Taibbi is pretty polite about it, but Obama’s defense involves a lot of misdirection. It assumes that Lehman Brothers, by virtue of having failed, was the only financial institution out there responsible for the collapse, rather than an example of industry-wide behavior.

Boy, the financial industry is really circling the wagons in the wake of Sandy Weill’s comments endorsing a breakup of big banks and the separation of investment and commercial banking. The finance lobby has revved up their sympathetic sources to ensure the world that change will never come, and anyway that it’s irrelevant.

In an earnings statement for the second quarter of 2012, JPMorgan Chase announced that they lost $4.4 billion in Q2 on the “Fail Whale” trades out of their Chief Investment Office in London. Overall they still managed to book a $5 billion profit for the quarter.

This comes up on the low end of estimates of losses from the trades, but there are more quarters to come where they can book additional reductions.

JPMorgan Chase will spin off a “special investments group” to isolate the Chief Investment Office that created the Fail Whale trades. Basically they are taking the salvageable remains out of the CIO and ring-fencing it, while curtailing the speculative trading that led to the massive losses.

It’s stupid to say that repeal of Glass-Steagall was irrelevant to the Great Crash. I wonder which sell-out economists are whispering in the ears of pundits.

The Fail Whale trades showed that massive, as-yet unregulated risk still exists in our financial system, with the potential to bring down the economy once again and trigger massive taxpayer bailouts. Since the Administration already passed a law that was supposed to deal with that, they’re scrambling to restore what little of value existed in those laws.

I’m going to post a transcript, edited somewhat for clarity, of an interview I did with Professor Warren yesterday afternoon. But I want to highlight the very last thing we talked about. After Warren discussed how, without meaningful civil and criminal investigations of the financial sector, it will not be possible to “clean out the system and rebuild it,” I asked her if she was confident that the current set of investigations, in particular the task force co-chaired by Eric Schneiderman, looking into criminal actions in the securitization process, would yield this level of accountability. She had a simple answer:

“I am not confident. No. And that’s the answer to your question. The American people are pushing for more accountability. They need to keep on pushing until it happens.”

If there’s one thing to be gained from the Fail Whale trade, it’s that one section of the political class has rediscovered the need for stronger financial regulations. Even politicians running for office are starting to runn on the need for more reform.

Whale trade, proponents of stiffer regulation on Wall Street than what was ushered in with Dodd-Frank have offered a variety of solutions, including reenacting Glass Steagal or making banks smaller. All of them could be beneficial in tandem to reduce risk and political influence from the financial system.

You know things are bad when Paul Craig Roberts, one of the founders of Reaganomics, says about deregulation and the current state of the economy:

It’s gone too far.

With Heist: Who Stole the American Dream, directors Frances Causey and Donald Goldmacher trace the roots of today’s current economic crisis back to a 1971 memorandum written by Lewis F. Powell Jr.– a Virginia lawyer and representative of the tobacco industry who later became an associate justice of the United States Supreme Court. The Powell Memo, written for the Chamber of Commerce, lays out a very solid, point by point plan for corporations to loosen regulations and gain greater and greater control of the economy for their own benefit at the expense of of the American people.