Goodbye, #TXU, #Luminant, #EFH, whoever the hell you are

Well, the old TXU, or at least the post-deregulation power-generating portion of it, Energy Future Holdings, or EFH, is officially in bankruptcy.

The Wall Street Journal summarizes why, as most of us know — badly gambling wrong on fracking.

That said, that's not the whole story.

Behind that decision stands the separation of the old TXU, and other old electric utilities, into different arms for generation, transmission and other things as part of Texas' electric deregulation.

Even at the time it was being done, it was being questioned.

And, between that and the wrongly-placed bet, this has been a time bomb waiting to detonate, oh, for about four years.

To a large degree, the prospects of Energy Future Holdings hinge on something it and its owners can’t control: the price of natural gas. While it has insulated itself somewhat, through financial hedges that protect it from price swings, it still needs the prices to rise sharply to have any hope of paying off its staggering debt load. 

Indeed, while the company met its roughly $3.6 billion in interest payments on its debt last year, it still faces a $20 billion balloon payment coming due in 2014.

And, the backstory to that is that greed can be a powerful motivator, even to the point of making even a Saint Warren of Buffett wrong, wrong, wrong, on some decision-making:

Investors who bought $40 billion of TXU’s bonds and loans — including legendary wise men like Warren E. Buffett — have seen huge losses as most of the bonds trade between 70 and 80 cents on the dollar. The other $8 billion used to finance the buyout came from the private equity investors themselves, along with banks like JPMorgan and Citigroup and large institutional investors like the Canadian Pension Plan. Several analysts and energy bankers say that this latter stake currently has little value. 

The whole NYT story linked above is worth a good read.

Next question is: what does this mean? The story at top says the restructuring will take about 11 months. But, especially since Oncor, the transmission arm, isn't involved, there's not a lot of jobs to be slashed, as is often the case in such filings. Per federal safety regulations, you have to have X number of people running your power plants, for example. And, given that your wrong bet on natural gas got you in this pickle, you  can't raise rates. Indeed, EFH/TXU has been peddling longer-term contracts up to the last minutes before bankruptcy, including to my place of work.

As for transmission issues? The Electric Reliability Council of Texas, or ERCOT, the folks that oversee transmission issues, say there should be no problem. But, we're expecting another hotter-than-normal summer here. (Or, maybe I should say, in light of global warming, we're expecting another "new normal" summer here.) Combine that with any questions about power generation, and how much of that can reasonably done from older coal-fired plants given today's Supreme Court ruling (see below) and I hope ERCOT, while being sanguine for public consumption, is nonetheless doing careful planning in private. That's doubly true since, contra GOP legislative and gubernatorial "geniuses" in Austin, deregulation has given Texas residents higher electric rates than before, ones that are, overall, considered to be above the national average.

At the same time, this could be good news for the environment. Luminant, EFH's electric generation arm, had four of the five worst power plants in the country for mercury emissions as of a couple of years ago. If the bankruptcy finally forces it to finish writing off its older power plants, and its use of much of the dirty lignite from here in the state, there's a benefit right there.

And, they'll probably have to do that write-off. Today's Supreme Court ruling on EPA power plant regulation authority is not good for coal-fired power plants in general, and certainly not for older ones, especially if they use dirtier coal. Besides, since that underscores, if indirectly, EPA authority to regulate carbon dioxide emissions, it's another good reason for Luminant to cut its losses. It will hurt some small towns near some of its power plants, but this is a call that needed to be made at some point anyway.

But, the bankruptcy filing didn't stipulate any plans for that, leaving state-level leaders of environmental groups a bit frustrated:

Tom “Smitty” Smith, director of Public Citizen’s Texas office, said trying to retrofit plants like Big Brown would be like spending thousands of dollars to fix up a junk car, and Luminant would be better off investing in wind and natural gas plants.

To me, it's a no-brainer in light of the SCOTUS ruling. That said, will its creditors buy on? There's other issues in the filing, per the link above, that could have environmental ramifications. And, speaking of "Big Brown"?

