06/19/2010 05:12 am ET | Updated May 25, 2011

Goldman Nailed Finally

Ever since the financial catastrophe of 2007-08, Goldman Sachs has been hypervigilant when it comes to the media. Many like myself have been complained about, and rudely denied access. The blogosphere has been patrolled 24/7 so that critics can be promptly pounced on.

Now we know why.

Yesterday's bombshell announcement that Goldman was charged with fraud by the U.S. Securities and Exchange Commission is hardly surprising. This is Wall Street's last survivor, and it is about to be ordered off the island too, so to speak.

The others disappeared or were forced into shotgun marriages. All are dogged by lawsuits and under investigation by the world's largest law firm, the U.S. Department of Justice. Many more cases are under investigation.

In a statement, Goldman said, "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation."

The SEC's statement alleges the fraud arose around an issue of subprime debt instruments in 2007. Bad enough this junk was questionably rated, but Goldman collected $15 million in fees to sell this stuff to investors without telling them another one of their clients, the big hedge fund Paulson & Co., was on the other side of the trade. Worse yet, that hedge fund had helped sandbag the other investors by helping to select debts that were likeliest to default. Goldman did not disclose this conflict of interest to other investors, the SEC claims.

The hedge fund was run by billionaire John Paulson, but he has not been charged because Goldman was responsible for disclosure to other investors, not Paulson (not to be confused with very rich Henry Paulson who ran Goldman before becoming Bush's Treasury Secretary).

Like AIG and so many other shenanigans, the deal took place outside U.S. borders, in London. Charged by the SEC was a 31-year-old Goldman vice-president, Fabrice Tourre.

The meltdown, which destroyed many lives and businesses and wounded countries, represented the confluence of government incompetence, immoral people and systemic corruption.

Goldman Sachs deserves to be separated from its taxpayer-backed deposit-taking incarnation, which was a lifeline extended by Republicans along with a big fat bailout of itself and its biggest accounts receivable, AIG.

Lastly, bankers should forever be separated from special access to Washington and the White House so that regulators and oversight can remain independent, which was not the case under Bush libertarianism.

This case, while far from over, certainly restores a bit of confidence in the law and that perhaps it will be applied against the richest, most plugged-in people in the world.