Goldman Vampire Squid Gets Bitch Slapped: JP Morgan Bitch Slaps the Dow; and Geithner Tries to Bitch Slap Elizabeth Warren

Ok here were three pieces of news today. First, Goldman Sachs was fined $550 Million for duping customers. We do not need to recap the charges in detail. Goldman helped hedge fund manager John Paulson pick toxic waste sure to go bad for collateralized debt obligations (CDOs) that Goldman would sell to its own patsy clients. Goldman and Paulson then bet against the clients. Since Paulson had picked “assets” guaranteed to go bad, it was a sure bet that Paulson and Goldman would win and that Goldman’s clients would lose. Oh, and by the way, although Goldman let Paulson meet the patsies, Goldman never told the patsies that Paulson arranged the deals and would win when they failed. Business as usual on Wall Street. In the SEC’s settlement, Goldman agreed that this was “incomplete information”—ie the patsies might have liked to know that Goldman and Paulson worked together to ensure the bets were rigged and the patsies would lose. Duh. For Goldman it was a tiny slap on the wrist—it still controls the Obama administration, with its moles, Timmy Geithner and Larry Summers still in charge of fiscal policy, thus prepared to funnel whatever money is necessary to prop up their firm—and the fine amounts to just 14 days of Goldman’s earnings. Time to celebrate—which Goldman did, as its stock rallied on the news that it had been found to have screwed its customers. Is there a better reason to party?

Round two. JP Morgan announced that its profits rose by 76%. Funny thing is that in all banking categories, JP Morgan’s results were horrendous: it lost deposits, it made fewer loans, and even its fees fell by 68%. So how could a bank manage to profit on such dismal results? Well in the old days it was called window dressing—banks would move one little chunk of gold among themselves to show that they were credit worthy. In Morgan’s case, the profits supposedly came from “trading”. In reality they mostly came from reducing “loan loss reserves”. In other words, Morgan decided it had set aside too many reserves against all the bad loans it made over the past decade. After all, borrowers will almost certainly start to make payments on all their debt over the next few months and years, won’t they? Sure, homeowners are massively underwater, and losing their jobs, and cutting back spending, but recovery is just around the corner. Right. Looks like 1933 all over again.

Ok, bitch slapping number three. Our favorite Timmy has weighed in on Elizabeth Warren. Lest readers need any reminder, Warren is the lone sensible voice within the Obama administration. There is, with no exaggeration at all, no other administration official who deserves her or his job more than Warren does. If—and this is a big if—the US survives the current crisis, there is no one who deserves more accolades than Warren. Heck, half the men (and perhaps the same percent of women) in the country have already proposed marriage to her. Yet, Timmy Geithner (let me repeat that: Timmy! Geithner!) the most incompetent and conflicted public official since “heck-uv-a-job” Brownie has dared to oppose Ms. Warren to lead the new Consumer Financial Protection Bureau.

Actually I agree with Timmy. Elizabeth Warren ought to be gunning for Timmy’s job. Fire Geithner. Now. Elizabeth Warren for Treasury Secretary! And in 2012, Warren for President. We should settle for no less. And Obama clearly does not want that job, anyway. Sorry folks, the audacity of hope can only carry us so far. Time for a new face in the White House. Elizabeth is our man, or woman.