Rolling Stone magazine referred to Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
That is pretty harsh, but the biggest idiots are the institutions who give them business and the resulting fees. They have little to NO fiduciary responsibility to their clients (all this is written (or not) into law). Laws should hold them accountable like mom and pop financial planners are held responsible to their small clients. It’s funny, but your average plumber assumes a lot more risk than your average investment banker.
The biggest crimes the likes of GS commit, is that they make insane fees with little to no risk — this is the heart of the problem in the financial services industry and what has led to massive bubbles. Government agencies (like Freddie and Fannie) were invented by banks to systematically reduce risk for investment and commercial banks at massive taxpayer expense. Any “liquidity” that these organizations have brought consumers (in the form of lower rates or easier to obtain loans) has been erased entirely by the real-estate collapse, which will plague us for at least 5 more years.
Banks need to loan money the old-fashioned way…underwrite loans with their OWN money and hold those loans to maturity (or refinancing)…and not play hot potato with derivatized instruments that seemingly reduce risk, until a financial collapse occurs.
Banks should be experts at reducing risk, but not at taxpayer and moral-hazard expense — this is what is continuing to happen as Freddie and Fannie still exist! They should be 100% liquidated and the US Government/Taxpayer needs to remove itself from the mortgage industry (especially the derivative industry that Freddie and Fannie built). Banks are plenty big these days to hold the loans they underwrite, period.