Tag Archives: Goldman Sachs

Call for Expert Help in Financial Regulation by the MEPs

This is both extraordinary and unusual. A group of MEPs has publicly complained of the pressure exerted by the financial and banking industry to influence the laws governing it (hat tip: Hajo Friedrich). The MEPs call on NGOs, trade unions, academic researchers, think-tanks, etc., to organize to create one (or more) non-governmental organizations capable of developing a counter-expertise on activities carried out on financial markets.

More, the declaration states that:

“In the U.S. the connections between Goldman Sachs and the government are known. But in Europe this proximity is by no means smaller.”

Although somewhat self-deprecating, this call should be taken seriously. The financial services sector is too important  to be governed by one-sided expertise.

European Commission, German Financial Regulator Follow Closely the Goldman Sachs Investigation

EUobserver reports that both the European Commission and the German financial regulator BaFin are following closely the investigation of the US investment bank Goldman Sachs (see the detailed legal analysis by Bill Singer).

UK’s Prime Minister Gordon Brown has also demanded investigation of the possible fraudulent activities of Goldman Sachs.

It is worth reminding that Goldman Sachs was also involved in providing help to the Greek government in order to hide an additional 1 billion US dollars in debt by currency swaps.

Greece, Goldman Sachs Will Be Investigated over Credit Swaps

To my satisfaction both the Federal Reserve of the US and the European Commission are looking into the role of Goldman Sachs in providing help to the Greek government in order to hide an additional 1 billion US dollars in debt by currency swaps.

Is the Eurozone Flawed?

George Soros has an interesting article in the Financial Times where he says that a fully fledged currency requires both a central bank and a Treasury, and that the eurozone in its current form is patently flawed. He advises on more intrusive monitoring and institutional arrangements for conditional assistance.

Daniel Gros and Thomas Meyer go one step further and propose the setting up of a European Monetary Fund, which will be responsible, among other things, to manage the insolvency of euro area countries in an orderly way.

However, Desmond Lachman says that sovereign borrowing is now done preponderantly in the securitization market rather than in the form of bank loans. His remarks seem a bit ideological, though.

On a more tactical level, Marshall Auerback and L. Randall Wray advise Greece to declare war on Goldman Sachs and other global financial firms that created this mess.

UPDATE: Gideon Rachman has quite a strong position, saying that the Greek crisis threatens not just the euro but the entire edifice of the European Union. He’s also in favor of a political union that includes common European taxes and a mechanism for big fiscal transfers between EU states. He also acknowledges that the kind of political integration required by the euro affects ordinary citizens at a very basic level. He believes that political inaction could cause a crisis of confidence in the European Union and the likely result would be that other powers it has acquired, on everything from immigration to social policy, would come into question.