Goldman Sachs Going To The Mattresses

As Taegan Goddard reports, Obama is ready this week to make a blistering push for financial regulation using Goldman Sachs as the poster child of bad banks, and Goldman Sachs is more than ready to fight back.

This expected push comes, of course, in the wake of the SEC accusing Goldman Sachs of securities fraud and, as the Wall Street Journal reports, the SEC has expanded their investigation into other major Wall Street banks.

The situation "has emboldened Democrats to ratchet up pressure on Republicans who oppose the Obama administration's proposal," the New York Times reports.

But Goldman Sachs is pushing back and as one senior executive at the firm told me over the weekend, "This is all out war." 

Things are about to get interesting.  The case against Goldman Sachs is heating up, but it's the Shark Effect:  if there's blood in the water, sharks will attack other sharks.  And the seemingly invincible Masters Of The Universe at GS suddenly have a trail of red in the water behind them.  GW at Zero Hedge:

More importantly, the SEC action may represent a crack in the company's armor.

Before the SEC announced the charges, Goldman seemed unstoppable. It seemed like even countless tons of water pressure or scores of invading armies could not touch Goldman.

Now, there is a crack ...

Even if the timing of the SEC's announcement was wholly political (some commentators have called it bread and circuses or kabuki theater), and even if (as some writers have alleged) Goldman CEO Lloyd Blankfein himself approved the action as a way to diffuse pressure for bigger, criminal prosecutions against bigger players, tons of public pressure and hordes of lawyers are probably on their way.

Or perhaps Goldman is like the warlord hated - but feared - by all.  If there is ever a crack in the warlord's veneer of invincibility, the locals might realize that he is only human after all ... and decide they can - together as a group - take him on.

The rest of Wall Street may be quite eager to throw GS under the bus, folks...especially if it helps them avoid their own "SEC action".  Count on it.  And I'm betting a lot of these other banks are pretty damn eager to take GS down a few pegs too.

That faoums Sonny line from the Godfather comes up yet again: "If not, it's all-out war: we go to the mattresses."

This could get very interesting indeed.