The big financial news today was Greg Smith, the top-level Goldman Sachs executive who resigned after 12 years with the firm. He distributed his resignation letter via the opinion pages of the Old Gray Lady (New York Times).

You don’t do that if you’re looking for a job with the competition. But then, I doubt that he needs one, either.

In a nutshell, Mr. Smith said the corporate culture at Sachs had become poisonous. Clients were mocked behind their backs and sold the most profitable (to Goldman) trades, regardless of their needs or how the investment would perform. All eyes were on the bonus pool all the time.

Goldman Sachs, of course, would be a footnote in Wall Street’s history by now if the American taxpayer had not bailed them out and come to the rescue with their bonus payments (we also bailed out other firms Goldman was in bed with).

The concept “too big to fail” is a red herring. Just who is it that approves or denies mergers among banks and other large companies that allows them to become “too big to fail”? Right. Our selfless federal regulators, who report to our selfless public servants, also known as politicians.

In Goldman’s case, the bailout alone wasn’t enough taxpayer blood for their refined tastes. They were also designated a bank holding company by the feds, so they could borrow the Federal Reserve’s almost free money window, designed to keep real banks from going broke. Goldman was only interested in using the extra cash to feed their computer trading algorithms and make money off unsuspecting “investors” saving for retirement. They had already been bailed out of their disastrous trading choices that destroyed many Americans’ retirements.

If small businesses and not big banks had been allowed to borrow the Fed’s almost-interest-free money, America might be in a very different economic position today. Those businesses would have bought equipment and hired people. Those new employees would have, in turn, spent money in the consumer marketplace.

I think there are two primary reasons the government (and I mean the politicians, who ultimately are the government) let banks and other businesses become “too big to fail.”

First, the feds are very eager to use financial institutions to track the financial transactions of ordinary Americans. Big banks can afford the computer hardware and programmers required to operate this type of tracking system. So the banks are, in effect, doing the federal government’s job for them (which bypasses the constitutional protections against warrantless searches). The feds want to control people.

Second, big banks can afford to pay big bucks for access to politicians and senior “public” officials. In fact, they can’t afford not to pay. Otherwise, some nasty legislation could result. “We’re so sorry, but you know, a generous campaign contribution might have derailed this bill in committee, or prevented a public hearing or helped you to avoid an expensive regulatory quagmire.”

With a Chicago Democrat in the White House, running for re-election, those of you with no experience of Chicago politics are in for quite an education. The endgame is having you and me pay for Obama’s re-election campaign, by handing out more taxpayer dollars to his contributors after the election is over. Or better yet, before the election. (Think the transportation bill, now in Congress, as just one example.)

Since corruption is endemic to human nature, the only way to control it is to lessen the opportunities available to our corrupt public servants (my spell checker just suggested serpents, and I think that’s more accurate). Corruption follows the money. When the money is gone, the party is over.

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