Today, Accountable America sent a letter to the Financial Crisis Inquiry Commission calling on the commission to get work and use the broad mandate given to them by Congress. The letter encourages the FCIC to start moving more swiftly and to host public hearings with, amongst others, victim of the Madoff's fraud. The letter reads:

Two weeks ago, we noted that the Financial Crisis Inquiry Commission (FCIC) is planning to accept and discuss working papers from noted economists on the subject of the causes of the global financial crisis. The presentations will be given this Friday and Saturday, February 26-27th.

The forum, which is open to the public, will be held at the American University Washington College of Law, 4801 Massachusetts Avenue, NW, room 603. The forum will also be webcast live at FCIC.gov. Join us.

On Thursday, dozens of financial reform advocacy groups sent a letter to Senator Chris Dodd (D-CT), the Chairman of the Senate Banking Committee, thanking him for championing the Consumer Financial Protection Agency (CFPA) and urged the Senator not to bow to Wall Street's pressure and water down reform. The letter reads:

The undersigned consumer, civil rights, labor and community organizations would like to thank you for your strong efforts to enact an independent Consumer Financial Protection Agency. Existing bank regulators utterly failed to protect consumers from abusive lending practices in the marketplace because they were not independent of the lenders they regulated and because they subordinated consumer protection concerns to a dangerously shortsighted focus on the near-term profitability of these institutions. We strongly support the CFPA because it will transform this failed regulatory approach by creating an independent agency focused on protecting consumers from deceptive, unfair or discriminatory financial practices. Correspondingly, we will oppose any CFPA proposal that undermines the ability of the agency to make and implement independent decisions about the needs of consumers, such as placing the agency within a new prudential regulator. In fact, putting the CFPA under the OCC or a new, more consolidated national bank regulator would be worse for consumers than the existing regulatory system.

It is dismaying that some are proposing to give the same prudential regulators whose failures harmed millions of American families and brought our economy to the brink of collapse even more power to make decisions about consumer protection. The OCC, for example, not only failed to stop widespread mortgage and credit card lending abuses by banks it regulated, it actually opposed consumer protection measures to curb these abuses. In August of 2008, Comptroller of the Currency John Dugan wrote the Federal Reserve Board to propose significantly weakening core elements of a proposed rule to address unfair and deceptive credit card lending practices. Dugan said that the first reason he wanted to eviscerate these provisions was because they "raise safety and soundness concerns." Even the Federal Reserve Board rejected the OCC’s anti-consumer views and finalized a rule that Congress then improved when it passed the Credit CARD Act.

It would be equally impossible to assure the necessary degree of independence for a CFPA if its rules were effectively subject to veto by a political appointee such as the Secretary of the Treasury, at the behest of a banking regulator. The models for “independent” agencies within the Treasury – the OCC and the OTS – have statutory guarantees of autonomy from the Secretary in rule-making and enforcement, in addition to other attributes necessary for independence, such as independent funding.

We can think of no other circumstance in which an agency charged with protecting the American public can have its actions vetoed because of a challenge by another agency focused on the priorities or profitability of a regulated industry. Though the auto industry is important to the American economy, we do not let the Commerce Department attempt to override NHTSA's auto safety rules or vehicle emissions standards. We would not give another agency the legal authority to get a FAA airline safety rule or EPA clean water regulation vetoed because of the impact on industry. We do not let the Small Business Administration trigger a legal process to OSHA's worker safety rules because they might eat into business profitability.

Given the very poor consumer protection track record and lack of independence from the institutions it regulates, neither the OCC nor its successor should have the ability to oversee or, in effect, veto decisions by a CFPA. It should also be prevented from trying to use phony claims regarding "safety and soundness" to slow or stop consumer protection measures.

The evidence is clear that strong consumer protection measures will also protect the long-term stability of financial institutions, even if these measures impinge on short-term profitability. For example, if the OCC and other banking agencies had paid more attention to the impact of abusive subprime mortgage loans on consumers, it would have better protected the solidity of the institutions it regulated as well. It is no longer appropriate to allow prudential regulators to narrowly (and improperly) focus on the short term profitability of the institutions they regulate by rejecting measures that are in the best interest of consumers.

Our organizations strongly urge you to reject all proposals to allow prudential regulators to oversee or veto legitimate consumer protection decisions by an independent regulatory agency. Once again, we commend you for your strong support of the CFPA and look forward to working with you to achieve this crucial goal.

The letter was signed by a number of advocacy organizations calling for responsible reform including Americans for Financial Reform, AFL-CIO, California Reinvestment Coalition, Center for Responsible Lending, Ctw Investment Group, Consumer Action, Consumer Federation of America, Consumer Union, Consumer Watchdog, Demos, Empire Justice, International Brotherhood of Teamsters, National Association of Consumer Advocates, National Community Reinvestment Coalition, National Consumer League, National Consumer Law Center (on behalf of its low income clients), National Fair Housing Alliance, National People's Action, New Jersey Citizen Action, Public Citizen, Sargent Shriver Center on Poverty Law, SEIU, The Leadership Conference on Civil and Human Rights, U.S. PIRG and the Western States Center.

In a groundbreaking piece in Rolling Stone, Matt Taibbi concludes that "Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash." Taibbi:

Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America's populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what's the difference if some fat cat in New York pockets $20 million instead of $10 million?

The only reason such apathy exists, however, is because there's still a widespread misunderstanding of how exactly Wall Street "earns" its money, with emphasis on the quotation marks around "earns." The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street's eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its "performance" was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.

Taibbi goes on to explain the seven great "cons" of Goldman Sachs. The first Taibbi describes as the "swoop and squat:"

By now, most people who have followed the financial crisis know that the bailout of AIG was actually a bailout of AIG's "counterparties" — the big banks like Goldman to whom the insurance giant owed billions when it went belly up.

What is less understood is that the bailout of AIG counter-parties like Goldman and Société Générale, a French bank, actually began before the collapse of AIG, before the Federal Reserve paid them so much as a dollar. Nor is it understood that these counterparties actually accelerated the wreck of AIG in what was, ironically, something very like the old insurance scam known as "Swoop and Squat," in which a target car is trapped between two perpetrator vehicles and wrecked, with the mark in the game being the target's insurance company — in this case, the government.

This may sound far-fetched, but the financial crisis of 2008 was very much caused by a perverse series of legal incentives that often made failed investments worth more than thriving ones. Our economy was like a town where everyone has juicy insurance policies on their neighbors' cars and houses. In such a town, the driving will be suspiciously bad, and there will be a lot of fires.

AIG was the ultimate example of this dynamic. At the height of the housing boom, Goldman was selling billions in bundled mortgage-backed securities — often toxic crap of the no-money-down, no-identification-needed variety of home loan — to various institutional suckers like pensions and insurance companies, who frequently thought they were buying investment-grade instruments. At the same time, in a glaring example of the perverse incentives that existed and still exist, Goldman was also betting against those same sorts of securities — a practice that one government investigator compared to "selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars."

