Obey Wan.

“I don’t know what my biggest contribution has been. I think it has been simply showing up for work every day, trying to fight the good fight for average people…But I leave more discontented when I came here because of the terrible things that have been done to this economy by political leaders who allowed Wall Street to turn Wall Street banks into gambling casinos which damned near destroyed the economy.“

On the eve of his retirement, Chair of the House Appropriations Committee David Obey has some choice words for the administration, and himself. “I think the more important thing was what was my biggest failure…our failure to stop the ripoff of the middle class by the economic elite of this country, and this is not just something that happened because of the forces of the market.”

Spitting on a Gift Horse.

“They’re not accustomed to being engaged in politics this way,” says a private-equity investor. ‘Their skin isn’t toughened. They actually take [the attacks by Obama] personally. This is a profession with a lot of smart people, but who aren’t necessarily terribly introspective. They think they actually deserve to make all this money. So any attack on their livelihood is, ahem, unpleasant.’“

In the wake of the Senate’s 59-39 passage of financial reform last week (not to mention increasing evidence of rampant and pervasive fraud at Goldman, Morgan, and elsewhere), New York‘s John Heilemann surveys the bruised egos of Wall Street’s would-be robber barons. (In very related news, Paul Krugman and the WP note that Wall Street is now betting heavily on the GOP again.)

Keep in mind: Wall Street is angry with the administration despite the fact that “Geithner’s team spent much of its time during the debate over the Senate bill helping…kill off or modify amendments being offered by more-progressive Democrats.” [Change we can believe in!] Heilemann writes: “Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.“

Still, on the bright side and despite the ambivalence (or open opposition) from folks in high places, this bill did get significantly stronger on the Senate floor, and in some ways is now stronger than the House version passed last year. Let’s hope this welcome progressive trend continues in conference.

In a Flash, a Grim Recognition.

“The initial reaction of traders to the Flash Crash was that some human must have made a mistake submitting a trade. But the SEC…hasn’t found evidence of a ‘Fat Fingered Louie’ punching a billion rather than a million on an order. In fact, the SEC still doesn’t know what caused this crash. Curiously, no one is focusing on what caused the crash to stop…JP Morgan and Merrill Lynch were big buyers precisely as the market hit minus one thousand points on the Dow. It seems rather odd that both these firms at the same time would see the same trading opportunity.

In fact, what they did was violate one of the prime rules of trading: never try to catch a falling knife. The market was falling fast and furious at the point they entered the pit to buy equity futures, so why did they take such an enormous risk? We learned yesterday that both of these firms, plus Goldman Sachs, were such superb traders in the market that none of them had a single losing trading day all last quarter. This type of risky trade is not how you get to be a superb trader.“

Over at the Agonist, Numerian digs deep into last week’s “Flash Crash” — and comes to some very troubling conclusions. To wit, the big players know the thresholds where the trading algorithms kick in, and thus, basically, the fix is in. “The stock market seems to be nothing but a playground for the big banks and other connected firms who get a preview peek at everything that goes through the market, and who can program their computers to skim profits off daily with no risk whatever. The stock market is also, quite possibly, prone to more serious manipulation that resulted in last Thursday’s crash.“

Oof. I’m out of my comfort zone when it comes to understanding market behavior, so I hope someone has a better explanation for the Flash Crash than the disconcertingly plausible one offered here. (Just saying Greece doesn’t quite cut it, I don’t think.)

FinReg: Where Things Stand.

“Last week, Congress decided it would not confront Too Big To Fail, the single gravest threat to our collective financial security. But there are still several key Wall Street reforms worth fighting for–reforms that must be enacted before the next crisis hits, with or without a big bank break-up. And fortunately, key Senators have authored amendments dealing with each one.” In HuffPo, Zach Carter delineates the most worthwhile progressive amendments to financial reform still up for debate in the Senate. A good encapsulation of the state of play.

Bank to Basics.

