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Bullying in the Name of Financial Reform

In the frenzy to prove their populist bona fides, Sen. Carl Levin’s committee demanded and then leaked out a handful of Goldman Sachs e-mails. This led to a plethora of supposedly shocked mainstream reporters who were aghast to learn that there are times when one side profits by others’ losses. We do, after all, allow “selling short” in the U.S. Yes, it’s perfectly legal (not in Britain, however, so I suppose Levin could try to outlaw it here too). The issue with Goldman is whether fraud was committed in a deal with extremely sophisticated investors who understood all too well that others might gain from their losses. But that real case may be hard to prove and is not so politically attractive as the Wall Street “greed” story line.

The liberal spasm of outrage reached its low point on Fox News Sunday when Juan Williams went around the bend. The relevant exchange is comic but also instructive as to how liberals think of private industry, the rule of law, and government:

KRISTOL: Senator Levin’s committee — I’m sorry. Senator Levin authorized his staff to release e-mails that were provided to this investigation (inaudible) on the committee, ostensibly on the grounds that the committee was doing a serious investigation. Then they release e-mails that are simply, they say, embarrassing.

It’s an outrage, actually. What is — this is — now any business in the United States has to worry that any e-mail sent anywhere, at some point, if you — three years later, that could be made to look embarrassing to a chief executive who’s testifying on Tuesday.

And I say this as no fan of Goldman Sachs. But Lloyd Blankfein’s testifying Tuesday and they want to embarrass him or put him on the spot, and they release these e-mails.

KRISTOL: But the core issue here is the issue of rule of law and this notion that this bill increases executive authority discretion so much as opposed to other ways of fixing the financial crisis because of the bankruptcy code and the like, that it’s bad to increase the authority of the discretion of the big government in Washington this much. That is the core objection to the bill, the core dispute over the bill. For President Obama to pretend that the only reason you might not like this bill is if you were interested in bilking people as he said, that’s really ridiculous.

WILLIAMS: It’s not ridiculous when you read the e-mail. The core here is not the release of the e-mail but the content of the e- mail. The e-mails reveal that they are saying that people at Goldman Sachs are saying, you know what? We’re going to make money while investors are losing money. In fact, we’re going to have a windfall they say in the e- mail. That is the outrage in case you missed it. That’s why public outrage over the behavior by these Wall Street titans is over the top. And I might add, you know what else?


KRISTOL: Shouldn’t Senator Levin’s e-mails be released? He’s the public official. I mean, if he believes that everything should be transparent, let’s see the e-mail to his staff when he discussed whether to embarrass Lloyd Blankfein or not.

WILLIAMS: Listen, you are lost in the weeds on this. It doesn’t matter who released —

KRISTOL: It doesn’t matter what the rule of law in Washington?

WILLIAMS: Of course it matters, rule of law. But let me just say, you sit at your desk at your corporation, guess what? Your boss can read your e-mail. That is not the issue.

KRISTOL: You know what?

WILLIAMS: The issue is the government of these people —

KRISTOL: The Senate of the United States is not the boss of every employee at Goldman Sachs. That is a very revealing statement, Juan. Let me tell you something, we all work for Carl Levin. That is the future — what about the investors, the people who are putting money in these Wall Street firms and being gyped?

So the Democrats’ view of private industry is that there is no private industry. There is no better argument against the ever-expanding reach of the federal government in the name of “financial reform” than this sort of devil-may-care attitude about the right of politicians to peer into every nook and cranny of a business, read every e-mail, and haul executives before the glare of the cameras and then harangue them for devising transactions that the politicians only dimly understand. With the power to regulate goes the power to snoop, harass, and bully. We should be very wary of giving government officials too much leeway; they are certain to abuse it.

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