Goldman often "insured" some of this garbage with AIG, using a virtually unregulated form of pseudo-insurance called credit-default swaps. Thanks in large part to deregulation pushed by Bob Rubin, former chairman of Goldman, and Treasury secretary under Bill Clinton, AIG wasn't required to actually have the capital to pay off the deals. As a result, banks like Goldman bought more than $440 billion worth of this bogus insurance from AIG, a huge blind bet that the taxpayer ended up having to eat.

Thus, when the housing bubble went crazy, Goldman made money coming and going. They made money selling the crap mortgages, and they made money by collecting on the bogus insurance from AIG when the crap mortgages flopped.

Still, the trick for Goldman was: how to collect the insurance money. As AIG headed into a tailspin that fateful summer of 2008, it looked like the beleaguered firm wasn't going to have the money to pay off the bogus insurance. So Goldman and other banks began demanding that AIG provide them with cash collateral. In the 15 months leading up to the collapse of AIG, Goldman received $5.9 billion in collateral. Société Générale, a bank holding lots of mortgage-backed crap originally underwritten by Goldman, received $5.5 billion. These collateral demands squeezing AIG from two sides were the "Swoop and Squat" that ultimately crashed the firm. "It put the company into a liquidity crisis," says Eric Dinallo, who was intimately involved in the AIG bailout as head of the New York State Insurance Department.

It was a brilliant move. When a company like AIG is about to die, it isn't supposed to hand over big hunks of assets to a single creditor like Goldman; it's supposed to equitably distribute whatever assets it has left among all its creditors. Had AIG gone bankrupt, Goldman would have likely lost much of the $5.9 billion that it pocketed as collateral. "Any bankruptcy court that saw those collateral payments would have declined that transaction as a fraudulent conveyance," says Barry Ritholtz, the author of Bailout Nation. Instead, Goldman and the other counterparties got their money out in advance — putting a torch to what was left of AIG. Fans of the movie Goodfellas will recall Henry Hill and Tommy DeVito taking the same approach to the Bamboo Lounge nightclub they'd been gouging. Roll the Ray Liotta narration: "Finally, when there's nothing left, when you can't borrow another buck . . . you bust the joint out. You light a match."

And why not? After all, according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG — again, money it almost certainly would not have seen a fraction of had AIG proceeded to a normal bankruptcy. Along with the collateral it pocketed, that's $19 billion in pure cash that Goldman would not have "earned" without massive state intervention. How's that $13.4 billion in 2009 profits looking now? And that doesn't even include the direct bailouts of Goldman Sachs and other big banks, which began in earnest after the collapse of AIG.

The second great con Taibbi dubs the "dollar store" and refers to the process by which investment houses like Goldman Sachs reclassified themselves as banks. Taibbi explains how this was a great con:

In the usual "DollarStore" or "Big Store" scam — popularized in movies like The Sting — a huge cast of con artists is hired to create a whole fake environment into which the unsuspecting mark walks and gets robbed over and over again. A warehouse is converted into a makeshift casino or off-track betting parlor, the fool walks in with money, leaves without it.

The two key elements to the Dollar Store scam are the whiz-bang theatrical redecorating job and the fact that everyone is in on it except the mark. In this case, a pair of investment banks were dressed up to look like commercial banks overnight, and it was the taxpayer who walked in and lost his shirt, confused by the appearance of what looked like real Federal Reserve officials minding the store.

Less than a week after the AIG bailout, Goldman and another investment bank, Morgan Stanley, applied for, and received, federal permission to become bank holding companies — a move that would make them eligible for much greater federal support. The stock prices of both firms were cratering, and there was talk that either or both might go the way of Lehman Brothers, another once-mighty investment bank that just a week earlier had disappeared from the face of the earth under the weight of its toxic assets. By law, a five-day waiting period was required for such a conversion — but the two banks got them overnight, with final approval actually coming only five days after the AIG bailout.

Why did they need those federal bank charters? This question is the key to understanding the entire bailout era — because this Dollar Store scam was the big one. Institutions that were, in reality, high-risk gambling houses were allowed to masquerade as conservative commercial banks. As a result of this new designation, they were given access to a virtually endless tap of "free money" by unsuspecting taxpayers. The $10 billion that Goldman received under the better-known TARP bailout was chump change in comparison to the smorgasbord of direct and indirect aid it qualified for as a commercial bank.

When Goldman Sachs and Morgan Stanley got their federal bank charters, they joined Bank of America, Citigroup, J.P. Morgan Chase and the other banking titans who could go to the Fed and borrow massive amounts of money at interest rates that, thanks to the aggressive rate-cutting policies of Fed chief Ben Bernanke during the crisis, soon sank to zero percent. The ability to go to the Fed and borrow big at next to no interest was what saved Goldman, Morgan Stanley and other banks from death in the fall of 2008. "They had no other way to raise capital at that moment, meaning they were on the brink of insolvency," says Nomi Prins, a former managing director at Goldman Sachs. "The Fed was the only shot."

In fact, the Fed became not just a source of emergency borrowing that enabled Goldman and Morgan Stanley to stave off disaster — it became a source of long-term guaranteed income. Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve.

"You're borrowing at zero, putting it out there at two or three percent, with hundreds of billions of dollars — man, you can make a lot of money that way," says the manager of one prominent hedge fund. "It's free money." Which goes a long way to explaining Goldman's enormous profits last year.

The third great con Taibbi describes as "pig in a poke," refers to the mark to market rule changes and the bailout which helped the banksters clear off their so-called troubled assets. Taibbi:

At one point or another, pretty much everyone who takes drugs has been burned by this one, also known as the "Rocks in the Box" scam or, in its more elaborate variations, the "Jamaican Switch." Someone sells you what looks like an eightball of coke in a baggie, you get home and, you dumbass, it's baby powder.

The scam's name comes from the Middle Ages, when some fool would be sold a bound and gagged pig that he would see being put into a bag; he'd miss the switch, then get home and find a tied-up cat in there instead. Hence the expression "Don't let the cat out of the bag."

The "Pig in the Poke" scam is another key to the entire bailout era. After the crash of the housing bubble — the largest asset bubble in history — the economy was suddenly flooded with securities backed by failing or near-failing home loans. In the cleanup phase after that bubble burst, the whole game was to get taxpayers, clients and shareholders to buy these worthless cats, but at pig prices.

One of the first times we saw the scam appear was in September 2008, right around the time that AIG was imploding. That was when the Fed changed some of its collateral rules, meaning banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything — including some of the mortgage-backed sewage that got us into this mess in the first place. In other words, banks that once had to show a real pig to borrow from the Fed could now show up with a cat and get pig money. "All of a sudden, banks were allowed to post absolute shit to the Fed's balance sheet," says the manager of the prominent hedge fund.

The Fed spelled it out on September 14th, 2008, when it changed the collateral rules for one of its first bailout facilities — the Primary Dealer Credit Facility, or PDCF. The Fed's own write-up described the changes: "With the Fed's action, all the kinds of collateral then in use . . . including non-investment-grade securities and equities . . . became eligible for pledge in the PDCF."