No wonder, based on the mercury link above, and its shaky bottom line, that TXU/EFH/Luminant was among the corporations suing the EPA. So, too, of course was our "sue Obama" attorney general, Greg Abbott. Guess what, Greg? You lost. Ain't the first time. Remember last October, when you lost two out of three? No wonder you're our state's top money-waster.

(By the way, does anybody also notice how Abbott gets as quiet as a church mouse whenever he loses as the SCOTUS level?)

As for details of that bankruptcy? It's a bit complicated, as the Dallas Morning News explains. Will it work? Spinning off the competitive, deregulated Texas Competitive Electric Holdings, in essence, what most of us saw as TXU before deregulation, isn't likely to thrill all creditors. And, a lot of junior creditors may get bupkis. I somehow am skeptical of the 11-month timeline to emerge from this bankruptcy. Every other financial claim by EFH in three-plus years has been wrong, at least to some degree. Why should we believe it now?

Also, any chance that some of the financial speculators behind EFH ask for some socialistic relief from the state? Stay tuned on that one. So far, Kohlberg Kravis Roberts, Texas Pacific Group and Goldman Sachs, the three speculative buyers, have resisted spending their own money more than absolutely necessary.

After all, it was bribery lobbying in Austin that let this takeover happen in the first place. Again, per that long NYT piece:

To that end (of getting state OK for the takeover), the K.K.R. group spent at least $17 million on lobbying (including 2,400 breakfast tacos on the Legislature’s opening day and San Antonio Spurs tickets for certain state representatives), according to Texans for Public Justice, a watchdog group. According to the group and others, the lobbying money was used to win over opponents in the Texas Legislature and fend off legislation that would have given regulators power to veto the deal.

Don't you sleep on this idea of Round Two of bribery lobbying in Austin being on the 2015 agenda of the Lege. That's especially true since the original round was bipartisan, including Democrats such as then-Dallas Mayor Ron Kirk. Electric issues had already been popping up at the edges of some primary races earlier this year.

That said, the buyout also personified the ugliness of "greenwashing":

Other advisers for the buyout team approached environmentalists, including the Natural Resources Defense Council and James D. Marston and Fred Krupp, two leaders of the Environmental Defense Fund, to support the deal. The buyout team offered to cut the number of proposed coal-fueled plants to 3 from 11.  

And, that's why I loathe "Gang Green" environmental groups.

#GoldmanSachs, Village Voice, prostitution, disgust

OK, multiple disgust revealed in this Nick Kristof column.

The first disgust is that Goldman Sachs is a partial owner of the alleged sex trafficking website Backpage. Not that surprising, whether or not, per Kristof, top brass at Goddam Sachs knows about this latest issue. (Contra Saint Nick, having seen Goddam Sachs cybersquat on solar energy public land sites, sell against its own major investors, etc., I'm NOT inclined to give its top brass the benefit of the doubt.

The second disgust is that Village Voice Media owns part of this site. That said, given that VVM's national group of alt-weeklies (including, here in Tejas, the Dallas Observer and Austin Chronicle -- I can't remember what Houston's alt-weekly is) were making money off escort services, albeit, I hope, ones that didn't dip into actual trafficking, years ago, long before the rise of the Net made such things more private/discreet. Again, disgusting but not surprising. Disgusting also, to the degree that such places are exploitative (and I'm not a "gender feminist," so I'm not going to tar with a broad brush) an allegedly liberal site like VVM was into them.

The third disgust? That Goddam Sachs is a partial owner of the allegedly liberal Village Voice Media.

What if some editorialist on staff at one of the stable of VVM products decided to go all Matt Taibbi and rag on Sachs week after week? How long would she or he last? And, will anybody try it?

Is Greg Smith of #GoldmanSachs really a 'hero'? Maybe not

Oh, sure, everybody from the often-combative Matt Taibbi to a fair degree closer to the center of the political spectrum is touting the "brave departure," as Taibbi calls it, of the former Goldman Sachs executive director, chronicled in his own words in a New York Times op-ed.

But, does everything he says stand up? Especially about his own valor or whatever?

