I am not sure how successful the Securities and Exchange Commission (SEC) will be in making their fraud allegations against Goldman Sachs stick ... but I applaud them for trying. When CA style value chain analysis is applied to most of the activities of the banking sector, it becomes clear that there are profits, but no value adding ... and in much of what the banking sector does, there is serious value destruction.
Of course, in the modern world where profit metrics are ubiquitous and value metrics non-existent, business behavior is driven by profit, and the matter of value is not taken into account at all. In the end, this becomes self defeating. The capital markets are meant to be an efficient way of allocating capital to the most important works ... but this is measured only as the most profitable, rather than being also to do with value. This explains why the banking sector has grown and grown producing profit without value ... and infrastructure has been allowed to deteriorate in a totally irresponsible way because it is not "profitable" enough.
Bankers and the leaders of the capital markets should be ashamed of themselves. They have created some powerful models for making profit ... but have done little to help make the world a truly better place.
The SEC allegations that Goldman Sachs created an almost perfect profit mechanism for themselves while doing serious damage to their clients is thought provoking. This is not what should be happening in a responsible society ... but value analysis of the banking industry suggests that this has been a broad pattern of behavior in all sorts of places in the industry for a very long time. Profits were made ... fees were taken ... and a lot of ordinary people, clients of the system, were hurt. Unconscionable!
I like the idea that intellectual analysis can improve the performance of society ... but I abhor the idea that "quants" can build systems that make profits while destroying value. I am also bothered by the role "business education" has had in creating a society where profitable value destruction is a norm rather than the exception.
I am not holding my breath that the SEC will win its case against Goldman Sachs. The rule of law is powerful ... but the terrible reality is that the law often works to protect those most culpable, leaving the innocent to get hurt. Rule of law should work for everyone ... but most statutory law has loophole after loophole to protect those that helped write the law through their lobbyists and their campaign contributions. It is no accident that the banking industry has been spending around $1 million a day lobbying in Washington ... banking oligarchy now fully entrenched in modern US society!
Hopefully a modest success with Community Analytics (CA) can help bring value into play as an important metric for decision making ... on a par with corporate profit, stock market prices and GDP growth!