Brad DeLong comments on the trial of former Goldman board member Rajat Gupta, The Network Nature of Social Reality:

The shareholders of Goldman and the investors of Galleon want the relationship between Rajaratnam and Cohn to be about their investigating whether it would be profitable for them to spend their time negotiating win-win deals with each other. But, at least from Goldman’s internal CR perspective, Rajaratnam at least will make his decisions based on the heuristic: is Cohn my friend who remembers and cares about me?

The whole case speaks to a bigger issue:  Inadequate Government oversight and their apparent aversion to prosecuting fraud, etc. committed by powerful financial institutions.  They pick off easy targets but don’t go after the big ones, no matter how much more serious the crimes.  Matt Taibbi has been all over this – see, e.g., Goldman Non-Prosecution:  AG Eric Holder Has No Balls.  He sizes up current reality and how things need to change:

That’s how law works on Wall Street. The bank walks into the room with the sordid activity, and the law firm’s partners huddle up and whip their associates – for hundreds and hundreds of billable hours straight, if necessary – until a way is found to call stealing or tax evasion or accounting fraud or whatever legal.

That’s the way it should work on the prosecutorial side, too. You should start with a simple moral premise – this group of crooks ripped off X group of victims for fifty million dollars – and then you should bury yourself in law books until you find a way to put them all in jail.

One of the reasons I’m so optimistic about Senator-elect Warren is that I believe she’ll push hard for accountability.  I believe she shares Taibbi’s view of how things need to work on the prosecutorial side.