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

By L. Randall Wray

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.

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

  1. Impressed from the first moment I did see her. I'm not an American but I'll agree you should settle for no less.

  2. Wray writes:*********************First, Goldman Sachs was fined $550 Million for duping customers….Round two. The other remaining investment bank, JP Morgan announced that its profits rose by 76%.**********************"The other remaining investment bank" is Morgan Stanley. (Actually, Goldman Sachs and Morgan Stanley are bank holding companies, subject "to significantly tighter regulations and much closer supervision by bank examiners from several government agencies rather than only the Securities and Exchange Commission" these days than they were in the good old days. As to the other three investment banks from yesteryear; Lehman Brothers went bankrupt, Bank of America absorbed Merrill Lynch and JP Morgan absorbed Bear Stearns.)

  3. Thank you for your strong words against GS, JM, Timmy, Larry, and Barry. And for your strong words for Elizabeth. Mr. Black, you are one of only 10 or 20 American leaders that I admire. Thank you for all of your efforts to save America. I too have been hoping that Elizabeth Warren will run for President or Vice President in 2012 — because she truly cares about the people, she's immensely competent, and she's a strong and brave progressive reformer. In contrast, Obama is an incompetent, half-hearted failure. We progressives need to start preparing now to draft candidates who can beat Obama in the 2012 Democratic primary. Elizabeth Warren, Bernie Sanders, Russ Feingold, et al. should be encouraged to run. America cannot afford Obama for 8 years! Much less any Republican or Tea Party destruction of the middle class. Mr. Black, please consider writing about progressive challengers to Obama running up to 2012. Thanks again.

  4. Elizabeth warren is no nonsense. She can be the voice of modern Keynesianism, and I doubt she would let any conservative or tea party get in her way. I would vote for her for President.

  5. From your mouth to God's ears.

  6. For a petition site urging Obama not to cave in to Geithner's attack and to move ahead with his plan to appoint Elizabeth Warren to lead the Consumer Financial Protection Bureau follow this link:

  7. This is not on topic for this post, but geez is this an alarming development: Dem Congressmen are clamoring for austerity. Yikes!

  8. I don't know why anyone would be so taken with Elizabeth Warren. While clearly the darling of the non-profit, wine and brie set, it seems to me that much of this affection is misplaced. She was clearly rolled at the hearings and, quite possibly because of her own ambitions, utimately accepted the vile compromise which installed the CPFB under the aegis of the Fed. And today she raves about the hollowed out disaster foisting itself off on us as "financial reform". More principled people like Russ Feingold went down with the ship rather than lend personal support to such garbage. But then again Russ isn't bucking to head CPFB is he. No agency, no job, eh?Lavrenti Beria

  9. Yo Beria: Yeah, I spend a lot of time trying to choose 'tween bad and worse, myself. Or is it 'tween bad, worse, and insufferable? I dunno….

  10. Thx for comments. Yes I caught the confusion on the 2 Morgans, but with the time difference between NY and KC I was offline when the draft got posted and then had to wait for the editors to make the change the next morning.Hey, first time I've ever been confused for my colleague, Bill Black (check the pix).Warren is not appreciated just by the wine sniffing crowd. So far as I can tell she is the only one in Washington who gives a rat's posterior about the consumers ripped off by Wall Street.Politics is knowing when to compromise. I would never be good at it. So far as I can tell, the financial "reform" does very little–good or bad–so if Warren wants to suppport it to get a bit of consumer protection, I won't slap her down. LRWray

  11. Dave Raithel,There has always been a pernicious tendency among the credulous on the left to accept half a loaf which, when examined closely, amounts to no loaf at all. Although defining themselves as “progressive”, these timorous little mice are more fundamentally anchored in the status quo, too pucilanimous to embrace out-of-the-box concepts that would bring real solutions. I see these people less as allies than obstacles, almost as kulaks in one sense. Suspect you’d feel similarly.Lavrenti Beria

  12. hope is a cruel taskmaster. though i agree warren has integrity, the structure of the political system would prevent her candidature. the key message here is that timmy is so certain of his position he is willing to attack warren. the rest of the world considers this period as critical as the cold war. a giant animal is mortally wounded and in its final breaths will likely lash out and inflict massive damage elsewhere. forget a breakup of europe, time for americans to get real and accept devolution before civil war.

  13. I haven't check closely enough into the JPM result to confirm how much of the 'profit' was simply writing back loss provisions, but it's not a new game. It happened last year at much the same scale. Then again, who can ever believe anything a bank puts in its financial statements – talk about the dark arts.

  14. RJ Wray,"Warren is not appreciated just by the wine sniffing crowd. So far as I can tell she is the only one in Washington who gives a rat's posterior about the consumers ripped off by Wall Street."Its not enough that Warren cares. I care too, should I be appointed to head this sham agency? One needs to be principled enough not to accept half-a-loaf and Warren hasn't been. Principled people rightly opposed the recently passed "insurance care" legislation. And they oppose this garbage as well."Politics is knowing when to compromise. I would never be good at it. So far as I can tell, the financial "reform" does very little–good or bad–so if Warren wants to suppport it to get a bit of consumer protection, I won't slap her down."And isn't this the very problem, compromise. As long as we persist in the acceptability of a psychology of compromise all we will achieve is little that ever could be considered good. We deserve better than that and, truth be known, we're never going to get it short of massive public demonstrations and strikes. We take our eye off the ball when we find promise in reformist social fascists like Warren. I'll believe in the efficacy of an Elizabeth Warren when I see her holding a picket sign. Lavrenti Beria