“The big U.S. banks were the source of the global financial crisis, in part because their bigness and their practices were copied by major banks around the world. What happens in this reform effort is being watched avidly in many countries, because it will say much about how global finance is to be conducted. What is often missing in these discussions are the assumptions people make about banking and its role in a modern economy. We should begin therefore with some first principles.“

As the manifestly fradulent behavior by Goldman Sachs of late comes to full light — one among many, it seems — Numerian of The Agonist goes back to basics to make a case for strong banking reform. “The very first lesson we should learn from this crisis, which we thought this nation learned in the 1930s, is never again…The second lesson we should learn from this crisis is that we should not as a nation have to learn these lessons over and over again every 80 years. Something has to be done to make the legislative changes this time stick.”

Hudson Hawks (Lehman’s Garbage).

“‘How can anyone — regulators, investors or anyone — understand what’s in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?’ said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. “‘Everybody’s talking about preventing the next crisis, but they can’t prevent the next crisis if they don’t understand all these incestuous relationships.’“

The NYT delves into the sordid story of Hudson Castle, a.k.a. Lehman Brothers’ alter-ego, which they used to squirrel away shady investments. (This shell game didn’t even make the recent Lehman report, which apparently found enough “materially misleading” behavior to warrant criminal charges against Lehman’s leadership.)

Regulators, Mount Up.

“Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation’s. So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.“

In the bowels of Wall Street and one year after the collapse of Lehman Brothers, President Obama outlines his vision for financial regulatory reform, including a new Consumer Financial Protection Agency and stronger accountability and oversight in the existing regulatory regime. [Transcript.]

But — see also health care — some wonder if the President is going far enough: “The problem with concentrating on the banking system is that it allows the administration to present an overly optimistic assessment of its actions…Taking credit for stabilizing the financial system after feeding it with massive amounts of federal money is like a teacher bragging about turning around the academic performance of a failing student after handing them all the answers to the big tests.“

Continues economist Nomi Prins, in an analysis that dovetails quite tellingly with the health-care situation:”A strong CFPA is a sensible plan…This proposal has drawn the most ire from the banking community, so you know it’s good…But Obama’s reforms do not strike deeply enough. The banking crisis has been subdued, not fixed, because of enormous amounts of government assistance. Ignoring that fact, and failing to overhaul the sector, leaves us open to another crisis. And the next round will be worse, because there is now so much more federal money invested in the banks.”

Atlas Hemmed and Hawed.

“Somewhere in literary-character hell, John Galt is spending an eternity getting beat down by Tom Joad & his pick handle.” Ah, Ayn Rand…come for the vaguely kinky sex, stay for the self-serving, thoroughly reprehensible philosophy. Salon‘s Andrew Leonard asks if the recent economic downturn has discredited Rand’s Objectivism once and for all, prompting — as you might expect — a war in the comments section between the true believers and the gleeful cynics.

Among the many funny comments, this one, reposted from here: “There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”

A Consumers’ Republic.

“The Federal Reserve was supposed to do this, but they were asleep at the switch.” In light of recent shenanigans, the Obama administration contemplates creating a new regulatory commission for the financial services industry. “Responsibility for regulation of consumer financial products is currently distributed among a patchwork of federal agencies. Some of these regulators regard consumer protection as a low priority. And some financial products are not regulated at all. The proposal could centralize enforcement of existing laws and create a vehicle for imposing tougher rules.” Sounds alright by me.

Plastic Surgery.

“‘This is landmark legislation that is going to make the credit card marketplace more transparent and more fair for millions of consumers,’ said Travis B. Plunkett, legislative director for the Consumer Federation of America. ‘In particular, it’s going to prevent credit card companies from suddenly and unjustly increasing interest rates which is pushing many consumers with credit card debt into bankruptcy.’” The Senate passes legislation aimed at reining in the more blatant and arbitrary instances of credit card usury by a vote of 90-5, with a bill expected on President Obama’s desk by Memorial Day.

This sounds like a clear step in the right direction…but funny how times change, isn’t it? It doesn’t seem like all that long ago that many of these same Senators passed the 2005 bankruptcy bill, which dug the financial hole deeper for millions of Americans in the name of an easy buck for the credit card industry. Better late than never, I suppose.