Translation: We now accept cats.

The Pig in the Poke also came into play in April of last year, when Congress pushed a little-known agency called the Financial Accounting Standards Board, or FASB, to change the so-called "mark-to-market" accounting rules. Until this rule change, banks had to assign a real-market price to all of their assets. If they had a balance sheet full of securities they had bought at $3 that were now only worth $1, they had to figure their year-end accounting using that $1 value. In other words, if you were the dope who bought a cat instead of a pig, you couldn't invite your shareholders to a slate of pork dinners come year-end accounting time.

But last April, FASB changed all that. From now on, it announced, banks could avoid reporting losses on some of their crappy cat investments simply by declaring that they would "more likely than not" hold on to them until they recovered their pig value. In short, the banks didn't even have to actually hold on to the toxic shit they owned — they just had to sort of promise to hold on to it.

That's why the "profit" numbers of a lot of these banks are really a joke. In many cases, we have absolutely no idea how many cats are in their proverbial bag. What they call "profits" might really be profits, only minus undeclared millions or billions in losses.

"They're hiding all this stuff from their shareholders," says Ritholtz, who was disgusted that the banks lobbied for the rule changes. "Now, suddenly banks that were happy to mark to market on the way up don't have to mark to market on the way down."

The fourth great con is dubbed the "Rumanian Box" and refers to the "quantitative easing" policy from March 2009, a desperate move that resulted in more printed money, backed by Treasury bonds, that helped the banks build even larger profits. Taibbi explains:

One of the great innovations of Victor Lustig, the legendary Depression-era con man who wrote the famous "Ten Commandments for Con Men," was a thing called the "Rumanian Box." This was a little machine that a mark would put a blank piece of paper into, only to see real currency come out the other side. The brilliant Lustig sold this Rumanian Box over and over again for vast sums — but he's been outdone by the modern barons of Wall Street, who managed to get themselves a real Rumanian Box.

How they accomplished this is a story that by itself highlights the challenge of placing this era in any kind of historical context of known financial crime. What the banks did was something that was never — and never could have been — thought of before. They took so much money from the government, and then did so little with it, that the state was forced to start printing new cash to throw at them. Even the great Lustig in his wildest, horniest dreams could never have dreamed up this one.

The setup: By early 2009, the banks had already replenished themselves with billions if not trillions in bailout money. It wasn't just the $700 billion in TARP cash, the free money provided by the Fed, and the untold losses obscured by accounting tricks. Another new rule allowed banks to collect interest on the cash they were required by law to keep in reserve accounts at the Fed — meaning the state was now compensating the banks simply for guaranteeing their own solvency. And a new federal operation called the Temporary Liquidity Guarantee Program let insolvent and near-insolvent banks dispense with their deservedly ruined credit profiles and borrow on a clean slate, with FDIC backing. Goldman borrowed $29 billion on the government's good name, J.P. Morgan Chase $38 billion, and Bank of America $44 billion. "TLGP," says Prins, the former Goldman manager, "was a big one."

Collectively, all this largesse was worth trillions. The idea behind the flood of money, from the government's standpoint, was to spark a national recovery: We refill the banks' balance sheets, and they, in turn, start to lend money again, recharging the economy and producing jobs. "The banks were fast approaching insolvency," says Rep. Paul Kanjorski, a vocal critic of Wall Street who nevertheless defends the initial decision to bail out the banks. "It was vitally important that we recapitalize these institutions."

But here's the thing. Despite all these trillions in government rescues, despite the Fed slashing interest rates down to nothing and showering the banks with mountains of guarantees, Goldman and its friends had still not jump-started lending again by the first quarter of 2009. That's where those nuclear-powered balls of Lloyd Blankfein came into play, as Goldman and other banks basically threatened to pick up their bailout billions and go home if the government didn't fork over more cash — a lot more. "Even if the Fed could make interest rates negative, that wouldn't necessarily help," warned Goldman's chief domestic economist, Jan Hatzius. "We're in a deep recession mainly because the private sector, for a variety of reasons, has decided to save a lot more."

Translation: You can lower interest rates all you want, but we're still not fucking lending the bailout money to anyone in this economy. Until the government agreed to hand over even more goodies, the banks opted to join the rest of the "private sector" and "save" the taxpayer aid they had received — in the form of bonuses and compensation.

The ploy worked. In March of last year, the Fed sharply expanded a radical new program called quantitative easing, which effectively operated as a real-live Rumanian Box. The government put stacks of paper in one side, and out came $1.2 trillion "real" dollars.

The government used some of that freshly printed money to prop itself up by purchasing Treasury bonds — a desperation move, since Washington's demand for cash was so great post-Clusterfuck '08 that even the Chinese couldn't buy U.S. debt fast enough to keep America afloat. But the Fed used most of the new cash to buy mortgage-backed securities in an effort to spur home lending — instantly creating a massive market for major banks.

And what did the banks do with the proceeds? Among other things, they bought Treasury bonds, essentially lending the money back to the government, at interest. The money that came out of the magic Rumanian Box went from the government back to the government, with Wall Street stepping into the circle just long enough to get paid. And once quantitative easing ends, as it is scheduled to do in March, the flow of money for home loans will once again grind to a halt. The Mortgage Bankers Association expects the number of new residential mortgages to plunge by 40 percent this year.

If you're not disgusted already - there's more. The fifth great con is dubbed "the Big Mitt" which refers to the so-called "Public-Private Investment Program" which encouraged banks to engage in the same kind of risky behavior that contributed to the economic crisis. Taibbi:

All of that Rumanian box paper was made even more valuable by running it through the next stage of the grift. Michael Masters, one of the country's leading experts on commodities trading, compares this part of the scam to the poker game in the Bill Murray comedy Stripes. "It's like that scene where John Candy leans over to the guy who's new at poker and says, 'Let me see your cards,' then starts giving him advice," Masters says. "He looks at the hand, and the guy has bad cards, and he's like, 'Bluff me, come on! If it were me, I'd bet everything!' That's what it's like. It's like they're looking at your cards as they give you advice."

In more ways than one can count, the economy in the bailout era turned into a "Big Mitt," the con man's name for a rigged poker game. Everybody was indeed looking at everyone else's cards, in many cases with state sanction. Only taxpayers and clients were left out of the loop.

At the same time the Fed and the Treasury were making massive, earthshaking moves like quantitative easing and TARP, they were also consulting regularly with private advisory boards that include every major player on Wall Street. The Treasury Borrowing Advisory Committee has a J.P. Morgan executive as its chairman and a Goldman executive as its vice chairman, while the board advising the Fed includes bankers from Capital One and Bank of New York Mellon. That means that, in addition to getting great gobs of free money, the banks were also getting clear signals about when they were getting that money, making it possible to position themselves to make the appropriate investments.

