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Kenneth Griffin, head of the Citadel hedge fund, says it's "childish" to use the uproar over Goldman’s Abacus deal as a basis for regulatory reform.

I feel ya, Ken. Much of the anger about the SEC lawsuit is simply beside the point. (Which doesn’t mean there’s nothing to be angry about.) And some of the things Congress is doing make me want to pat it on the head, hand it a Dum Dum Pop and say: “Run along now and let the grownups talk.”

Childish Thing #1: Vilifying Goldman for trading "against clients."

Sorry to burst your giant Ground Ball Grape flavored Big League Chew bubble, Congress, but this is what happens in the big leagues. Some clients go long and some go short, so as long we live in this universe – you know, the one where the Volcker rule doesn’t exist and proprietary trading at banks does – dealers will often take positions opposite to a client's.

Sure, I still want to send Goldman (NYSE:GS) to detention and confiscate its Gameboy Advance. But the (alleged) misconduct in the Abacus trade wasn't about the firm's trading positions; it was about playing games and keeping secrets. In this great post on Interfluidity, Steve Waldman explains why Goldman should have told Abacus investors that John Paulson, a "speculative short," had helped choose the assets to which the CDO was linked:

That information would not only have been material, it would have been fatal to the deal, because the CDO’s investors did not view themselves as speculators.

Bethany McLean hit on the same point in her New York Times op-ed today:

Goldman did not tell a customer who didn’t want to lose money — the very definition of a buyer of AAA-rated securities — that the investment it was selling had been rigged to amplify the chances that it would, yes, lose money.

And, because I'm childish, I'll remind everyone that we said something similar here at TBDO last week.

Childish Thing #2: Vilifying Goldman for shorting the mortgage market and thus losing fewer billions than some other folks.

Oh, come on, Congress. If you were Goldman shareholders, you’d be applauding their genius. (Especially compared to, say, Citi (NYSE:C).) As Lloyd the B said in his recent letter to shareholders, doubts about "the future direction of prices" inspired the firm to cut its mortgage-related investments back in 2007. Having attended a high school where it was totally uncool to be smart, I don't think Goldman deserves a wedgie just for being less stupid about big-picture market trends than its competitors or its institutional clients.

Which brings us to something truly infantile.

Childish Thing #3: Endlessly yakking, yakking, yakking about Goldman, Goldman, Goldman...

As if no other financial institution around here ever did a shady structured deal. Yes, my darlings, and there's a faraway land filled with fairy dust, where Joan Rivers is the only celebrity who’s ever had plastic surgery.

Source: Goldman Hysteria: Had Enough?