“They have a bazooka and you have a water pistol.”

It isn't a fair fight  when government battles the private sector.  Ask anyone in the insurance industry.   Where the insurers fell flat, however, was in their failure to fight back.  Goldman Sachs doesn't appear to want to repeat the same mistake.  Responding to a Friday dump by the Senate Investigative Committee that flooded the news with stories Goldman Sachs profited while the financial markets melted down, Goldman Sachs released internal documents intended to refute what they will argue is a politically motivated attack on the firm:

The material, consisting largely of internal e-mail traffic, is meant to refute allegations by a Senate investigation committee, which claimed on Saturday that Goldman had made big profits betting against the mortgage market, which subsequently crashed.

The Securities and Exchange Commission has also alleged that Goldman fraudulently failed to disclose that a hedge fund influenced the composition of a subprime mortgage security underwritten by the bank. Mr Blankfein is expected to launch a strong defence of the bank on Tuesday, fighting to preserve the firm’s reputation in the eyes of both clients and the US public, many of whom were the victims of the housing crash.

Mr Blankfein will have to tread carefully if he suggests that Goldman is the object of a politically motivated campaign, without further infuriating regulators, according to people familiar with Goldman’s likely defence. “It is always an unequal battle with the government,” said one lawyer. “They have a bazooka and you have a water pistol.”

 Fire up the bazookas, Goldman Sachs execs and their attorneys will be hauled before the Investigations Committee Tuesday to see if enough outrage can be generated against the Wall Street giant for hedging their bets school bus drivers might default on their $800,000 mortgages.  The Senate Committee will pour through all the Goldman emails to see if they can dig up some dirty laundry.   Maybe there will be Coke cans with suspicious looking hairs on them.  Al Franken can impersonate a Senator - oh wait - nevermind.

At the end of the day all we are likely to find here is that Goldman bet against a bubble we all knew had to pop.  All this will serve politicians who created the policies to fuel the bubble nicely.  In a year when Democrats must face an angry underemployed electorate, Democrats need to appear to be doing something.  They surely can't spend that time looking at their own failures, that would be too much to hope for.  Their solution is to have a bazooka aimed at a bogeyman.  At least this bogeyman appears poised to fire back, even  if it's only with their water pistols.