Everyone knows that. When you get a lot of hard-working, brilliant people to dedicate their lives to making money they are likely to be successful. That is not the problem with GS. Finding loopholes and exploiting it for gain is the boon of any brilliant trader. The problem, inherently, is that of regulatory and legislative capture. Because of its huge profitability, Goldman along with the rest of the bulges has prodded our legislature to change laws and act to their benefit.

The fact that many ex-Goldmanites (including Fed governors who hold still hold Goldman stock through their tenure) only adds to this problem. To say these people will not act in the interest of their former coworkers or in their own fiscal interests is bunk.

That is the root of the problem. As you said, Goldman can make money absent regulatory capture, but they use this as well to enhance their success.

I think that a little forbearance by GS is necessary here–if only as a way of being long-term greedy as opposed to short-term greedy. The rules were written quickly and in an emergency and in a large part to save, among others, Goldman Sachs. The moral thing to do would be to say–this is serious and not a time to try to maximize short-term trading profits. There will always be loopholes–stable systems require that the players not take advantage of them, especially in times of crisis. To do otherwise appears as war-profiteering.

Sometimes, it’s better to keep one’s head down and not get the last dollar out of the trade.