The Nation:

Who drafted this dubious piece of legislation? Bankers (or their lawyers) did. The leading sellers of derivatives are an exclusive club of five very large financial institutions--Citigroup, JPMorgan Chase, Bank of America, Morgan Stanley and Goldman Sachs--that hold 95 percent of the derivatives exposure among the largest banks (the total contract value exceeds $290 trillion). These are the same folks who toppled the global economy and compelled government to intervene with gigantic bailouts.

Ian Welsh:

Last year myself and Stirling both noted that what would be done by banks if they were bailed out is to horde their money, not lend it out cheap, and save it to buy up competitors, make leveraged plays and so on. That is EXACTLY what has happened. Exactly.

During a downturn, if you have money, you don’t want to lend it out for low gains when you can buy up competitors, cheap. You don’t want to lend it out cheap, when you can make leveraged plays off the bottom of a stock and commodity market which is bound to go up because trillions are being poured into it by central banks. You want to take that money, and buy things while they are cheap, not lend it out for 4 or 5% returns, when you can make many many times that.

Why, exactly, governments expect banks who have better ways to make money to act like retail banks who don’t have any other way to make money but lend out at prime +3 or 4 percent is beyond me. They think they’ll do it out of gratitude for being bailed out, or some sort of sense of civic duty? Most politicians may be stupid, venal and corrupt—but it’s that very greed and venality which means they should understand that banks will do no such thing.

Banks will do it only if they are forced to do it. Remove retail banking from investment banking, insurance and brokerage services, and disallow any risky games on the markets for retail banks. Remove all special facilities from non retail banks because Goldman Sachs should not be doing highly leveraged plays with free money from the Federal Reserve. And reinstitute serious leverage limits, not just for retail banks but for everyone.

As for retail banks, if they don’t lend to the public at rates approved of by the Federal Reserve and Congress, they too should lose their access to special facilities. Banks are given the valuable right to borrow money for almost nothing, and to, in effect, print money by lending out money they don’t have. Those are privileges which are given to them in the expectation that they will use them to benefit the economy. If they refuse to do so, they should lose the privileges.

None of this is rocket science. Those of us who predicted both the crisis and what the bungling of the crisis would cause, however, are precisely the people who are not listened to by those in power. Obama is having his jobs summit, and forget nobodies like me, he isn’t even inviting somebodies like Stiglitz and Krugman.

That's because predicting a crisis correctly disqualifies you for Serious work in Versailles. But, seriously, why would it be any different?

ubetchaiam

For those who argued we should just pass SOMETHING, even if it was a bad bill, because they said we could fix it later, this is what you
get from a strategy of perpetual compromise, a bill that is utterly
beyond redemption. It’s time to throw HR 3962 in the medical waste
bin, and do what should have been done in the first place, build a
new national health care system on what actually DOES work, by
extending the existing economical and efficient Medicare plan to all
ages.

Kip Sullivan at Firedoglake:

McClatchy's Sacramento Bee:

The Sacramento Municipal Utility District sued Goldman Sachs, Morgan Stanley and 45 other financial firms Thursday in Sacramento federal court for allegedly rigging bids in bond-derivatives markets and defrauding the utility.

SMUD joined at least six city and county governments in California that already have filed similar lawsuits arising from a federal investigation made public in 2006. Many other public entities around the country have joined in lawsuits seeking class-action status.

The Lords get the vaccine while the peasants wait in line. What could be more natural or fair?

Today, Citizens for Responsibility and Ethics in Washington (CREW) asked Health and Human Service (HHS) Secretary Kathleen Sebelius to investigate why the Center for Disease Control (CDC) approved the distribution of the H1NI vaccine to Wall Street firms at a time when the vaccine is unavailable to most Americans.

Recent news reports indicate 13 companies, including Citigroup, Goldman Sachs, JP Morgan Chase and Time Warner, have been cleared to receive the vaccine.

Melanie Sloan, executive director of CREW said today, “Although CREW has been unable to uncover the demographic makeup of Goldman Sachs, Citigroup, and JP Morgan Chase, it seems safe to assume the vast majority of their employees are not pregnant women, infants and children, young adults up to 24 years old, and healthcare workers.”

No, seriously.

I'm playing the world's smallest violin. And at this time, I think it a propos to quote, once more, Michael Lewis:

Rumor No. 1: “Goldman Sachs controls the U.S. government.”

Every time we hear the phrase “the United States of Goldman Sachs” we shake our heads in wonder. Every ninth-grader knows that the U.S. government consists of three branches. Goldman owns just one of these outright; the second we simply rent, and the third we have no interest in at all. (Note there isn’t a single former Goldman employee on the Supreme Court.)

No Associated Press content was harmed in the writing of this post

Issues of financial reform and regulation can be intimidating to laymen (this layman anyway) because of its insanely complex nature. It is easy to imagine the system as a big Jenga tower, and moving one piece might cause the whole thing to come crashing down. No one wants to be seen as inadvertently - but earnestly! - advocating for a ruinous policy. Of course, that means the opposite extreme is then in play: Turning into Hamlet and endlessly agonizing over what to do at the expense of actually doing something. Not to mention the fact that, not to put too fine a point on it, wide swaths of our leadership has for years now been deliberately advocating ruinous policies both at home and abroad. That should certainly make those of us in the unwashed masses comfortable with forcefully advocating what seems reasonable based on available data. It's not as though we could screw it up any worse.

