Parsing an SEC Party Line Vote on Goldman

Turns out that the difference between getting nailed by a sucker punch and a free pass comes down to a single vote.

Or so it seems, according to a report on Bloomberg that the U.S. Securities and Exchange Commission split along party lines and only voted 3-2 to serve Goldman Sachs with a civil lawsuit.

EC Chairman Mary Schapiro sided with Democrats Luis Aguilar and Elisse Walter to approve the case, said the people, who declined to be identified because the vote wasn't public. Republican commissioners Kathleen Casey and Troy Paredes voted against suing, the person said....

The decision shows Schapiro, a political independent, moved forward in accusing New York-based Goldman Sachs of fraud in the face of resistance from not only the company but her fellow commissioners. It's the second time this year Schapiro has cast the deciding vote on a high-profile case without Republican support as she sided with Democrats to approve a $150 million settlement with Bank of America Corp. tied to its takeover of Merrill Lynch & Co.

Whether this suggests anything about the government's case is too early to say. Speaking for the Wall Street community, the Wall Street Journal's op-ed page (predictably) mocked the SEC lawsuit in an editorial this morning. Still, the piece marshals the available evidence to present a strong conservative argument, leading up to its haymaker conclusion: that it's all about politics. Here's the key paragraph:

The SEC charges conveniently arrive on the brink of the Senate debate over financial reform, and its supporters are already using the case to grease the bill's passage. "I'm pleased that the Obama Administration is using all of the tools in its arsenal to bring accountability to Wall Street and standing up for homeowners and small businesses across America," said Senate Majority Leader Harry Reid on Friday about the SEC case. "This is also why we need to pass strong Wall Street reform this year." Of course, this case matters to homeowners not at all.

If the SEC indeed voted along party lines, Goldman's proverbial goose may not be so cooked (assuming, of course, that no new blockbuster evidence subsequently comes to light)