One of the best examples of the banks blatantly gambling, and winning, on government moves was the Public-Private Investment Program, or PPIP. In this bizarre scheme cooked up by goofball-geek Treasury Secretary Tim Geithner, the government loaned money to hedge funds and other private investors to buy up the absolutely most toxic horseshit on the market — the same kind of high-risk, high-yield mortgages that were most responsible for triggering the financial chain reaction in the fall of 2008. These satanic deals were the basic currency of the bubble: Jobless dope fiends bought houses with no money down, and the big banks wrapped those mortgages into securities and then sold them off to pensions and other suckers as investment-grade deals. The whole point of the PPIP was to get private investors to relieve the banks of these dangerous assets before they hurt any more innocent bystanders.

But what did the banks do instead, once they got wind of the PPIP? They started buying that worthless crap again, presumably to sell back to the government at inflated prices! In the third quarter of last year, Goldman, Morgan Stanley, Citigroup and Bank of America combined to add $3.36 billion of exactly this horseshit to their balance sheets.

This brazen decision to gouge the taxpayer startled even hardened market observers. According to Michael Schlachter of the investment firm Wilshire Associates, it was "absolutely ridiculous" that the banks that were supposed to be reducing their exposure to these volatile instruments were instead loading up on them in order to make a quick buck. "Some of them created this mess," he said, "and they are making a killing undoing it."

The sixth con Taibbi dubs "the wire" and refers to banks that give bad advice to their clients on purpose and profit off of their decisions even if their clients are screwed in the end. Taibbi:

Here's the thing about our current economy. When Goldman and Morgan Stanley transformed overnight from investment banks into commercial banks, we were told this would mean a new era of "significantly tighter regulations and much closer supervision by bank examiners," as The New York Times put it the very next day. In reality, however, the conversion of Goldman and Morgan Stanley simply completed the dangerous concentration of power and wealth that began in 1999, when Congress repealed the Glass-Steagall Act — the Depression-era law that had prevented the merger of insurance firms, commercial banks and investment houses. Wall Street and the government became one giant dope house, where a few major players share valuable information between conflicted departments the way junkies share needles.

One of the most common practices is a thing called front-running, which is really no different from the old "Wire" con, another scam popularized in The Sting. But instead of intercepting a telegraph wire in order to bet on racetrack results ahead of the crowd, what Wall Street does is make bets ahead of valuable information they obtain in the course of everyday business.

Say you're working for the commodities desk of a big investment bank, and a major client — a pension fund, perhaps — calls you up and asks you to buy a billion dollars of oil futures for them. Once you place that huge order, the price of those futures is almost guaranteed to go up. If the guy in charge of asset management a few desks down from you somehow finds out about that, he can make a fortune for the bank by betting ahead of that client of yours. The deal would be instantaneous and undetectable, and it would offer huge profits. Your own client would lose money, of course — he'd end up paying a higher price for the oil futures he ordered, because you would have driven up the price. But that doesn't keep banks from screwing their own customers in this very way.

The scam is so blatant that Goldman Sachs actually warns its clients that something along these lines might happen to them. In the disclosure section at the back of a research paper the bank issued on January 15th, Goldman advises clients to buy some dubious high-yield bonds while admitting that the bank itself may bet against those same shitty bonds. "Our salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research," the disclosure reads. "Our asset-management area, our proprietary-trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research."

Banks like Goldman admit this stuff openly, despite the fact that there are securities laws that require banks to engage in "fair dealing with customers" and prohibit analysts from issuing opinions that are at odds with what they really think. And yet here they are, saying flat-out that they may be issuing an opinion at odds with what they really think.

To help them screw their own clients, the major investment banks employ high-speed computer programs that can glimpse orders from investors before the deals are processed and then make trades on behalf of the banks at speeds of fractions of a second. None of them will admit it, but everybody knows what this computerized trading — known as "flash trading" — really is. "Flash trading is nothing more than computerized front-running," says the prominent hedge-fund manager. The SEC voted to ban flash trading in September, but five months later it has yet to issue a regulation to put a stop to the practice.

Over the summer, Goldman suffered an embarrassment on that score when one of its employees, a Russian named Sergey Aleynikov, allegedly stole the bank's computerized trading code. In a court proceeding after Aleynikov's arrest, Assistant U.S. Attorney Joseph Facciponti reported that "the bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

Six months after a federal prosecutor admitted in open court that the Goldman trading program could be used to unfairly manipulate markets, the bank released its annual numbers. Among the notable details was the fact that a staggering 76 percent of its revenue came from trading, both for its clients and for its own account. "That is much, much higher than any other bank," says Prins, the former Goldman managing director. "If I were a client and I saw that they were making this much money from trading, I would question how badly I was getting screwed."

Why big institutional investors like pension funds continually come to Wall Street to get raped is the million-dollar question that many experienced observers puzzle over. Goldman's own explanation for this phenomenon is comedy of the highest order. In testimony before a government panel in January, Blankfein was confronted about his firm's practice of betting against the same sorts of investments it sells to clients. His response: "These are the professional investors who want this exposure."

In other words, our clients are big boys, so screw 'em if they're dumb enough to take the sucker bets I'm offering.

The final con, "the reload" describes the process by which the same bubble that caused the last collapse is reinflating. Taibbi:

Not many con men are good enough or brazen enough to con the same victim twice in a row, but the few who try have a name for this excellent sport: reloading. The usual way to reload on a repeat victim (called an "addict" in grifter parlance) is to rope him into trying to get back the money he just lost. This is exactly what started to happen late last year.

It's important to remember that the housing bubble itself was a classic confidence game — the Ponzi scheme. The Ponzi scheme is any scam in which old investors must be continually paid off with money from new investors to keep up what appear to be high rates of investment return. Residential housing was never as valuable as it seemed during the bubble; the soaring home values were instead a reflection of a continual upward rush of new investors in mortgage-backed securities, a rush that finally collapsed in 2008.

But by the end of 2009, the unimaginable was happening: The bubble was re-inflating. A bailout policy that was designed to help us get out from under the bursting of the largest asset bubble in history inadvertently produced exactly the opposite result, as all that government-fueled capital suddenly began flowing into the most dangerous and destructive investments all over again. Wall Street was going for the reload.

A lot of this was the government's own fault, of course. By slashing interest rates to zero and flooding the market with money, the Fed was replicating the historic mistake that Alan Greenspan had made not once, but twice, before the tech bubble in the early 1990s and before the housing bubble in the early 2000s. By making sure that traditionally safe investments like CDs and savings accounts earned basically nothing, thanks to rock-bottom interest rates, investors were forced to go elsewhere to search for moneymaking opportunities.

Now we're in the same situation all over again, only far worse. Wall Street is flooded with government money, and interest rates that are not just low but flat are pushing investors to seek out more "creative" opportunities. (It's "Greenspan times 10," jokes one hedge-fund trader.) Some of that money could be put to use on Main Street, of course, backing the efforts of investment-worthy entrepreneurs. But that's not what our modern Wall Street is built to do. "They don't seem to want to lend to small and medium-sized business," says Rep. Brad Sherman, who serves on the House Financial Services Committee. "What they want to invest in is marketable securities. And the definition of small and medium-sized businesses, for the most part, is that they don't have marketable securities. They have bank loans."

