Goldman Slapped

The satraps of Capitol Hill don't have much taste for aggressive financial reform. They do have a certain talent, however, for the theater of aggressive reform. And when Goldman Sachs (GS) CEO Lloyd Blankfein settles in at the witness table of the Senate Permanent Subcommittee on Investigations on Tuesday, that's what they'll try to deliver: a moment that crystallizes three years of global disgust with the smart money boys who seem to have played the rest of us for fools.

When the curtain falls, the case that brought Blankfein to the hot seat—the Securities & Exchange Commission's civil lawsuit alleging that Goldman misled investors when it sold them subprime-mortgage-related investments that were designed to blow up—will still be one small, rotten potato in a large and smelly field. The reforms that might prevent this sort of chicanery will still be elusive. And Goldman, which calls the allegations "completely unfounded" and vows to defend itself "vigorously," will still be the most spectacular cash machine that banking has ever seen.