By now everyone knows that Goldman Sachs' big quarterly profit came from trading. But trading what?

This analysis suggests that its pot of gold lies in credit derivatives. The bank's exposure to credit default swaps as a percentage of assets was a whopping 1,048% as of March 31, far and away the most of any big bank. (The bank with the second highest exposure, HSBC, clocked in at less than 500%. The percentage of assets devoted to CDS at J.P. Morgan Chase, which has the biggest absolute exposure, was 323%.)

These guys make a good point about the talks regarding CIT. If the big, no-strings-attached banking bail-out worked, then CIT can be allowed to fail without causing anyone a moment of sleep, no?

Evidently not. Why else would there be all this huddling? Yet the only other reason cited here is that because CIT traditionally lent to small business, it would seem unfair to bail out the Goldmans and Citis of the world and not CIT.

Bloomberg is reporting Bank of America is balking at paying the U.S. government any of the $4 billion fee it agreed to in January to backstop $118 billion in Merrill Lynch assets, claiming that the agreement was never signed and the funding wasn’t used.

It's probably safe to say that any corporate finance chief would laugh at a bank suggesting it didn't have to pay fees on a backstop just because it wasn't used.

While worldwide merger and acquisition activity in general continues its slog (volume down 40% in the first half 2009, compared to a year earlier), some companies have found keepers in the bankruptcy bargain bin.

Indeed, with five bankruptcy-related M&A deals announced this week, a total of 173 such deals have been struck year-to-date, according to data from Thomson Reuters. That's the highest level since the same period in 2004, when 202 bankruptcy-related deals were announced.

After decades of silence, Washington will at long last again hear publicly stated  (click on James Galbraith's testimony) what we've been ranting about for years: The Fed is not really independent but is a creature of the banks and in so far as it sets public policy is therefore unconstitutional.

So when you hear the Beltway go on and on about the need to protect the Fed's "independence," what‘s really being expressed is a desire to keep it safely in the hands of the banks, preventing Congress (i.e. the public) from having a real say in how monetary and financial regulatory policy is set.  One man's independence is another's lack of accountability.

There are those who say more regulation would do little to prevent financial crises, because greed always finds a way to circumvent rules.  

To them, I say take a look at these charts and get back to me.

This article suggests that Microsoft and other companies that have recently tapped the debt markets will just sit on the money, which is hardly an encouraging sign for new capital investment, research and development, or even deal making.

That means that corporate treasurers don't have a lot of faith in prognostications of an economic recovery this year, or anything other than an anemic one.

Amazon may be angling for a U.S. Supreme Court fight over nexus, but a victory there won't get it very far abroad.

Sure enough, Japan's tax authorities have followed in the footsteps of a growing number of U.S. state officials by hitting up the online retailing giant with a sales tax bill.

All of us here are certainly into social networking, at least the professional kind. But how can anyone predict where Facebook's revenues will be in five years, even if his name is Mark Andreessen?

Didn't Rupert Murdoch have the same expectations for MySpace only a year or two ago?

Ryan Lizza's piece in the current issue of The New Yorker isn't a bad summary of the political dance that Washington is doing around the financial crisis, which is far from over. But to describe Sheila Bair's role at the FDIC as unprecedented is to ignore Big Bill Seidman's stint at the organization during the S&L meltdown.

Ancient history? Well, the rest of the article talks a great deal about the run-up to the current crisis. And a look back at what the FDIC did under Seidman and what he had to say about the on-going train wreck would have been instructive. (Sorry, the fact that banks' stock prices are up says nothing about the state of their balance sheets now that they no longer have to mark much of them to market.)