In other words, unless you're dealing with the stock of a major, publicly traded company, or a giant pile of home mortgages, or the bonds of a large corporation, or a foreign currency, or oil futures, or some country's debt, or anything else that can be rapidly traded back and forth in huge numbers, factory-style, by big banks, you're not really on Wall Street's radar.

So with small business out of the picture, and the safe stuff not worth looking at thanks to the Fed's low interest rates, where did Wall Street go? Right back into the shit that got us here.

One trader, who asked not to be identified, recounts a story of what happened with his hedge fund this past fall. His firm wanted to short — that is, bet against — all the crap toxic bonds that were suddenly in vogue again. The fund's analysts had examined the fundamentals of these instruments and concluded that they were absolutely not good investments.

So they took a short position. One month passed, and they lost money. Another month passed — same thing. Finally, the trader just shrugged and decided to change course and buy.

"I said, 'Fuck it, let's make some money,'" he recalls. "I absolutely did not believe in the fundamentals of any of this stuff. However, I can get on the bandwagon, just so long as I know when to jump out of the car before it goes off the damn cliff!"

This is the very definition of bubble economics — betting on crowd behavior instead of on fundamentals. It's old investors betting on the arrival of new ones, with the value of the underlying thing itself being irrelevant. And this behavior is being driven, no surprise, by the biggest firms on Wall Street.

The research report published by Goldman Sachs on January 15th underlines this sort of thinking. Goldman issued a strong recommendation to buy exactly the sort of high-yield toxic crap our hedge-fund guy was, by then, driving rapidly toward the cliff. "Summarizing our views," the bank wrote, "we expect robust flows . . . to dominate fundamentals." In other words: This stuff is crap, but everyone's buying it in an awfully robust way, so you should too. Just like tech stocks in 1999, and mortgage-backed securities in 2006.

To sum up, this is what Lloyd Blankfein meant by "performance": Take massive sums of money from the government, sit on it until the government starts printing trillions of dollars in a desperate attempt to restart the economy, buy even more toxic assets to sell back to the government at inflated prices — and then, when all else fails, start driving us all toward the cliff again with a frank and open endorsement of bubble economics. I mean, shit — who wouldn't deserve billions in bonuses for doing all that?

It's these banksters who ruined the economy once and are set to ruin it again that are opposing financial regulatory reform. Do you stand with them or do you stand for financial reform that puts Main Street first?

Time Magazine's Michael Grunwald makes the case for the Consumer Financial Protection Agency (CFPA) and dismantles three major myths in a must read piece.

When you buy a dishwasher, you know it probably won't explode. When you buy aspirin, you can figure out the side effects without an advanced degree. When you buy zucchini, you can feel confident it won't be toxic. And when you buy movie tickets, you can presume the terms of your purchase won't change after you leave the window.

But when it comes to financial products like mortgages and credit cards, you can't be sure of any of those things. That's the basic case for a Consumer Financial Protection Agency (CFPA), the centerpiece of President Obama's push to reform financial regulation. (See the financial crisis after one year.)

The argument is that finance has become a Wild West of outrageous hidden fees, ridiculous fine print, deceptive come-ons and secret side deals designed to sucker us into predatory rip-offs we can't afford or escape. And the CFPA is supposed to be the new sheriff in town. It would be an independent agency empowered to write and enforce rules for financial products, so that banks would no longer enjoy lax consumer regulation — and nonbanks peddling loans from hell would no longer escape just about all regulation. It would be like a financial version of the Consumer Products Safety Commission (CPSC), the Food and Drug Administration (FDA) or even the Environmental Protection Agency (EPA).

Financial reform is complex, and it's hard for nonexperts to follow which proposals for a derivatives clearinghouse or systemic risk council have teeth and which are sops to the industry. One political attraction of the CFPA is its simplicity: you're for it or against it. After sketchy subprime mortgages helped crater financial markets, even laissez-faire ideologues like Alan Greenspan called for stronger regulations to curb abuses and stabilize the system. And given the well-documented outrages pervading the industry these days — exorbitant overdraft fees, late fees, nuisance fees and balloon payments buried in opaque legalese, slimy yield spread premiums that banks give brokers who push high-risk mortgages — it's awkward to argue against it.

Grunwald goes on to dismantle three key Wall Street assertions First, he tackles the ridiculous claim that the CFPA weakens consumer protection.

Nobody is defending the recent performance of the Federal Reserve, the Office of the Comptroller of the Currency (OCC) or any of the other financial agencies with current consumer-protection duties. But that doesn't necessarily mean those duties should be transferred to a brand-new bureaucracy. As JPMorgan Chase CEO Jamie Dimon has been asking privately: If my legal department screws up, do I create a new legal department? Some bank lobbyists argue that consolidating all consumer protection in just one new agency would be like leaving just one rookie cop patrolling a highly complex beat. Critics like John Dugan, the head of the OCC, have warned that if consumer-protection duties are separated from the "safety and soundness" duties of traditional bank regulators, then both will suffer.

Of course, it's fair to wonder why bank lobbyists would be so concerned about the CFPA failing to protect their customers from exploitation. And agencies like the OCC can be expected to protect their turf. But the status quo just isn't working, and history suggests that consumer protection will never be a top priority at agencies primarily responsible for ensuring the financial health of banks. The CSPC, FDA and EPA aren't perfect, but their clear missions have made them much less susceptible to capture by industry, and much more attractive to employees who are serious about enforcement. That's the appeal of a financial agency exclusively devoted to protecting consumers.

Then, he addresses the argument that CFPA won't fix everything by pointing out that it's not an actual argument against CFPA.

Warren argues that the financial meltdown of 2008 was essentially a consumer-protection meltdown, a direct result of exploitative loans that never should have been approved. It's certainly true that the securities that sparked the crisis began imploding after subprime borrowers began struggling to repay the underlying loans. Still, the notion that a CFPA would have prevented the mess is debatable at best. It's not as if all borrowers who bit off more than they could chew were deceived; many of them just wanted more house than they could afford, and it's not clear whether an agency devoted to helping consumers would have pushed for stricter scrutiny of their credit histories, higher requirements for their down payments and other borrowing restrictions that might have helped save them from their own bad instincts. In any case, it's hard to imagine how the subprime crisis would have metastasized into a financial collapse if banks hadn't been so big, interconnected, complex and overleveraged — problems that had little to do with consumer protection.

So the argument that better consumer protection will prevent the next collapse is no slam dunk. But better consumer protection is still a good idea! And the CFPA is a clear way to send a message that the economy is supposed to work for ordinary families. We should have a CFPA — and also size restrictions, stricter leverage rules and capital requirements, better regulation of complex derivatives, an orderly mechanism to wind down failing firms without bailouts and all the other elements of financial reform.

