Curbing Wall Street

An anonymous email's been making the rounds on Wall Street from some loser who thinks he's a shark. It's a nasty piece of work that reveals the mentality of the people that have been running our economy for some time, thanks to deregulation and political influence peddling. We caught a glimpse of that mentality in Goldman Sachs' testimony last week. But even though they seemed pretty odious to the public, the Goldman Sachs boys actually had their "play nice" faces on.

This email takes off the mask. It reveals the psychology of Wall Street in its rawest form. If it didn't it wouldn't have gone viral so quickly, being passed all around the Street by brokers satisfied that someone is finally telling "Joe Mainstreet" what superior human beings - what ubermenschen - brokers really are.

We've responded, below, and we're offering a challenge to the author: We'll debate you anytime.

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We thought we'd write a little radio ad for the SAFE Banking proposal being put forward in the House and Senate. But this ad's not just promoting a policy - it's selling a litmus test. This amendment finally gives us a chance to find out whether those politicians who are giving great speeches about "too big to fail" and "no more bailouts" mean what they say or not. So imagine you're listening to the radio and you hear this ...

Financial reform: It's so confusing! CDO, MBS, CDS ... it's like alphabet soup out there! Sure, we hear politicians in the House and Senate say they want to stop "too big to fail." They say they don't want to bail out rich, greedy bankers again just so they can give themselves more fat bonuses. They all say that. Then they fight each other tooth and nail! How's a poor voter to know who's telling the truth? more »

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Tomorrow President Obama will return to Cooper Union in New York, where he gave a speech on financial reform as a candidate two years ago. We're told that his advisors want him to "go big" in his speech, as he did when he addressed a joint session of Congress on health reform. But if he follows the same course he followed in health reform - "going big" on rhetoric and then "acting small" on policy - he's not just courting political blowback: He's running the risk of going down in history as this century's Herbert Hoover. more »

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JPMorgan Chase CEO Jamie Dimon knew what he was talking about when he said that ""large corporate America is in very, very, very, very good shape." It's a crude and insensitive remark, but an accurate one.

Unfortunately, the rest of us are still paying for the party. We bailed out the big bankers once, and if Dimon has his way we'll probably be forced to do it again. Despite his company's record first quarter, he's complaining. He thinks that asking banks to cover the cost of their own potential failure is "punitive." Dimon, once known as the "Democrats' banker," is throwing more cash to the GOP these days, and in return his wishes are being slavishly carried out by the likes of Mitch McConnell.

How dangerous are Dimon and his colleagues? Using data from Robert Litan's valuable study of derivatives, as well as source data from the Comptroller of the Currency (plus some handy tips from Mike Konczal), I put together some pie charts.<!--break-->

1. "Too Big to Fail" is Worse Than You Think

The misuse of derivatives nearly brought down the economy, and the concentration of these instruments in a few hands forced the government to bail out their holders. Are we any safer today? Here's the market share held by the top five banks trading in derivatives:

No, your eyes aren't deceiving you. The top five banks hold nearly 96% of the entire derivatives market.

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What secrets are hidden in the Federal Reserve's trillion-dollar shadow? Economic recovery depends on confidence, and confidence requires knowledge. But senators like Chris Dodd and Judd Gregg don't want us to have that knowledge. They don't even want it themselves. more »

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Just when you thought you'd had enough of Goldman Sachs running things -- and running them into the ground -- along comes Meg Whitman. Most Californians know she's using her fortune to run for governor. They probably don't know that she was once on the board of Goldman Sachs, and most likely still would be if she hadn't been cited for a practice one law firm describes as "essentially ... an illegal bribe ... to corporate leaders." Then came the Congressional investigation, and the investor lawsuit, and ... well, it was probably best to just leave the board. more »

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With word that Six Senators were expressing opposition to putting direct lending in the budget bill reconciliation -- which only requires sixty votes to pass the Senate -- Rep George Miller, Chair of the House Education and Labor Committee, and Tom Harkin, Chair of the Senate Education Committe, got to work. more »

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After more than a year of closed-door negotiations, the President and other Democrats have finally appropriated a Republican phrase by calling for "an up or down vote" on the resulting health reform legislation. Great idea - so great, in fact, that we should do even better on financial reform.

This time, let's have an up-or-down vote on each of the vital policy planks that constitute meaningful reform. Instead of having politicians do their horsetrading in private and leaving the public vote until the end, let's have a public show of hands on the vital economic issues of our time.. more »

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