People who read here regularly know that I'm not going to bash him from the right, unlike the Wall Street Journal and many others.

But, let's take an honest look at what Greg Smith says in his column.

First, he blames this all, at least by implication, on current GS CEO Loyd Blankfein.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Puhleeze.

This stuff, including trading AGAINST toxic alphabet soup derivatives inside the company, was happening when Henry Paulson was still the head, before he became Bush's Treasury Secretary.

That means this claim:

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.  

Is pure bullshit.

No, it doesn't sound "surprising"; it sounds "dubious," "incredulous" or other things.

Second, he didn't become an executive director yesterday, nor could he have been totally naive about the already-changed-under-Paulson culture until after he became an executive director.

So, to riff on Watergate:

What did you know, Mr. Smith, and when did you know it?

Third, the culture had changed even before Paulson was CEO. It had changed even before Smith was hired. Ever read about the repeal of Glass-Steagall, Mr. Smith?

Ever hear about Alan Greenspan, et al, including people in government with GS connections, refusing to countenance regulation of derivatives, way back then, even? The derivatives which you were apparently still selling?

Combining both points two and three, one must wonder if Mr. Smith is engaged in apple-polishing and character-polishing as much as he had a real crisis of conscience, if not more.

That, in turn, makes this statement of his ironic at least:

Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. 

So, is that how you got promoted? And, did you metaphorically become a Lizzie Borden there, or just why are you leaving?

And (update, March 26) what did you know about stuff like this — alleged short-sheeting short-trading clients?

Until I learn more, and until Greg Smith talks about donating, say, 25 percent of his profit on derivative sales to charities for the needy (not ADL as a nonprofit) my response is:

Cry me a river.

Don't get me wrong. I'm all in favor of some insider exposing details of still-ongoing duplicity at Goddam Sachs. But, let's not give the messenger a halo; to riff on the ax murderer line, if the messenger needs to be shot after he delivers the message, then shoot him!

More seriously, I hope some magazine does a long-form story about this, including people who entered Sachs about the same time as Smith, worked with him, etc. Let's hear the backstory.

Team Obama suing #banksters on #CDO and #CDS - more on why this is likely 'show'

I said yesterday that, after Dear Leader's minions, including and starting with Little Timmy Geithner, along New York Fed members and others, have spent months attacking N.Y. Attorney General Eric Schneiderman, color me skeptical at least, and cynical at most, that any talk  of a federal lawsuit against banksters for their alphabet soup diarrhea of CDOs, CDSs, etc., is anything more than a hill of diarrhea-inducing beans.

 The suit's been filed. So, let's update this from yesterday Adding to my skepticism? It names no dollar amount for damages sought. (Fannie Mae and Freddie Mac reportedly lost $196 billoin on the alphabet soup crap.) So, let's look more at the reality of why this is probably a dog-and-pony show.

Here's how this will likely play out.
1. Team Obama goes through motions of filing suit.
2. Goddam Sachs, Citigroup, Morgan Stanley et al plead remorse. (Like AT&T pleading to "tweak" the T-Mobile takeover.)
3. Said banksters eventually agree to a settlement. (This is part of "doing God's work," of course. Loyd Blankfein will combine this with the "remorse" part for Goddam Sachs.)
4. Money for said settlement will pennies on the dollar, payable over a decade or more. Updated with the new link, 10 percent of this is about $20 billion. And, not coincidentally, that's what Team Obama suggested in initial settlement talks. Even prorated by company size among the 17 defendants, that's, say, $3 billion for Bank of America. BofA had that much profit in one quarter in 2010. Even if I temper my cynicism somewhat, and call it 20 percent on the settlement, payable over three years, that's $6 bil for BofA over three years, or $500M a year. It will be able to digest that, write it down on earnings statements, and possible even find a way to a tax deduction or two.
5. Said money is then used by Team Obama to create a successor to HARP and HAMP called HEMP: "Home Equity Maintenance Program." God, I love being snarky.
6. Said program is started, oh, say, July 2012? Just in time for the Democratic National Convention and some appropriate re-election PR?
6A. Said program, said start of payments, said percentage markdown of payments, etc., all get connected in some way to Democratic campaign contributions.
7. Team Obama tells Schneiderman: "We really, really tried. This is the best we can do. Now, for the last time, stop bothering the banksters."