Finally, he addresses the naysayers that say reform isn't possible in today's Washington. He tells them: make members of Congress take a stand on whether they're with Wall Street or Main Street.

The argument here is that reasonable people can disagree on the importance of a new consumer agency, but it's not a realistic goal, because Republicans have declared it a deal breaker. Even before the Massachusetts election, Democratic Senate leaders had decided not to reprise the horse-trading it took to get them 60 votes for health care reform. They want a bipartisan bill, and there's no way that will happen with the CFPA. Why not ditch it?

Because there's no guarantee that ditching it will ensure a bipartisan bill. Health care was telling: Republicans called the public option a deal breaker, but once the public option was deleted, they found new excuses for obstruction. They say financial reform is different, but it's worth noting how many Republicans supported it in the House: zero. (See why financial reform is easier than health care.)

Senator Christopher Dodd, the Democratic chairman of the Senate Banking Committee, recently broke off negotiations with Senator Richard Shelby, the ranking Republican, a politician so committed to bipartisanship that he placed a hold on all Obama Administration appointees to extract some pork for Alabama. Now Dodd is trying to negotiate with Senator Bob Corker of Tennessee, who said in a recent interview that he truly believes an agreement is possible. But in that same interview, Corker described some modest Administration proposals — like giving consumers the option of a simple "plain-vanilla" mortgage — as "way, way out in left field." He also said that when Obama proposed a small tax on large banks to recoup the costs of the bailouts, he wondered if he was living in the U.S. or Venezuela. And he's considered the most compromise-friendly Republican.

Realistically, the only way Republicans are going to support a financial-reform bill is if they conclude that they're going to pay a serious political price for obstruction. And they're only going to pay that price if they're perceived as anticonsumer; the finer technical points of derivatives regulations or proprietary trading are not going to move the masses. A new bureaucracy might not scream populism either, but it's probably the best way to portray a vote on reform as a choice between the banks and the people.

The right wing is trying to hoodwink America into believing that financial regulatory reform is something that it's not. Don't let them get away with it. Circulate this article to expose the lies.

Stand up for common sense reform:

The FDIC wants banks that promote risky behavior to pay higher insurance premiums. Just as a reckless driver pays more for auto insurance, these banks would pay more if they insist on rewarding recklessness. It's only common sense.

Take Action! Tell the FDIC: Rein in Banks' Reckless Behavior

While some Wall Street elders are honest enough to acknowledge that Wall Street needs reform, one man continues to shill for Wall Street's excess. That man is none other than William Donaldson - George W. Bush's SEC Director. The New York Times:

That worries William H. Donaldson, a chairman of the Securities and Exchange Commission in the George W. Bush administration, and a co-founder of Donaldson, Lufkin & Jenrette, a prominent Wall Street firm in its day. To deal with such issues, Mr. Donaldson, now 78, would have Congress create a powerful regulatory body, independent of the Federal Reserve or any other government body, whose members would be appointed directly by the president.

The Bush Administration and William Donaldson were complicit in the dismantling of the regulatory environment that contributed to the financial crisis. The article quotes other Wall Street elders that completely dismantle Donaldson's concern trolling.

While the younger generation, very visibly led by Lloyd C. Blankfein, chief executive of Goldman Sachs, lobbies Congress against such regulation, their spiritual elders support the reform proposed by Paul A. Volcker and, surprisingly, even more restrictions. “I am a believer that the system has gone badly awry and needs massive reform,” said Mr. Bogle, the 80-year-old founder and for many years chief executive of the Vanguard Group, the huge mutual fund company.

Mr. Volcker, 82, signed up the support of nearly a dozen peers whose average age is north of 70 and whose pedigrees on Wall Street and in banking are impeccable. But while Mr. Volcker focuses on a rule that would henceforth prohibit a bank that takes deposits from also buying and selling securities for its own account — risking losses in the process — most of his prominent supporters see that as a starting point in a broader return to regulation. And most do not hesitate to speak up in interviews.

Listen to Nicholas Brady, a Treasury secretary in the late 1980s and early 1990s and before that chairman of Dillon Read & Company, now extinct, but in its day a prestigious Wall Street house. “If you are a commercial bank,” he said, “and you wish the government to guarantee your deposits and bail you out if necessary, then you can’t be involved in speculative activity.”

Does that mean Mr. Brady, now 79, would tell commercial banks they could no longer trade securities for their customers? Mr. Volcker, who gained fame in the 1980s as chairman of the Federal Reserve, would permit this and so would President Obama, who has endorsed the Volcker restriction on proprietary trading, but not the broader ban on trading for customers. Mr. Brady just might take that extra step.

“I’d certainly look into it,” he said, arguing in effect that the current generation of bankers is so profit-oriented, it might well find a way to convert trading for a customer into surreptitiously trading for the bank itself, risking depositors’ money in the process.

“You draw a line that is too tight,” Mr. Brady said. “That does not bother me a bit.”

Nor does it bother John S. Reed, a former Citigroup co-chairman, who played a role in building Citi into a powerhouse that mingled commercial banking and all sorts of trading activities. That mix helped to precipitate the current credit crisis, requiring a costly federal bailout of Citigroup, among others, in 2008.

Mr. Reed, now 71, was long gone by then, and from retirement he has second thoughts. He even thinks about resurrecting the Glass-Steagall Act of 1933, which prevented banks from engaging in any sort of trading activity involving stocks and bonds. (It was revoked in 1999, partly at the behest of Citigroup, then run by Sanford I. Weill.)

“I can be convinced that we should move back in the direction of Glass-Steagall,” Mr. Reed said, disagreeing on this point with Mr. Weill who, at 76, has not retracted his view that deregulation was the right course. Indeed, Mr. Weill has hanging on a wall of his retirement office, as a trophy, one of the pens that President Clinton used to sign the bill that revoked Glass-Steagall.

Mr. Reed, in contrast, wonders if a trading operation should even exist under the same roof as a standard commercial bank. The traders make more in salary and bonuses than the bank employees, and there are frictions. “The bank people say ‘if the capital market guys take big risks, why can’t we do so too and earn the same bucks?’ ” Mr. Reed said. “They start trying to do things that make them look good, like making risky commercial loans and driving for volume.”

The Volcker Rule would solve this in part by telling “the capital market guys,” as Mr. Reed put it, that they can trade only as agents for customers and not on behalf of the house. Restricted to serving only customers, they might or might not take fewer risks.

In any event, the restriction goes in the right direction, which is why George Soros, the billionaire trader, endorses it and falls into place as one of Mr. Volcker’s supportive elder statesmen, referring to him as “an extraordinary public servant.”

But the Volcker Rule is emphatically not enough, Mr. Soros said. A company like Goldman Sachs, barred from proprietary trading, would probably give up its status as a bank holding company and revert to its role as a big Wall Street investment house, free to trade as it wished. If it then failed, Mr. Volcker would use the federal government to usher it through an orderly liquidation. Mr. Soros, in contrast, would rescue Goldman Sachs.

