Next time you hear bank lobbyists complain that regulation will extinguish innovation, direct them to the work of these folks.

Yes, they're a trio of pointy-headed academics, and European to boot. But what's the industry's response to their findings that "rents rise progressively to the point where the agents end up capturing the bulk of the return from the innovation?"

Does the banking industry need to be able to screw its consumers in order to be profitable? If so, it's in even worse shape than I thought.

Yet that's what Senator Richard Shelby suggested when he wowed the audience in a speech at an American Bankers Association conference last week. Saying the Republicans in Congress would do everything they could do prevent efforts to rein in banks, Shelby noted that "safety and soundness trumps everything," including "the consumer finance whatever."

I may be wrong about the apparent public indifference to the findings of the examiner's report on the Lehman Brothers bankruptcy that I detected from the relative dearth of on-going press coverage less than a week after it was released.

As Jack Ciesielski, an investment advisor who publishes the Analyst's Accounting Observer, put it in an email to me yesterday, "This is really opaque stuff, similar in that regard, at least, to Enron. It's hard to make it catch fire with the general public. All they know is that someone on Wall Street was crooked, and there you go again. But I think even the public is getting numb."

The currency swaps that Goldman sold Greece to hide its debt could lead to fraud charges in the US after all.

The swaps were issued and sold abroad, and thus did not have to be registered with the Securities and Exchange Commission. But bonds subsequently issued by Greece and underwritten by Goldman and other US banks would be subject to SEC disclosure requirements if sold to sophisticated investors in the US, otherwise known as "qualified institutional buyers."

The closer one looks at the Lehman Brothers' bankruptcy examiner's report, the more one wonders what bank regulators were up to.

In fact, the report shows that the bill proposed by Senate Banking Committee Chairman Chris Dodd is misguided in having the Federal Reserve take over investment bank supervision while continuing to oversee large commercial banks, and serve as lender of last resort to both. The plain fact is that those two roles are in conflict, as we've pointed out before.

I have never understood why exactly bank regulators need new, so-called resolution authority for banks when there is something called Chapter 11, unless of course they don't plan to use it, in which case there's no reason to provide it to them other than to engage in the complete pretense that they do.

And neither evidently does this panel of bankruptcy and restructuring experts.

This fight between bailed-out banks and Fannie Mae and Freddie Mac about who has to take the hit for soured mortgage loans really demonstrates how screwed up the financial system is, and why the Federal Reserve failed in its role of regulating securitization.

Fannie and Freddie claim the deals were "improperly written," so the banks have to buy them back, but the banks say that will blow holes in the balance sheets that taxpayers just restored.

There are three pieces in the blogosphere today that touch on the fundamental problem with our economic system and why it will remain in a ditch, or just lurch onward to the next crisis, if it isn't addressed.

And that is monopoly. I'll leave aside the politics of that, which is addressed well enough by Thomas Franks over at the Wall Street Journal. In a nutshell, he warns of a return to feudalism, which I've done as well before.

A conference on financial reform held today by the Roosevelt Institute really tells it like it is when it comes to what's going on in the nation's capital. And "it" isn't pretty. 

I just heard Congressional TARP cop Elizabeth Warren, for example, accuse banks of "bullying" Washington into doing its bidding over consumer protection.

Several bloggers have beaten me to this, but the latest proposal regarding the so-called consumer protection agency for financial products is just another example of Congress succumbing to the bank lobby.

Rather than set up an independent agency, or even put it under the auspices of the Treasury, as Senate Banking Committee Chairman Chris Dodd earlier proposed, he would now put it under the Federal Reserve because of opposition from Republicans and even some fellow Democrats.