Team Obama suing banksters - real or a head fake?

Well, after Dear Leader's minions, including and starting with Little Timmy Geithner, along New York Fed members and others, have spent months attacking N.Y. Attorney General Eric Schneiderman, color me skeptical at least, and cynical at most, that any talk of a federal lawsuit against banksters for their alphabet soup diarrhea of CDOs, CDSs, etc., is anything more than a hill of diarrhea-inducing beans.

UPDATE: The suit's been filed. Adding to my skepticism? It names no dollar amount for damages sought. (Fannie Mae and Freddie Mac reportedly lost $196 billoin on the alphabet soup crap.)

Look, here's how this will likely play out.
1. Team Obama goes through motions of filing suit.
2. Goddam Sachs, Citigroup, Morgan Stanley et al plead remorse.
3. Said banksters eventually agree to a settlement. (This is part of "doing God's work," of course.)
4. Money for said settlement is pennies on the dollar, payable over a decade or more. Updated with the new link, 10 percent of this is about $20 billion. And, not coincidentally, that's what Team Obama suggested in initial settlement talks. Even prorated by company size among the 17 defendants, that's, say, $3 billion for Bank of America. BofA had that much profit in one quarter in 2010.
5. Said money is used by Team Obama to create a successor to HARP and HAMP called HEMP: "Home Equity Maintenance Program." God, I love being snarky.
6. Said program is started, oh, say, July 2012? Just in time for the Democratic National Convention and some appropriate re-election PR?
7. Team Obama tells Schneiderman: "We really, really tried. This is the best we can do. Now, for the last time, stop bothering the banksters."

Meanwhile, the mainstream media is piling on Schneiderman, at least the WaPost. Naked Capitalism wonders if its ownership of Kaplan, and Schneiderman's investigation of for-profit colleges, just might have something to do with that.

Sheila Bair: The one insider who fought the bailouts

Joe Nocera has a great "exit interview" with Sheila Bair, who is stepping down as head of the FDIC.

We have her, more than anybody else in the administration (arguably, more even than Elizabeth Warren, yes) to thank for the Dodd-Frank financial regulation reform bill actually having any teeth. We have her to thank for the fact that while non-investment American banks aren't the healthiest, they're healthier than those in Europe. We have her to thank for the fact that the unholy mix of Alan Greenspan and retread Clintonistas with Goddam Sachs connections (plus Henry Paulson, who's not a Clintonista) didn't make "too big to fail" even more set in concrete than it is.

Her "reward"? No goodbye encomiums from Obama. No offer to make her head of the financial regulation commission if Warren is deemed too "toxic" to get past Congress. No appointment as a White House economic adviser to replace all those who have left.

Nope. Just the door.

A shame.

Read the story and you'll see how much we owe Sheila Bair. As well as how much she was unable to change Team Obama.

AND ... she's a Republican, no less.

Schadenfreude for #GoddamSachs outsourcing?

If Think Progress is right about how high up the food chain some of these folks may be .... to be honest, I'm feeling a bit of schadenfreude. They probably defended globalization and the government bailout both.

On the "food chain level," TP cites Business Insider as saying these are primarily “high-paying, skilled positions in sales and investment banking.”

Business Insider adds:

The layoffs come at an interesting time. Banks are fighting tough regulations like capital requirements that they say will stem growth. Preparation for the regulations require banks to free up capital -- like the $1 billion Goldman plans to slash in the coming year. ...

So this news of the adverse effects that capital requirements will have on employment at Goldman Sachs should help the bankers' as they argue against the requirements in coming months. That's why this looks like a political move to discourage Washington from adding capital requirements above the 7% that Basel III regulations will enforce.

On that side, I'm a bit more saddened for those who will lose their jobs, to be pawns in a political game, but GS, and other megabanks, have done this in various ways for years.

