Paul Volcker Crusades Against "Hedge Fund" Goldman Gambling With Taxpayer Money while Masquerading as a Bank

A quick look at Goldman Sachs' earnings shows that for the YTD 2009 period, trading activities accounted for a whopping 77% percent of its revenues, while investment banking represented a mere 9%. Asset management and other services account for the remainder. So how is it that Goldman Sachs continues to be classified as a bank, when lending and banking activity accounts for only 9% of its revenue?

Paul Volcker seems to be the only person in the administration pulling the brake on the Goldman gravy train. In a Bloomberg interview at Deutsche Bank’s Berlin office, Volcker reiterated that Goldman should not be getting taxpayer support if the firm focuses on trading over banking. According to Volcker:

The “safety net” provided by the U.S. government “should not be extended beyond the core commercial-banking business. They can do trading and do anything they want, but then they shouldn’t have access to the safety net.” When the collapse of smaller rival Lehman Brothers Holdings Inc. triggered a crisis of investor confidence last year, regulators allowed Goldman Sachs and Morgan Stanley, another competitor, to convert into bank holding companies. That put the New York-based firms under the Fed’s purview and gave them access to cheap funding. The two firms received federal guarantees on new debt issues, as did commercial banks and some companies with financing businesses, such as General Electric Co.
Goldman Sachs does “a lot of proprietary trading” and General Electric “does a lot of complicated financial services,” said Volcker. “This is one of those kind of things that have to be sorted out.”
Since January, Volcker, who was Fed chairman from 1979 to 1987, has called for regulators to provide government support only to banks that provide essential services like deposit- taking and business payments. He has suggested prohibiting them from owning or sponsoring hedge funds, private-equity funds or from engaging in proprietary trading.

We are in complete agreement with Volcker. Here are some questions the Fed should be answering, namely:

1. What social/economic or even systemically important banking/lending service does Goldman Sachs provide, to deserve a Fed backed bailout?
2. Why does Goldman Sachs a hedge fund have the power to create money by being classified as a bank?
3. How has Goldman Sachs a hedge fund, been allowed to masquerade as a bank and given access to cheap funds through the Fed's discount window?
4. Why has Goldman Sachs been allowed to raise $30bn in low interest FDIC guaranteed debt from the markets? Why should the taxpayer subsidizing their gambling activities?
5. Why is there no move by the Fed to reclassify Goldman Sachs as a hedge fund? How do they continue to justify using taxpayer money to fund a hedge fund's gambling activities?

If Bernanke was truly the honest academic he claims to be, he would surely be addressing these questions.