"Bribe" (verb): to induce or influence by or as if by bribery.
"Bribe" (noun): money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust.
--Webster's Dictionary
Of course, the whole thing is that "no laws were broken." And there's the rub.
But what else do you call showering money on legislators, credit rating agencies, and your own employees (past, present, and -- in the case of many government officials -- future), all toward the end of crafting a financial system to your liking?
Just consider all the ways that Goldman Sachs' lucre and ingenuity have rotted out the foundations of the American system of governance:
Rating Agencies. No, Wall Street couldn't have sold trillions in mortgage-backed securities all by itself -- it needed the credit rating agencies' seal of approval.
Which was simple enough: Wall Street was the client!
Moody's & Standard & Poor's didn't just rake in billions for giving Triple A ratings to dreck.
Thanks to the magic of the stock market, which values companies based on P/E ratio's, every incremental dollar the credit raters earned from Wall Street created as much as a 20x jump in their market cap's.
Financial Alchemy
What's the significance of that?
It translated into tens and sometimes hundreds of millions(!) in extra compensation for company exec's, whose pay included huge slugs of stock.
Politicians. President Obama's biggest corporate campaign contributor? Goldman Sachs. Ditto for practically every senior Democratic member of Congress (and many junior ones).
The really sad part is how cheaply Congress can be bought: a couple hundred million in campaign contributions, tops.
The return?
If the upside includes your company's stock market capitalization (see, above), tens of billions in annual compensation, and double that in profit . . . trillions.
Return on investment?
I don't know -- infinite??
Regulators.
Once upon a time, the Securities and Exchange Commission, conceived during the last financial upheaval during The Great Depression, protected investors' interests.
Now, it does those same investors a double disservice: 1) by not doing its job (see, Madoff, Bernie and many, many other examples); and 2) by giving at least some investors the mistaken notion that their interests are being protected, thereby creating a false sense of security.
What might explain regulators who don't regulate?
A lot of these folks aspire to "graduate" from Washington to Wall Street. An aggressive stance towards your future employer is not a good career move.
Diagnosis & Prescription
If you're keeping track, that's two out of three branches of government thoroughly compromised by Wall Street money (call it 3-for-3 -- a hat trick! -- if you consider Congress' role selecting and confirming judges).
Which suggests the solution.
Take the money away from them.
Step #1: break up Goldman Sachs.
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2 comments:
If you want to see examples of bribery take a look at the Realtor industry. Secret buyer broker bonuses paid by the seller's broker. Six figure bonuses to brokerage managers for their success in coercing or bribing their agents (through commission splits and other incentives) to use their in-house over-priced services such as title and mortgage. Take a look at dual agency... The list is long and at least as bad as what exists in the political arena.
Don't know about other agents, but I spend a great deal of time with my selling clients discussing -- and criticizing -- "single agent" dual agency (where the Realtor simultaneously represents both the Seller and the Buyer).
You can't serve two masters, and you can't be on both sides of a deal. As I tell my clients, if you're representing both sides . . . you're representing neither.
So, I contractually promise not to do it.
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