Goldman Wants to Regulate Itself

Goldman Sachs, facing pressure from shareholders at today's annual meeting, said the company needs a "rigorous self-examination." He announced the creation of a new business standards committee.

That sounds suspiciously close to self-regulation, a concept that the oil companies embraced. Transocean, the owner of the exploded Deepwater Horizon, and other companies in the oil sector fought back legislation that would have imposed safety checks on a government schedule. Instead, they were allowed to control the pace of their reviews. We know how that ended up.

It's understandable that Goldman would like to take the lead in regulating itself. The Senate is getting closer to adopting financial reform, and the SEC and the U.S. attorney are putting the heat on the company. No doubt, the company would prefer to police itself.

It's well and good that Goldman will strengthen internal controls. That is no substitute for more effective government regulations and for surer hands at the tiller. Otherwise, financial institutions such as Goldman will continue to produce the financial equivalents of the oil leak in the Gulf of Mexico.