Limbaugh Gets it Wrong

Just before noon today, I turned on my car radio and caught a portion of Rush Limbaugh's broadcast. Rush was lambasting Obama's financial reform agenda, but he caught my ire when he attempted to buttress his argument by defending Goldman Sachs role in marketing securities which were composed of shoddy loans hand picked by hedge fund investor John Paulson. Limbaugh stated that every deal has a winner and a loser, that the suit brought by the SEC was nothing more than representing whiners upset about losing, and that the parties involved were all sophisticated investors that understand what is at stake. No harm, no foul.

Rush is wrong on so many levels it's incomprehensible. Let's start at the top with the investors. The buyers of these securities included pension funds and similar organizations looking for a decent yield on safe investments (the bonds were rated AAA). Even if the purchasers of these products were sophisticated investors, they had no skin in the game. The pools of money at risk belong to people in the general public who are for the most part interested in protecting their life savings - not speculators looking to risk discretionary income. 

Secondly, the products were rated AAA, the safest rating awarded. But the loans that made up these packages were liars loans. The ratings agencies, influenced by the megabanks that pay their fees, failed to do their job. Loan originators and appraisers knowingly accepted and manufactured false numbers in order to process the loans which generated income to them. The entire chain was full of corruption. The system failed and no one has been punished.

Unfortunately, any reform bill that passes is going to be diluted and most likely even written by representatives of the financial industry of which the bill is designed to regulate. That is a shame. Perhaps a bigger shame however is the fact that millions of listeners turn in to Rush Limbaugh and are led to believe that the billions of losses suffered by millions of Americans is solely due to liberal politicians. Liberalism is part of a big problem we face in America,  but that isn't even an issue here. What we have is a financial oligarchy that commits fraud on the American public with impunity, and in fact controls the government by virtue of political contributions and a revolving-door system where members of Wall Street, politicans, and policy makers  are now interchangeable. Limbaugh doesn't get it.