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Fraud, a crime in finance, is often merely an insult in politics. But there are disturbing parallels between the securities fraud charges outlined in the Securities and Exchange Commission’s civil lawsuit against Goldman Sachs and Senate Minority Leader Mitch McConnell’s fraudulent case against financial reform. Only, in one case the apparent victims were sophisticated investors, and in the other the designated saps are American voters.

Goldman stands accused of creating and marketing an investment tied to subprime mortgages without disclosing that the underlying securities had been selected by a billionaire investor, John Paulson, who was betting on their failure. The Wall Street powerhouse may have been alone in this particular ugliness — Bear Stearns, hardly a paragon of virtue, apparently turned down a similarly structured deal with Paulson. But it’s clear that fraud was pervasive in the lead-up to the financial debacle. Last week, Senate hearings exposed the fraudulent mortgage practices that were central to Washington Mutual’s business plan. 

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