Besides, since he's been Goddam Sachs' elfin toady, it would be fun to see a Congressional mix of libertarians, tea partiers and true liberals put Tim Geithner in the hot seat over this. Both for teh layoffs themselves AND for teh attempt to stiff the government.

#RickPerry should work for #WallStreet, even #GoldmanSachs

After all, he's got all the credentials.

First, a 4,500-percent return on an "investment" fund, turning an owner's $1,000 into a $4.5 million return? Who else but Wall Street's wizards can do that? (For their friends, that is.) And, he can talk the Wall Street hypocrisy talk about how government is BAAADDDD. (Except when it's for one's friends.)

Second, like Goldman Sachs' Lloyd Blankfein, he has the part about "doing God's work" down pat. And, again, like Lloyd, Rick appears to spell "god" as "government," since Joseph was working for "the man," not "the son of man."

Third, like many a Wall Streeter, he knows how to bamboozle the middle class and keep his riches to himself, even to the point of not giving them to the external representatives of the divinity he claims to worship. Then again, Rick surely spells "god" with a word shorter than "government."

That word?

"Gold."

What else?

Oh, have some fun and crash the poll about Perry on the homepage of this newspaper.

Do you think Gov. Rick Perry should try a run for president of the United States?
Yes, he'd make a great president and could turn this country around.
No, he's more valuable guiding Texas the next three years.
No, Perry has been bad for the state and he'd be worse for the nation.

Need I say more?

Goddam Sachs is playing with your food

GoldmanGoddam Sachs is into speculating on everything, including something as innocuous as wheat futures prices. And, that's part of what's wrong with world food prices today.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer and the global price is high, he'll lose some cash, but if there's a lousy summer or the price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked well.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into 'derivatives' that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born.

The fallout? Soaring food prices is part of what fuels unrest in places like Egypt, as Truthout explains. It also notes that folks like Goddam Sachs can probably work around obstacles or through loophole in last year's financial regulation reform bill.

Obama is both stupid and lying on foreclosures

I don't know how else to explain his administration's mix of tone-deafness, cluelessness to the seriousness of the situation, and cluelessness to potential political capital.

First, in a number of ways, this is like the pre-bank bailout situation. And, more and more people are seeing the fraud, the big bank shadow and more looming in the background.

Plus, there's no excuse, not even the lying excuse of 2008, that nobody could have seen this coming.

So, for Obama mouthpiece David Axelrod to say a foreclosure moratorium is off the table is both stupid and idiotic.

Stupid because he knows better, he, like top bloggers, knows action is needed. Idiotic because you put down the shovel when you're already in a political hole - or you pick up a different tool when a new approach can be a winning one.

Already, the Wall Street types are pushing back against even basic elements of paper verification. So, is Obama's opposition to a moratorium motivated by campaign cash issues? We know that ultimately, folks like Goldman Sachs are behind CDO tranches behind this whole mess. And, G. Sachs took no bailout haircuts when AIG was made good 100 cents on the dollar.

At the same time, Obama can't punt, really, because the title insurance market runs on as tight a margin as did all the investment banks peddling CDO crap.

And, let's not forget the John Paulsons of the world who bet against those CDOs, and therefore have an interest in no moratorium.

Let's also note this type of fraud ain't exactly new.

Next, the idea of Bank of America self-insuring titles? Are state agencies going to accept and validate that? In many states, probably not. I'm no expert on the state-fragmented regulation of mortgages and related issues, but, at least in states that require court hearings for foreclosures, I don't think it's likely.

Beyond that, real estate financiers, by using computerization without any legal warrant, have brought this moment on themselves in other ways.

So, whether or not Obama is saying this shit for the darkest of neoliberal reasons, it sure looks that way. Or, option 2, it reinforces the idea that he's simply clueless.

As Andrew Leonard notes:

As Elizabeth Warren said in an interactive chat session broadcast at Whitehouse.gov while I was writing this post "the foreclosure problem is big and it is serious." Either she, or Obama, needs to make it clear to the general public just how serious it is and what the government plans to do. David Axelrod, obviously, is not the man for that job. Republican politicians are equally tongue-tied. For the most part, they've been remarkably quiet, aware that it is political suicide to defend the banks but ideologically opposed to any government intervention in favor of homeowners.