“The danger is that Congress and the administration may try to hide behind the banner of Volcker’s reputation, enact this one dimension of reform and nothing more, and pretend that it is sufficient to repair the financial system,” Mr. Soros said. “That would be a dangerous mistake.”

At 79, Mr. Soros says, he has watched Goldman Sachs, and other firms like it on Wall Street, grow too big to fail, which means that no administration could allow such giants to go through Mr. Volcker’s orderly liquidation and disappear. That would be too damaging to the financial system, the economy and the political party in power.

“You have to recognize that they enjoy an implicit guarantee,” he said of the big trading houses. “To pretend they will be allowed to fail is not credible.”

The solution for Mr. Soros is to avoid failure in the first place. The big Wall Street firms “would have to be closely regulated to make sure they don’t fail,” he said. “You may decide to break them up, or restrict the number of markets in which they are allowed to operate and you would need to impose capital requirements” to curtail risk-taking.

Derivatives contracts are a major source of risk, and Mr. Soros would limit their use. These contracts — offering insurance, for example, on trading positions — are still ubiquitous. When they come due in great quantities, as they were about to do in the fall of 2008, the contagion spreads, undermining one financial institution after another.

These elders know something is gravely wrong with Wall Street. But, William Donaldson and his fellow Bush Administration cronies just don't get it. They are the staunch defenders of a failed system that rewards wealth, not work. Today's so-called conservatives are trying to dress up in populist clothing hoping to earn America's to support. But, behind the populist smokescreen are the same old "conservative" leaders that put Wall Street before Main Street during the Bush Administration.

Wall Street banksters and K Street lobbyists are teaming up to stop real financial regulatory reform that puts Main Street interests over Wall Street profits. Wall Street expenditures on K Street are up 12% from 2008 to $29.8 million last year. The LA Times has the story:

Reporting from New York - Even as the financial industry has sought to keep a low public profile, some of the country's largest banks have ramped up their spending on lobbying to fight off some of the stiffest regulatory proposals pending in Congress.

Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.

The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.

"I have never seen such a scrum of bank lobbyists as I have in the last year -- and I've worked on quite a few bank issues over the years," said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. "It seems like everybody is out of work except for bank lobbyists."

Wall Street banksters are spending tens of millions on K Street lobbyists to protect their profits and the status quo. Do you stand with Wall Street banksters and K Street lobbyists? Will you stand up for real reform?

Wall Street is gambling with our money and our economy. And, they've rigged the game to make sure they win. Watch:

Tom McMahon explains the ad:

Wall Street CEOs legalized gambling through something called ‘derivatives,’ making bets on bets on bets. But when their luck ran out, it was our money they lost – our homes, our investments. And as this house of cards came tumbling down on Wall Street, millions on Main Street lost their jobs and trillions in retirement savings disappeared. President Obama has laid out a clear path for real financial reform that will protect working families and small businesses and now it’s time the Senate to move the plan forward.

The right wing wants to let Wall Street continue to take risky bets with our economy. We can't let that happen. The time is now to change Wall Street.

Oh goody! Just what we need: a profit incentive for Wall Street to tank the global economy:

Credit specialists at Citi are considering launching the first derivatives intended to pay out in the event of a financial crisis.

As Heather Booth of Americans for Financial Reform notes, this is no joke:

The Onion probably wishes it had written this story. Unfortunately it’s no joke. Even Citi is convinced too little has been done to avoid the next financial crisis – in fact, so strongly do they feel a repeat is possible, they are offering financial products to gain from the next collapse! With this scheme, they can bet there either will be or will not be a collapse – to which they contribute. The notion that Citi would look to make money off another collapse is inexcusable, irrational and blatantly irresponsible.

Wall Street knows how to profit from crisis. Now, more than ever, Main Street needs safeguards in place to guard against another crisis.

As we've noted previously, the FCIC was established to examine the causes of the financial collapse. In January, the commission received public testimony, and, now, they are convening a panel of experts. The panel includes academic luminaries in the field of economics.

The economists will present working papers to the Commission on the key issues and events leading up tot he crisis. Those papers will address the underlying causes of the crisis. A question and answer session with the Commissioners follows the presentations.

The forum, which is open to the public, will be held at the American University Washington College of Law, 4801 Massachusetts Avenue, NW, room 603.

In today's must-read in the Wall Street Journal, Elizabeth Warren makes the case for a Consumer Financial Protection Agency (CFPA).

The consumer agency is a watchdog that would root out gimmicks and traps and slim down paperwork, giving families a fighting chance to hang on to some of their money. So far, Wall Street CEOs seem determined to stop any kind of watchdog. They seem to think that they can run their businesses forever without our trust. This is a bad calculation.

It's a bad calculation because shareholders suffer enormously from the long-term cost of the boom-and- bust cycles that accompany a poorly regulated market. J.P. Morgan CEO Jamie Dimon recently explained this brave new world, saying that crises should be expected "every five to seven years."

He is wrong. New laws that came out of the Great Depression ended 150 years of boom-and-bust cycles and gave us 50 years with virtually no financial meltdowns. The stability ended as we dismantled those laws and failed to replace them with new laws that reflected modern business practices.

Even though boom and bust causes suffering on Main Street and is of questionable value for Wall Street - the banksters are fighting hard for it.

Now, a year later, President Obama's proposals for reform are bottled up in the Senate. The same Wall Street CEOs who brought the economy to its knees have spent more than a year and hundreds of millions of dollars furiously lobbying Washington to kill the president's proposal for a Consumer Financial Protection Agency (CFPA).

The latest bankster-funded lie is that the CFPA is more "big government." Warren lays waste to that argument:

The latest lie is that the CFPA is "big government." The CEOs all know that the current regulatory structure, which they support, is big government at its worst: bureaucratic, unaccountable and ineffective. The CFPA will consolidate seven separate bureaucracies, cut down on paperwork, and promote understandable consumer products. In the process, it will stabilize the industry, rebuild confidence in the securitization market, and leave more money in the pockets of families. Complaining about short, readable contracts and efforts to slim down bureaucracy only further diminishes the banks' credibility.

This generation of Wall Street CEOs could be the ones to forfeit America's trust. When the history of the Great Recession is written, they can be singled out as the bonus babies who were so short-sighted that they put the economy at risk and contributed to the destruction of their own companies. Or they can acknowledge how Americans' trust has been lost and take the first steps to earn it back.

Wall Street is using their money and influence to take advantage of a broken Senate to obstruct reform that's good for Main Street. Our economy needs the CFPA and we must fight for this common sense solution that will make government smaller, more efficient and better able to protect consumers.

Is Richard Shelby's move to place a "blanket hold" on 70+ nominees just so he could get a little extra pork for his state the straw that breaks the filibuster's back? Let's hope so, because the Senate is broken and unable to get anything done.

Calls for Senate reform peaked over the weekend after Sen. Richard Shelby, R-Ala., put a "blanket hold" on more than 70 Obama nominees, not out of principled opposition, but because two projects in his home state of Alabama weren't getting enough attention. [Update, Feb. 9: Shelby lifted most of his holds late Monday.]

