WEEP FOR THE BANKSTERS

I'm a bit late getting to this, but according to an article in yesterday's New York Times, next year might be a terribly painful year for the banksters:

Most banks are hunkering down in anticipation of another big wave of real estate and consumer loan losses. Small and midsize banks are expected to be hit especially hard: They must absorb nearly $900 billion of commercial real estate losses over the next few years....

The big banks, meanwhile, face a range of new regulations that take effect in 2010. Rules curbing overdraft fees and predatory practices in the credit card business are expected to squeeze the flow of billions of dollars from penalty income. They will also have less wiggle room as regulators require them to hold larger cash reserves, reducing their returns and forcing them to be more conservative.

That heralds a sharp drop in profits, especially if the ebullient stock and bond markets, which generated billions in trading revenue last year for Goldman Sachs and other Wall Street giants, tapers off in 2010.

Omigod! It's going to be just horrible for banks!

How horrible? This horrible:

Analysts say that bank profitability might fall by a third from its precrisis levels, to where it was in the '60s, '70s and '80s.

I hear you gasping -- understandably! Why, it's a cataclysm! They'll only make two thirds of what they made during the boom! They'll only make what they made under Ronald Reagan!

So no wonder this is happening:

Wall Street has responded by beefing up its financial lobby in Washington to win big concessions. Among other things, the industry is working to ease rules governing derivatives and to weaken a proposal for a consumer financial protection agency.

OK, enough sarcasm -- good Lord, this is what a cooling off looks like for these guys? A third less in profit, after a spectacular year, while the rest of us are dying out here?

The Times article then reverts to a meme I utterly despise:

Already, there is the sense that the political momentum to force meaningful changes has ebbed....

This is what the fat cats, the pols, and the journalists keep saying to one another: we've lost the momentum for real change. Er, guys? You may have lost the momentum, but remember us? Out here in America? We've got your momentum for change -- right here. To us, change isn't so nine months ago. We still want it -- badly.

Then we get a quote from someone who now seems like one of the good guys, or less-bad guys, in the administration:

"This is no time for a return to business as usual," Paul A. Volcker, the chairman of the president's Economic Recovery Advisory Board, said in a recent speech in Germany. "The rally in world stock markets from recession lows has brought renewed hopes on Wall Street and the City of London for a return to outlandish bonuses for financial operators and a vigorous defense of established vested interests."

But Volcker is the Colin Powell of this administration. Maybe he resists administration groupthink on the economy more vigorously than Powell did on foreign policy in the first Bush term, but, like Powell, he's the guy nobody in the administration listens to. If he wants to make the case that we need a return to Glass-Steagall-style regulation and an end to "too big to fail," he should have the guts to resign, making it obvious that he's not doing so "for personal reasons." He should write a book. He should speak out against business as usual as an independent gray eminence. He should, in other words, be outside the tent pissing in, rather than the opposite, which is just where it suits the fat-cat-friendly administration to have him.