Goldman Sachs calls for more financial regulation 

Few writers today capture and explain the business-government dynamic as well as Ira Stoll, who blogs at "The Future of Capitalism." Today, Stoll spotted this line in Goldman Sachs' annual letter to shareholders:

Given that much of the financial contagion was fueled by uncertainty about counterparties' balance sheets, we support measures that would require higher capital and liquidity levels.

Yes, that's the largest investment bank on Wall Street calling for stricter regulation from Washington. Stoll has a pretty straightforward explanation:

What [Goldman CEO Lloyd] Blankfein and Mr. Cohn are now saying is that their desire for higher capital requirements isn't related to concern about their ability to control Goldman's risk-taking ("Please, Mr. Government, supervise me more closely, allow me to borrow less money, and force me to take less risk"), but their ability to assess and judge the risks of their counterparties, the other firms they are doing deals with.

Why should Goldman have to pay for mitigating the risk of its deal-partners when the SEC or the Fed can do Goldman's work for it -- on the taxpayer dime?

This is further evidence of what I've been saying for months: just as tobacco regulation was a gift to Philip Morris, toy regulation was a gift to Mattel, and health-care "reform" was a gift to Big Pharma, financial reform will improve Goldman's profitability, Obama's populist rhetoric notwithstanding.

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Timothy P. Carney

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