Obama and SEC: Conspiracy to Uphold the Law

Several days ago, the SEC charged Goldman Sachs with fraud for its alleged role in deceiving investors regarding a mortgage bond which lost over $1 billion in value.  The charges allege that Goldman did not inform investors that the bond's portfolio of mortgages was picked by a hedge fund which was betting against the bond's success.  In short, Goldman allegedly allowed someone with a vested monetary interest in the bond's failure to pick the kinds of investments the bond held and then didn't tell people who bought the bond.

These are very serious allegations which strike right at the heart of some of the things occurring on Wall Street leading up to the 2008 crash of the financial sector.  The charges were announced at a time when President Obama and the Congress are pursuing new financial regulatory reform targeted at stopping just these types of things from occurring.

Yet, the right wing and Republicans view this as being a sinister conspiracy between the White House and the SEC to bring the fraud charges as part of a PR push to gain support for the financial reform bill.  I'll address the very obvious problems with this conspiracy theory in just a bit, but let's examine some of the alleged evidence for this conspiracy theory first.

Rush Limbaugh's show featured an anonymous caller who described himself as having been an intern for Google during his graduate school.  The caller, identified only as a "John Doe" claimed to "have some information about the Goldman Sachs SEC key word on Google that you [Limbaugh] might be interested in".  He then described the manner by which an organization or business could buy keywords from Google.  These keywords, when entered into a Google search, would result in that organization's website featured at the top or side of the search results as a "Sponsored Link".  He then described how one such set of keywords, "goldman sachs SEC", would result in a paid link to www.barackobama.com, thus indicating that someone from the campaign office of President Obama paid for those search terms in order to promote the President's regulatory reform push.

Other right wing sites jumped all over this as evidence of collusion between the White House and the SEC to politicize the reform debate at a time the bill is winding its way through the Congress, along with tabloids like the New York Post.  They even posted a screenshot as PROOF of their claim:

[caption id="attachment_527" align="aligncenter" width="320" caption="The smoking gun of a conspiracy?"][/caption]

Now, again, what this conspiracy would actually be trying to accomplish is vague.  The SEC has been sifting through the rubble of the financial collapse for almost two years.  The investigator examining the Lehman Brothers collapse, for example, is STILL working on sorting out the details of what level of malfeasance, if any, occurred which lead to the company's collapse.  The SEC's investigative efforts would have a similar timeline or longer, with an even larger scope, as Goldman was just one player in the much larger derivative bond market.  The charges coincide with the new push for regulatory reform from the White House, the Democratic Congress, and even the public at large.  Given such widespread agreement that reform needs to happen and those who are responsible for the collapse need to be regulated and investigated, it's unclear what a conspiracy between Obama and the SEC would be seeking to accomplish.  Would it be to make people more in favor of reform than they are already?  It's unclear, but let's get back to the Google angle to this conspiracy theory for a moment.

In seeking to replicate this experiment, I entered the same search terms in a browser (latest version of Firefox, on a Mac system).  This is what I came up with:

[caption id="attachment_528" align="aligncenter" width="892" caption="Right wing conspiracy to hijack Google and oppose financial reform?"][/caption]

The website featured in the "Sponsored Link" box is stopthebailouts.org, which redirects the visitor to a right wing website called The Freedom Project, a PAC founded by Republican Minority Leader, John Boehner.  What would be the alleged conspiracy here?  That a right wing site would seek to undermine the reform bill by buying up Google keywords so visitors are brought to the site's page on it?  Is this a conspiracy between Republican leadership to oppose financial reform through Google ad buys?  Does the right wing consider it okay for a sitting Congressman's political action committee to buy ads on Google, but not a sitting President's political arm?

Further adding to the conspiratorial nature of this story is Rush Limbaugh's use of an "anonymous source", allegedly providing "inside information" on this process.  The truth is that its publicly available from Google's own website.  Google provides complete online purchasing of the keywords to promote your link, depending on how much you wish to spend.  There was no need for a stagecraft of an "anonymous tipster" who claims to have FORMERLY worked for Google as a mere intern.  Anyone with questions about how a sponsored link appears could have just searched Google's own business site.

While this debunks the notion of evidence of a conspiracy, it's still unclear what the alleged conspiracy would be aiming to do.  Uphold the law?  Goldman Sachs, if found guilty, violated the law and mislead investors through fraudulent advertising of their bond instrument.  There may even yet be more charges against them and other players in that market as investigations continue to uncover new information.  Does President Obama have a vested political interest in promoting what the investigation has uncovered in his push for his regulatory reform bill?  Absolutely, every bit as much as Republican John Boehner has in using the same methods to oppose and undermine it.

There is no conspiracy here.  The SEC is an independent agency of the government does not coordinate its enforcement activities with any other branch of government, according to the SEC's own chairperson.  Why would they?  What's in it for them?  The current chairperson was appointed in January of 2009, meaning she has a 5 year term from that point.  There's no threat to her job security until then.  Given her background as being an appointee of both Republican and Democratic presidents, trying to allege she would be acting on party interests in using an 18 month investigation seems implausibly silly.