The civil charges being brought against Goldman Sachs on the eve of the push for financial reform have been politicized from day one by the Obama administration and Democrats.

Civil charges can put pressure on a firm and industry, and in themselves can be destructive. Regardless of the SEC’s subjective motivation, objectively the Democrats’ use of the charges as an excuse to push through legislation seems to fit a pattern of bullying private industry.

Now the bullying is being raised to a whole new level, as Democrats in Congress are calling for a criminal investigation of Goldman Sachs:

A growing number of House Democrats are asking the Department of Justice to open a criminal investigation into Goldman Sachs.

Rep. Marcy Kaptur (D-Ohio) made the request Tuesday in a letter to Attorney General Eric Holder. Since then, almost 20 of her colleagues have signed on.

The Securities and Exchange Commission (SEC) has filed a fraud action against Goldman for allegedly promoting a package of investments that was designed to fail.

But the SEC can only pursue civil actions. Kaptur wants the Justice Department (DOJ) to consider criminal charges as well.

As destructive as civil charges can be, the bringing of criminal charges will put a company out of business quickly, as happened with the accounting firm Arthur Andersen which had the criminal charges thrown out by the U.S. Supreme Court, but only after the company was out of business.

As a regulated entity which relies upon licensure by various state and quasi-federal agencies, Goldman Sachs and other securities firms are particularly vulnerable.

The threat of criminal prosecution in this political theater should send a chill down the spines of executives at Goldman Sachs.

I’m not sure what Goldman Sachs did to earn the wrath of the Democrats, who were happy to take Goldman Sachs’ campaign contributions for years.

Perhaps the fact that Goldman Sachs has mounted a vigorous public relations campaign to dispute the charges has angered the Democrats in Congress, who are used to industry executives groveling at their feet.

Perhaps it’s just bad timing for Goldman Sachs.

Goldman Sachs may just be in the wrong place at the wrong time from the perspective of Democrats who are in a rush to pass legislation before the November elections.

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