Still, it would be nice to have a rule of thumb, compass point or guiding principle to go by. Having been a reasonably close observer of the meltdown and its aftermath, here is one I have come up with: It is necessary (but not sufficient) that any proposal be strenuously opposed by Goldman Sachs (GS). In a largely protected industry Goldman appears to be the closest thing to untouchable as we have. It is in Matt Taibbi's already-legendary description "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." It has installed a revolving door between the highest levels of the government and its board room, enjoys privileged lines of communication with the Treasury secretary exceeding even that of our closest allies, was happily positioned as a key competitor died, then days later benefited as a key debtor was drenched in cash (Yves Smith called it a "massive backdoor subsidy to the likes of Goldman"), and as it happens was the second largest contributor to the president in the 2008 election cycle. More so than any other player in financial services, GS always seems to be nearby when bad things happen.

What Ian Welsh said:

Too many folks are dancing with the Devil, because he or she is a Democrat. Let me repeat one more time, Barack Obama and this Democratic Congress have given the richest people and corporations in America trillions of dollars, have packed the administration with neo-liberals and Goldman Sachs cronies, and are on track to pass a health care bill, which, whether it has a “public option” in it or not, is a regressive tax on the middle class, which will directly be handed over to the health industry.

Reuters:

As Los Angeles housing advocates launched a campaign warning of mortgage rescue scams, a couple hit by foreclosure are charged with torturing two loan-modification agents they suspected of fraud, authorities said on Monday.

Of course, we shouldn't be torturing anybody, not even loan modification agents; after all, they're just part of a "complex ecology." What we ought to be doing is giving artificial persons the death penalty -- starting with Goldman Sachs, Bank of America, and the other top banks, and working our way down.

Matt Taibbi has this lovely Goldman Sachs lobbying document. Here's a smidge:

The equity markets provide perhaps the best example of a highly evolved complex ecosystem, where care must be taken to preserve the benefits that have evolved from competition and innovation...

BWA-HA-HA-HA-HA-HA-HA-HA-HA!

Isn't it time to have a Democratic President? A long quote from Taibbi, but a good one. And I'm glad we're starting this discussion now instead of in 2010 or, heaven forfend, 2012:

I’m personally of the opinion that our main problem lay with the fact that the Democratic Party as currently constituted is more afraid of losing the financial support of Wall Street and the health insurance industry and the pharmaceutical industry than it is of losing progressive voters. In fact, I think I’ve put that wrong, because it implies that the Democratic Party pushes the agenda of industry insiders out of fear. That is a misread of the situation, I think.

Simon Johnson:

Competition between banks is good – on this ["immaculate regulation" advocate Charles] Calomiris and I agree. We differ with regard to whether allowing large quasi-monopoly banks to dominate the landscape (e.g., Goldman Sachs and JP Morgan Chase today) is helpful to competition in any sense.

We should also throw into the mix three additional considerations.

Matt Taibbi:

No one mentions here that [Dow-10000 coverage] is a carrot-and-stick story — the stick being that ordinary people have been robbed of the interest they should be getting in CDs and ordinary bank savings accounts by the various bailout programs and lending guarantees, which have brought the cost of capital down to nothing for the big banks, and punished those people who have been doing the right thing all along by saving. The Fed lends its money to Goldman Sachs and BOFA for free, why does anyone have to pay Grandma a high rate for her CD or her bank savings?

And now that those good, savings-oriented people are getting gouged, they’re being encouraged to get back into the stock market, where the returns are better at the moment. They’re being called people on the “sidelines” who have to be encouraged to “get back in.”

What’s so tiresome about all of this is that no one reports this stuff as a political story. This is politics at its most basic. The Dow is going up, sure, but what does that mean, if the rest of the economy still sucks?

I know what it means!

[I'm leaving this sticky because a synonym for "economic rent" would be really nice to have and propagate. -- lambert]

Go read Numerian for a lucid explation of how GS is making its money. I'll wait.

Now, I want to pull out two paragraphs:

We’ve seen this year the scandal over High Frequency Trading, where Goldman and other firms have computers positioned at the New York Stock Exchange getting information on trades a millisecond before they are posted publicly. Goldman sees where the market is going second by second, positions itself for very short term profits, and in effect extracts a tax on trading by individual investors and mutual funds.

This tax is, exactly, a "rent," a concept which -- lambert blushes modestly -- we were hammering on rather early on, and which our tribunes of the people on the A list still haven't latched on to.

The second paragraph:

Big Picture lists things that are more important* to worry about:

• Paying people in year one for risks that last years or decades;
• The “privatized gains, socialized losses” of the current system;
• Dramatically reduced competition in the Banking sector;
• The idea that “Too Big To Fail” is now an official policy of the United States;
• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;
• Bank lobbyists preventing any sort of credible regulation from passing;
• Goldman Sachs wresting $19 billion from AIG;
• The absurd and poorly thought out $750 billion TARP plan;
• The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;
• The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.

Which would also be a fine checklist for things that the Democrats have not done and are not about to do or even consider doing or considering considering. Hope! Change! Fucking hippies, what do they know?

Yay:

On Thursday, Goldman Sachs will announce the firm's bonus payments for 2009. Analysts expect the bonus pool to mushroom to $23 billion -- double the bonus pool paid to employees in 2008. Earlier this year, Goldman Sachs said that it had put aside $11.4 billion for bonuses during the first half of the year.

Things are working out quite well for the banksters, aren't they?

AP actually does some reporting; turns out it's not really banksters who own Timmy; it's just a few banksters, among them our favorite, Goldman Sachs:

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies -- Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. -- whose executives can reach the nation's most powerful economic official on the phone, sometimes several times a day.

What the calendars show, however, is that only a select few can call the treasury secretary.