The fact that Goldman used taxpayer funds via the AIG bailout to cover their bets is a pretty good reason to call it a scandal.

Adults make bets every day that sometimes work out and sometimes don’t. Goldman created a rigged game and bet a huge amount thanks to the CDS insurance from AIG. If AIG had gone under, Goldman would have been screwed. Somehow, the government managed to reverse it’s trend of letting adults deal with the consequences of their bets for only one company - AIG. and the main beneficiary of that reversal was Goldman.

Thus, the scandal is that Goldman influenced the government in the AIG bailout for their own benefit. And once you start pulling on that thread you realize that the AIG bailout resulted in taxpayer money being used to allow Goldman to win on their bet that the housing market would collapse. So the same taxpayers who were being hurt by the economy, kicked out of their homes, suffering from home price declines etc., were having their money taken to pay off the people who were profiting from their misery.

If this doesn’t make you uncomfortable you have a pretty high tolerance for scandal. If you don’t get the political implications of this, come the next election cycle or the Financial Crisis Inquiry Commission, the you haven’t been paining attention to all of the outrage that has already been generated about Wall Street.

I admit that the subject is dense and confusing, but with the proper explanations, it is terribly damning to Goldman, Deutsche Bank, John Paulson, the Treasury and the Federal Reserve.

- Tom

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