The Senate Hearing yesterday on Goldman Sachs was very informative on the issues posed by Wall Street and how they affect America. It showed Goldman Sachs top people aren't evil, amoral people, they are ordinary people out to make money. They are good at it and they play by the rules, the problem is that the rules need some changing and hopefully Congress will rise to the occasion! One main theme stringing through the hearing with Mr. Blankfein was a glaring theme that ordinary Americans hope Congresses addresses in their bill which went something like this. A Senator would bring up the subject of synthetic collateral debt obligations or speculative derivatives and define them where they are in essence swap contracts or more simply agreements where one party agrees to pay another if "X" happens and time and again a Senator in a dramatic fashion would say this is no more than a bet, like a sport bet or or a bet one makes at a casino it doesn't help a person buy a home or help a business create a job or any good thing like that! And Mr. Blankfein would essentially respond that even outside of typical hedging as one sees in say airlines on jet fuel or export businesses on foreign currencies, etc. which everyone accepts as having public utility these swap contracts do offer a valuable benefit they allow investors or financial institutions to manage risks in their investment inventory. For the American people's sake and stability in America's financial industry sake, one would hope that Senators would not be restrained by this use of Swap contracts to stop this foolish and dangerous speculative activity! These contracts result in mind boggling swings of money between financial institutions, Congress if they are truly interested in doing their job they will make against the law "speculative" swap contracts or whatever semantics or manifestations of this concept Wall Street wants to use whether it be derivatives or synthetic CDOs. It is way too dangerous and risks too much instability in having financial institutions engage in such activities as being a party to these instruments. In light of yesterday's hearing it needs to be said "loudly and clearly" that investors using these instruments to manage risks in their investment inventory are hedging and it should be deemed "permissible hedging" as long as the investment item in the inventory for which the investor is protecting against risk over is a security whether it be a stock or bond, that is, it can't be a speculative instrument the investor is trying to manage risk over. Wall Street needs to get the message that main street doesn't want these speculative swap contracts because main street doesn't want to pay the price in loss of job, loss of retirement pension/savings, recession that this casino capitalism brings! Another interesting subject raised during yesterday's hearing was that it was mentioned during the hearing that the financial regulatory bill plans to require banks and mortgage lenders to hold five percent of the loans they make so that they will have "skin in the game so to speak" so they will have a strong reason to make sure that the loans they make are sound loans because if the borrower defaults since they hold a portion of the loan they will incur some loss. Many brilliant people that work in the industry and federal regulatory bodies have advocated for this course to avoid the huge problem America experienced which was a major cause of the "2007" recession which was borrowers being given loans that they could not afford and that was or should have been evident when the loans were made. If Congress is wise they will recognize this idea as an "overkill" and scrap it because it will tie up capital for community banks which can ill afford to have capital tied up unnecessarily and if not scrapped will obstruct them from making some loans because of unavailable capital which will cause a loss of loan fees for them which they desperately need not to mention how it will hurt those Americans who will not be getting those loans who otherwise would and the people that will not be getting work that they would otherwise which would stem from those loans. The problem this five percent mandate is trying to fix was a documentation problem lenders should have thoroughly checked borrowers documentation like proof of income, this was a regulatory problem and it has been fixed! Sometimes people in authority when they try to fix one problem cause another, members of Congress if they don't what is being said here they will soon after the bill's provisions referenced in this paragraph are enacted into law!