Incentive

I do think Obama made a decision early on (helped by Timmy talking in his ear) that punishing the banks would hurt any recovery. The problem is, his rigid focus on sticking to that strategy, even when it’s clearly the problem. They have no incentive at all to play by even the mildest rules:

Sitting onstage in Washington’s Ronald Reagan Building in July, Lloyd C. Blankfein said Goldman Sachs Group Inc. (GS) had stopped using its own money to make bets on the bank’s behalf.


Lloyd C. Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc. Photographer: Scott Eells/Bloomberg
“We shut off that activity,” the chief executive officer told more than 400 people at a lunch organized by the Economic Club of Washington, D.C., slicing the air with his hand. The bank no longer had proprietary traders who “just put on risks that they wanted” and didn’t interact with clients, he said.


That may come as a surprise to people working in a secretive Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said.


The team’s survival shows how Goldman Sachs has worked around regulations curbing proprietary bets at banks. Former Federal Reserve Chairman Paul A. Volcker singled out the company in 2009, saying it shouldn’t get taxpayer support if it focuses on trading. A section of the 2010 Dodd-Frank Act known as the Volcker rule, drafted to prevent banks from taking on excessive risk, limits short-term investments made with firms’ capital.

In the meantime, Lanny Breuer, who oversees criminal prosecutions of the banks, is now resigning being pushed out for being open enough to explain what he was up to on last week’s Frontline.

Republican strategery

What a brilliant idea! Attack Hillary Clinton, the most admired woman in America, because she might run for president in four years. Boy, those congressional Republicans are smart. Remember these poll results from last month?

A new Washington Post/ABC News poll finds broad support for a potential 2016 presidential run by Secretary of State Hillary Clinton, including a surprising amount of Republican women that say they would support her candidacy.

Overall, 57 percent of the poll’s respondents said they would support a Clinton candidacy. That includes 35 percent of Republican women. To put that in perspective, President Barack Obama won just 6 percent of the overall Republican vote this year. Among all women, 66 percent would support Clinton’s potential bid in 2016.

Clinton is riding a wave of popularity as she prepares to leave her post as Secretary of State in Obama’s second term. Sixty-six percent of adults view her favorably, an all-time high in the poll. This includes 67 percent of self-identified Independents.

And 68 percent approve of the way she is handling her job as secretary of state. That includes 65 percent of Independents — and 40 percent of Republicans.

I guarantee you: Those numbers will be even higher tomorrow.

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