Libertarian law professor Richard Epstein's latest Forbes column is on the SEC charges against Goldman Sachs: "the SEC claim's of Goldman deception looks utterly groundless given ACA's active role....If Goldman committed fraud, then so did Paulson, who was mysteriously not charged. Even more notably, the SEC complaint makes no mention that Goldman actually took the same side of the deal as ACA, which puts it in the unique position of defrauding itself."
More: "If big boys want to go naked in that market, let them, so long as there is no free explicit or implicit government guarantee at the other end." Professor Epstein doesn't mention it, but the transaction at issue in the SEC's case against Goldman Sachs actually fails that test, because, as we noted earlier, British taxpayers ended up bailing out the Royal Bank of Scotland, which had taken over the obligations of ABN Amro Bank N.V., which had taken over the obligations of ACA. And the German taxpayers, through the state-owned KfW development bank, ended up bailing out IKB, the other firm that was with ACA on the other side of the trade from Paulson & Co. And the American taxpayers ended up bailing out Goldman Sachs through TARP, through naming them a "bank holding company," and through the FDIC's Temporary Liquidity Guarantee Program. So there were government guarantees on three of the four sides of the transaction.