When the Securities and Exchange Commission leveled its complaint against Goldman Sachs for manipulating the financial markets, it was quickly clear that while the legal and political consequences of the case against Goldman Sachs drew most of the public’s attention, but it was the cultural fallout that would be the more meaningful legacy of the case.

I had the chance to make the point for Forbes. Here is some of it:

“The fuzzy link between a real asset like a home mortgage and a synthetic collateralized debt obligation is hard to grasp for people focused on Roth IRAs and pretax health care expense accounts. By ignoring the need most of us have to see how investments are linked to tangible assets, Wall Street generally, and Goldman Sachs specifically, have given us ample reason to believe the truth of the charges.

This lack of trust will be the bigger problem for the investment community, whatever the short-term legal and regulatory outcomes. This is the cultural fallout, full-blown now but rooted in a pattern of Wall Street behavior that has long defied common sense.

We are all somewhat culpable because as long as we saw our real estate, 401(k) and mutual funds increase in value, we were willing to believe, as the saying goes, ‘it’s all good.’ No more. As a result, what Goldman Sachs has to say won’t be heard until trust is rebuilt.”

The rest is here.

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