This, for Senate-reform advocates, was the last straw. "The genie is out of the bottle with this abuse of Senate rules," wrote FireDogLake's Jon Walker. "I congratulate Shelby on fully exploring the logic of the modern United States Senate," remarked Matthew Yglesias. "Why, after all, should a great nation of 300 million people have a functioning government if preventing the government from functioning can help a lone Senator advance parochial interests?" "America is not yet lost," Paul Krugman reassured. "But the Senate is working on it."

Complaints about Senate procedure tend to focus on two tools: The filibuster, which many liberals hold responsible for the failure (so far) of health care reform, and the "hold," which allows a single senator to stall a president's nominee. Both mechanisms are outdated, say critics. Filibusters used to be rare, with roughly 8 percent of major bills getting blocked in the 1960s. Now, the rate is 70 percent.

It's not just the startling numbers that speak to the filibuster's abuse - it's real, substantive legislation that's being held up. The House passed Cap and Trade to address climate change. The House passed healthcare with a public option. The House passed financial reform legislation. But, it's all stymied in the Senate thanks to the abused filibuster. The filibuster also makes abuse of the "hold" possible as well. Newsweek explains the abuse:

Now that Barack Obama is in office, holds are running at a ridiculous rate. During George W. Bush's first 17 months in office 100 judicial nominees were confirmed, versus nine in Obama's first nine months, in part because of an inordinate number of single-senator holds on his nominees.

The American people are demanding action on a host of issues. The House is taking action. The President is calling, begging and pleading for action. But, because of just one thing - the abused filibuster in the U.S. Senate - little is getting done.

Senator Richard Shelby is making a play to be king of the obstructionists in the Senate. First, he holds up 70 nominees because he wants more pork for his state. And, now, he's doing Wall Street's bidding and trying to scuttle real financial regulatory reform:

HuffPost asked Shelby if Dodd had confirmed to him on the floor that he was moving ahead with an independent Consumer Finance Protection Agency.

"Well, that's been our biggest split, okay, and it's still at impasse there," Shelby said. "But we're talking."

Yup, that's right - Shelby is holding up financial regulatory reform because he doesn't think there should be an organization whose mandate will be to protect consumers. It's been over a year since the collapse that brought about the worst economic crisis since the Great Depression and, so far, no meaningful reforms have been passed to make sure it doesn't happen again. This is our opportunity to pass reform and all Shelby and his Republican pals can do is say no to meaningful reforms.

Goldman Sachs pushed AIG over the edge and you and I got stuck with the bill:

Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in.

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

Goldman played hardball with AIG and was rewarded handsomely.

Several former Goldman partners said it was not surprising that Goldman sought such tough terms, given the firm’s longstanding focus on risk management.

By July 2007, when Goldman demanded its first payment from A.I.G. — $1.8 billion — the investment bank had already taken trading positions that would pay out if the mortgage market weakened, according to seven former Goldman employees.

Still, Goldman’s initial call surprised A.I.G. officials, according to three A.I.G. employees with direct knowledge of the situation. The insurer put up $450 million on Aug. 10, 2007, to appease Goldman, but A.I.G. remained resistant in the following months and, according to internal messages, was convinced that Goldman was also pushing other trading partners to ask A.I.G. for payments.

On Nov. 1, 2007, for example, an e-mail message from Mr. Cassano, the head of A.I.G. Financial Products, to Elias Habayeb, an A.I.G. accounting executive, said that a payment demand from Société Générale had been “spurred by GS calling them.”

Mr. Habayeb, who testified before Congress last month that the payment demands were a major contributor to A.I.G.’s downfall, declined to be interviewed and referred questions to A.I.G. The insurer also declined to comment for this article. Mr. van Praag, the Goldman spokesman, said Goldman did not push other firms to demand payments from A.I.G.

Later that month, Mr. Cassano noted in another e-mail message that Goldman’s demands for payment were becoming problematic. “The overhang of the margin call from the perceived righteous Goldman Sachs has impacted everyone’s judgment,” he wrote to five employees in his division.

By the end of November 2007, Goldman was holding $2 billion in cash from A.I.G. when the insurer notified Goldman that it was disputing the firm’s calculations and seeking a return of $1.56 billion. Goldman refused, the documents show.

In many of these deals, Goldman was trading for other parties and taking a fee. As the mortgage market declined, Goldman paid some of these parties while waiting for A.I.G. to meet its demands, the Goldman spokesman said. But one reason those parties were owed money on the deals was that Goldman had marked down the securities.

In the end, Goldman got what it wanted, thanks to the American taxpayer:

A.I.G. shares fell 6 percent the day the report was published. Three weeks later, the United States government agreed to pour billions of dollars in taxpayer money into the insurer to keep it from collapsing.

The government would soon settle the yearlong dispute between Goldman and A.I.G., with Goldman receiving full value for its bets. The federal bailout locked in the paper losses of those deals for A.I.G. The prices on many of those securities have since rebounded.

The Wall Street banksters are playing dangerous, high stakes games with our nation's economic well being. We need more reforms so that Wall Street won't ever again demand another bailout.

What do companies that post record losses and teeter on the brink of bankruptcy only to be bailed out by the American taxpayer do? That's right - they dole out $100 million in bonuses to the fat cat executives that scuttled a multi-billion dollar fortune.

Bonus payments totaling $100 million to AIG employees from the same unit that prompted a massive taxpayer bailout are "outrageous" but allowed under the law, the Obama administration's pay czar said Wednesday.

Kenneth Feinberg said the retention bonuses were contractual obligations agreed upon years ago, before American International Group Inc. received a $180 billion federal rescue at the height of the financial crisis in late 2008.

"These are the old grandfathered payments," Feinberg said. "I do not for a minute ignore the outrage out there, which I share. But the fact of the matter is we've got to abide by the law."

It's time to pass a new set of laws to take on the excesses of Wall Street. Our small businesses and our middle class is at stake.

When the farmer throws out the corn, the pigs run to the trough. That's what's happening in American politics today. Wall Street is throwing out the coin and the politicians are scurrying to grab it up.

John Boehner and Mitch McConnell have sensed an opportunity. By staking out pro-Wall Street and anti-Main Street positions against financial regulatory reform, they know they have positioned themselves in the right place to maximize their ability to grab up that Wall Street coin. The WSJ observes:

Republicans are stepping up their campaign to win donations from Wall Street, trying to capitalize on an increasing sense of regret among executives at big financial institutions for backing Democrats in 2008.

In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.

GOP strategists hope to benefit from the reaction to the White House's populist rhetoric and proposals, which range from sharp critiques of bonuses to a tax on big Wall Street banks, caps on executive pay and curbs on business practices deemed too risky.

Wall Street knows where their bread is buttered. Many of them are against real reform because they know their profits are at stake. So, they're investing in the Republican Party to stop real reform. Read the story and find out where Wall Street is investing to scuttle reform.