SEC Probes Goldman Sachs for Investor Fraud but Ignores Widespread Racially Discriminatory Practices

By john a. powell and Christy Rogers,

The U.S. Securities and Exchange Commission (SEC) securities fraud case against Goldman Sachs seems to indicate that Wall Streeters care more about their own paychecks than that of their investors — a practice that Michael Lewis brought home not only recently with The Big Short, but over 20 years ago with Liar’s Poker. While this is maddening on its face, the SEC suit also indicated that some people were successfully manipulating an entire system without much oversight, and fooling sophisticated investors and analysts along the way.

So while we would never pound the table for increased financial illiteracy for consumers, we think that the SEC probe against Goldman illustrates that the call for consumer financial literacy as the answer to financial predation is too individualistic and too simplistic. Very financially literate people and institutions lost a lot of money, and there are nowadays a lot of moving parts of the financial system to keep track of. Being able to read the fine print on your mortgage doesn’t mean you know that a hedge fund giant just bet the house against you.

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