But time is short. Fumble this ball, and the game might be over.

Yep, that's about right.

Goldman Sachs: Why for-profit college is pricey

Yep, that's probably part of the problem. The modern Octopus owns some for-profit colleges, like the Art Institute of Colorado. And it, like other for-profit collge owners, is chintzy on faculty salaries, a slavedriver on faculty workloads and more.

Shocking, no?

Hey, G-Sachs, pay your staff. And, don't foist an overpriced education bubble on us either.

Securitize Wall Street salaries?

William D. Cohan has an idea to restrain greed in the financial sector — securitize top executive salaries:

I propose that each large Wall Street firm create a new security that represents — and is secured by — the entire net worth of its 100 top executives. This security would be subordinated to all other creditors as well as to all preferred and common shareholders; in other words, if a firm goes bankrupt, this security is the first to be wiped out.

Boy, wouldn't that shrivel some gonads at big banking houses?

I'm all for it!

Let's make this one better, though.

Let's let average Joes and Janes slice and dice these securitized salaries, then sell them all over the place. Wouldn't you like to sell part of a securitized salary of Goldman Sachs CEO Lloyd Blankfein to a Chinese sovereign wealth fund?

If Dems lose midterms, it's Obama's fault

Likewise, if he loses in 2012. No, seriously. Don't blame GOP obstructionism, of which Prez Kumbaya should have been more cognizant from the get-go. Blame the man staring back at President Barack Obama in the mirror.

If he loses, it's his own fault.

But, the person who slugged the URl is wrong. Obama didn't get "rolled by Wall Street." Geither, Summers et al were willingly chosen as economic advisers precisely because of their Goldman Sachs/Robert Rubin "bloodline"; others were willingly excluded.

Yet those who were most aligned with the “progressive” side of the Wall Street reform issue remained, for the most part, on the outside of the administration looking in. Among them were Brooksley Born, the former chairwoman of the Commodity Futures Trading Commission, and Nobel-winning economist Joseph Stiglitz. Summers and Geithner, by contrast, had been acolytes of Bob Rubin, the former Clinton Treasury secretary who, along with then–Fed chairman Alan Greenspan, had presided over many of the key deregulatory changes in the ’90s. And they convinced Obama that the financial system they themselves had done so much to nurture was, on the whole, fine.

That relates to a failure of will:

(T)he leadership question can’t be ignored. Financial and economic reform just never seemed to be a subject that kindled Obama’s passions, his critics say. ...There was so much passion and ambition in Obama’s words about fixing the economy, and so much dispassion and caution in his policy choices. Early in the Democratic primaries, in January 2008, Obama had stunned many of his supporters by praising Reagan as a transformational president—a contrast to the eight years of Bill Clinton, Obama added cuttingly. Reagan, Obama said, “put us on a fundamentally different path because the country was ready for it.” Yet at what would seem to be a similar historical inflection point—what should have been the end of Reaganism, or deregulatory fervor—President Obama seemed unprepared to address the deeper ills of the financial system and the economy. ... The Obama administration also did little to use its bully pulpit to reorient pay packages at the big financial houses, where bonuses still often run in the tens of millions of dollars. Critics make the case that changing this pay structure would do more than punish those who helped spur the meltdown. It might also encourage some of America’s greatest minds to stay away from financial engineering, which contributes little of substance to the economy, and instead consider real engineering.

Meanwhile, rather than acting like FDR or LBJ, Obama seems more and more like the second coming of Jimmy Carter. No, not every president is an LBJ, an FDR, a Wilson, or even a Reagan, at handling Congress. But, the more successful presidents improve their skills.

Another reason it's his fault if Dems lose big in midterms, or he loses in 2012?

This.

Obama again mocked the "professional left," this time while sucking up to the rich in Greenwich, Conn., many of whom he protected from real financial regulation with his pseudo-reform bill.

