Will the SEC prevail in its civil lawsuit against Goldman Sachs? It doesn’t matter. The suit brought against the firm has already caused considerable harm to the Goldman franchise, whether or not it is successful. It will likely embolden other claimants who lost money during the financial crisis (and who didn’t?) and who may now expect Goldman -- and also its competitors – to be held accountable. Moreover, the suit has already accomplished its main mission: to justify and personalize President Obama’s ongoing assault on “greedy” bankers.

Only by blasting Wall Street can Obama hope to win over populists angry at his government’s dangerous spending spree – a campaign vital to his party and to his ambitions for a second term. Passing “financial reform” legislation is not enough; most Americans are not interested in the subtleties of commodities trading venues and the FDIC’s role in dismantling large firms. They may not be following the details, but they’re pretty sure that the bill under discussion is about as oblique an attack on future financial crises as the health care bill was on rising medical costs. In short, more fluff over substance. They want blood, and no firm is a more appealing target than prosperous, arrogant Goldman.

Sadly, the once-great Wall Street behemoth has served up more than enough garbage to poison public sentiment. The deal in question, in which Goldman sold clients securities which had been purposefully assembled to present an unusual degree of risk, so as to allow a favored short-selling client a huge win, stinks to high heaven. Whether or not Goldman can wiggle through these charges, the suit makes more believable the persistent rumors that Goldman traded and acted against the best interests of its clients.

The SEC fracas follows reports of other misdeeds in recent months. Already, financial authorities in the U.K. and in Germany are demanding an investigation into Goldman’s role in helping Greece move debt off its balance sheet in order to borrow money on more favorable terms. U.K. Prime Minister Gordon Brown is described as “shocked” at the moral bankruptcy described by the lawsuit. (Note: he too is campaigning.)

My guess, for what it’s worth, is that Goldman will win the lawsuit against the SEC. First, they can afford a legal defense that will in sheer force of numbers bring the agency to its knees. This is the same SEC, after all, that took several close looks at Bernie Madoff’s imaginary funds and concluded that all was well. Second, the complexity of the issues will make it a tough case to prosecute, especially since Goldman claims to have lost $90 million in the transaction. Also, Goldman will rightly point out that just like hedge fund manager John Paulson, clients had ample opportunity to analyze the securities they bought. They were not neophytes or little old ladies. ABN Amro Bank, one of the big losers and now part of Royal Bank of Scotland, owned at the time LaSalle Bank in Chicago, a mortgage issuer and one of the twenty largest bank holding companies in the U.S.. They also owned a large U.S.-based residential mortgage brokerage operation, which they later sold to Citigroup. In short, these folks knew the U.S. mortgage markets inside out; they should have known the CDOs for the trashy investments they were. Also, in these types of securities, both sides were making a bet. John Paulson, who famously saw the subprime collapse coming, wanted the most over-rated mortgages he could find. For those optimistic about the housing markets, those same securities represented the best “leveraged” play on further growth in the sector.

The tragedy here is not that some reckless investors lost money on a synthetic CDO. Those instruments were served up to a drunken crowd thirsting for preposterous profits; both the bartenders and the customers were to blame. The real tragedy is that Wall Street’s efforts to regain the public’s trust have been knocked silly. Americans are disgusted by the greed, the self-dealing, the out-sized bonuses, the arrogance and insider culture of our financial houses. They have no confidence in these huge institutions and as a result will rally behind not only sensible reforms but punitive measures as well. Who will blame them?

Yet, Wall Street is responsible for creating the greatest capital raising machine in the world and fueling the growth of the world’s economies. It is one of few industries where the U.S. is a global leader. It is one of the few advantages we have in the race with China. We desperately need all such industries – including our financial institutions-- to thrive and prosper. Goldman Sachs has hurt not only Wall Street; it has hurt the country. Some have suggested that CEO Lloyd Blankfein should resign. It may well be that a new face at the helm is necessary; clients and shareholders will make their views known, and we can only assume that the board will be responsive.

Henry Cobb, who designed Goldman’s new $2 billion headquarters, says he wanted the building to be “a good citizen.” Let us hope that his ambitions are met – by the building, and its occupants.

Liz Peek is a financial, political and social columnist. She is a frequent contributor to the Fox Forum. For more, visit LizPeek.com.

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