint, but we digress.
The thing is, if you put aside two (very important! big!) things here: the emotionally charged fact that the things banks were gambling on were mortgages on people's homes, and that (we now, with hindsight, know) the banks that do these kinds of deals are backed by the government and the failure of them will affect the global financial system, and just isolate the overall tone, this argument kind of encapsulates what is so frustrating about the case the SEC filed against Goldman an dthe debate over regulation in general. Like the SEC, Lowenstein seems to have more of a moral objection to the deal Goldman made than a legal one. Which for him is fine, we guess, because he's not the one going around suing people and trying to make laws. But we're worried about the people who are making laws thinking this way. Is the idea that we're going to require Wall Street to produce only healthy, virtuous products from now on? And if so, who determines what is healthy? There's a million gazillion things that are bought and sold by consenting adults in this country that have no social value whatsoever, except that they keep people busy and in jobs. Most things, in fact. Will whatever rule gets made here extend to all of them? Like will Kraft be allowed to continue to sell milk and bread, but be required to stop selling Cheez Whiz? (Don't answer that, Mayor Bloomberg.) Either way, if this is the way we're going to approach regulation — emotionally, rather than rationally — then, well, we have some concerns. After all, this is a country that can't even get school lunch worked out.