Just as Democrats disingenuously use BP as the poster boy for why we need a climate bill (forget the fact that BP supports the bill and nearly INVENTED cap-and-trade), now they use Goldman Sachs as the rallying flag for financial "reform."

The problem: Goldman has been very clear for months that it wants more regulation. But two recent developments make it even clearer how dishonest it is for Dems to hold up Goldman as a the symbol of the free market:

1) Check out this Bloomberg report:

Goldman Sachs Group Inc. was upgraded to “overweight” from “neutral” at JPMorgan Chase & Co., which said the firm does not need to raise money to satisfy new capital rules. Deutsche Bank AG was cut to “underweight” from “neutral,” JPMorgan wrote in a report today, saying the German bank may need 15 billion euros following an analysis of new industry capital regulation.

This is no unexpected, unintended consequence. Goldman has a conservative portfolio, as a conscious decision -- possibly a luxury of being the king of the hill. Also, Goldman has publicly been lobbying for stricter capital requirements for months -- in its annual report, the firm wrote, "we support measures that would require higher capital and liquidity levels."

I call this the overhead smash: bigger firms, voluntarily taking some sort of precaution, lobby to make it mandatory, hurting smaller firms. I wrote about this Goldman smash of smaller banks back in April.

2) Check out Goldman's prescriptions for the economy:

we hope that Congress passes the extension of emergency unemployment insurance, continued aid to state and local governments, and at least a temporary extension of the bulk of the 2001/2003 tax cuts beyond the end of 2010...we favor additional deficit-financed stimulus...

There's also a call for more TALF-like bailouts.

Not a perfect liberal line, but far closer to Paul Krugman than to Friedman. Close enough that liberal blogger Matt Yglesias wishes Goldman did control the government.