It's clear that he's a flat-out liar about wanting to be "pushed" by the left. It's clear he's both a worse, and more unskilled, liar about it than Bill Clinton was on the same subject.

Criminal Sachs?

So, is Lloyd Blankfein going to tell the U.S. Attorney's Office in Manhattan he was "doing God's business," too? Looks like he has some sort of 'splaining to do.

That said, even though this investigation is playing off the SEC civil probe, there's no slam dunk on charges, let alone a conviction:

(T)he Goldman probe presents a significant challenge for the government. Prosecutors in the Brooklyn office of the U.S. Attorney last year lost a high-profile fraud case against two former Bear Stearns Cos. executives, in the first major criminal case linked to the financial meltdown.

Intent is the big issue, but some of the e-mails the SEC uncovered go in that direction.

The WSJ story notes that the feds are reluctant to pursue criminal cases against financial firms for fear they will implode. But, given post-bailout public opinion, I don't see how the DOJ can not push this case, no matter the implosion risk.

Why Dems won't push real financial reform

Wall Street firms like Goldman Sachs gave the party a 3-2 money raising edge in 2008 elections.

So, behind the faux populism of the current financial reform bill in the Senate is more business as usual.

Real populism would include public financing of Congressional campaigns.

Short of that, though, Simon Johnson says Dems could do more now.

"Show people, in gruesome detail, the money being spent by this part of big finance," he wrote Wednesday on his blog, Baselinescenario.com. "Go to the nonfinancial sector, to other parts of the financial system, and directly to individuals -- asking most clearly for contributions that would replace what the banks have withdrawn and offset what the banks are spending to defeat the president's reform agenda."

Don't hold your breath on that, either.

Let's gett a criminal investigation of G. Sachs, too

Just click the link and sign the petition.

Lawsuits next for G. Sachs? Euro action? More?

Some European countries, especially Germany, are making noise about going after Goldman Sachs themselves, in the wake of the Securities and Exchange Commission's civil filing yesterday.

But, that all may be just for starters. There's other things that could happen. Like the SEC trying to roll Fabrice Tourre, which itself is a good reason for Goldman to look at settlement offers.

There's lawsuits by disgruntled investors, who wonder not only how much they lost on Goldman's alleged "bet against CDOs" private investments, but also wonder if Sachs had other such sweetheart deals.

Third, in light of the three possibilities above, is the chance G. Sachs stock will continue to take a beating. If CEO Loyd Blankfein resists settlement offers from the SEC, even tough ones, especially after either European country actions or individual lawsuits, he could be seriously accused of not doing due diligence for major investors.

Fourth, also in light of a stock tanking, senior staff at Sachs, who get bonuses as a signficant part of pay, might organize an inside coup against Blankfein out of financial self-preservation.

I'm probably just scratching the surface; read the full story.

Goldman Sachs wrecks foreign economies, too!

Not content to pass out derivatives of various sorts here in the U.S. like a Pez candy dispenser, when some more fiscally "loose" members of the European Union sought some creative budget help in order to meet the deficit standards for the E.U.'s monetary union in the Euro, Goldman Sachs was only too glad to peddle similar bullshit to Greece, Italy and elsewhere.

Geithner told AIG to break the law

Well, technically, it was the collective voice of the New York Federal Reserve, which our current Treasury Secretary, Tim Geithner, headed at the time, which told insurer AIG not to reveal details of its federal bailout in 2008.

The biggest detail the NY Fed wanted kept under wraps is that AIG's default swaps partners, like Goldman Sachs, were paid 100 cents on the dollar.

You know, if Geithner had any honor, he would resign immediately.

If someone like Dennis Kucinich had the chutzpah, as in the last days of the Bush Administration, he would start impeachment proceedings if Geithner doesn't resign.

Could have fooled me on bankers, Obama

Obama claims he wasn't elected to help the "fat cats" but, then, why did he appoint so many to his administration? Fat cat bankers?

He becomes more full of crap on some things, and just a more complete sellout on others, by the day. As if giving bankers a "lecture" which they already are calling nothing but PR is actually going to help anything. Greenwald has more.