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Once In A Blue Moon

By Steve Piontek

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I know it’s a clich, but at the moment I can’t think of another phrase besides the headline of this piece that would so aptly describe how seldom I find myself agreeing with the editorial page of the Wall Street Journal.

Yet, here we are on April 15 and, sure enough, the moon is an amazing shade of cerulean blue!

The point of agreement with the Journal? Goldman Sachs. And I have to admit the firm is turning into a pet peeve of mine. I just can’t get past the feeling that due to its many friends in high places the former investment banking giant has gotten some really sweet treatment as the economic crisis has unfolded.

Here’s where I found myself agreeing with the Journal: “The point is that Goldman and other banks can’t have it both ways. If they want taxpayers to save them, then they have to take fewer risks and become smaller. Either that, or we need a new financial resolution or bankruptcy process that lets these companies fail while protecting the larger banking system.”

Goldman has made a big point of how it is just itching to repay the $10 billion in bailout funds it got from the government last year. It’s feeling particularly flush now that it has successfully pulled off a $5 billion stock sale.

Actually, as I’ve mentioned elsewhere, it’s about $13 billion flusher than it might otherwise have been if the same government that gave it $10 billion last fall hadn’t also made it whole on some transactions with AIG. Yes, whole, as in 100% of the risk Goldman took was covered.

As the Journal points out, a similar situation back in 2008 “involving Merrill Lynch and XL Capital Assurance resulted in Merrill receiving 13 cents on the dollar, not the 100 cents Goldman received.”

Now that Goldman is a bank holding company instead of an investment bank, it is riding the government gravy train in other ways. As the Journal’s editorial put it: “Meanwhile, Goldman also has access to the Fed’s discount window, as it didn’t before the 2008 Bear Stearns rescue. And Goldman has benefited from the FDIC’s debt-guarantee program, which means it can borrow money at cheaper rates.”

If Goldman repaid the $10 billion of TARP money to the feds, then it would be rid of those nasty restrictions on executive compensation that the government demanded as one of the conditions of getting the TARP money. But it would still have access to cheap funds from the government, as the Journal noted.

Now, having your cake and eating it too (having it both ways) is an American tradition going back to the origins of the Republic, so I’m not going to knock it. Let’s face it. There’s a large part of our nature that takes to the concept as cozily as sinking into a warm bath.

But it’s also part of human nature to get really annoyed when it’s some other guy who is able to stuff his face with the cake simply because he’s got big powerful friends who take good care of him.

That’s a crumby deal for the rest of us-no matter how you cut the cake. And even more so if you’re the one paying for the cake!

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