Goldman Sachs is lobbying the government to exempt investment vehicles known as credit funds from the Volcker rule, The Journal reports. If lobbying fails, the firm may be preparing for a game of a "Whac-A-Mole" as it devises strategies to dodge regulators.

An oil discovery in the Celtic Sea may offer salvation for the Irish economy!

Gold mining offers hope for Greece!

A list of nearly 2,000 Greek's with Swiss bank accounts has gone missing as the nation's political system devolves into "tragedy with elements of low comedy."

Leon Black, the chief executive of Apollo Global Management and the presumed buyer of Edvard Munch's "The Scream" for $120 million in May, acquired the high-end art book publisher Phaidon as a personal investment, according to The Times.

Third Point, the hedge fund founded by Dan Loeb, financed Penske Media's acquisition of Variety. Marc Lasry's Avenue Capital and Ron Burkle were said to be underbidders.

Wells Fargo managed to sell bad mortgages without sending embarrassing obscenity-filled emails about it.

Some finance professors sent out an anonymous survey to chief financial officers of publicly traded companies. About 20 percent said they engaged in legal but aggressive accounting techniques to hit earnings targets.

Peregrine Financial Group founder Russell Wasendorf Sr. pleaded guilty to charges that he stole about $200 million from clients at the futures firm. It was initially believed that Mr. Wasendorf would be set free pending sentencing, the judge ordered the fraudster held behind bars pending a determination on the flight risk posed by the Iowa man. Meanwhile, Wasendorf's son, Russell Jr., sued U.S. Bank for allegedly failing to supervise properly the transfer of customer funds.

Lenders to embattled broadband wireless company LightSquared want permission to go after Harbinger Capital, the hedge fund founded by Phil Falcone, in bankruptcy proceedings, The Wall Street Journal says.

A Morgan Stanley infrastructure fund is tripping over the Volcker rule, which dictates how much of its own capital a bank can risk, according to Reuters. Some senior executives have left the firm rather than accept a smaller share of profits.

SEC Chairman Mary Schapiro is on medical leave, according to The New York Post, and may leave the agency before her term expires in 2014.

Andrew Ross Sorkin relegates the Occupy Wall Street to the dustbin of history, along with the misfits and vagabonds he says diminished the movement.

Harvard grads are earning less than alumni of the South Dakota School of Mines & Technology, says Bloomberg.

Short sellers have more than doubled their bets against Manchester United since the British soccer club that went public in a U.S. offering this summer, according to the Telegraph (h/t Business Insider).

Whither Europe: European governments have about three months to save the monetary union, George Soros said at the Festival of Economics: "I expect that the Greek public will be sufficiently frightened by the prospect of expulsion from the European Union that it will give a narrow majority of seats to a coalition that is ready to abide by the current agreement. But no government can meet the conditions so that the Greek crisis is liable to come to a climax in the fall. By that time the German economy will also be weakening so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities. That is what creates a three months’ window."

Investors wonder whether central bankers can come to the rescue again, as Europe signals another tumultuous summer for markets.

Self-defense: Securities and Exchange Commission Enforcement Director Robert Khuzami defended his agency's low tally of prosecutions against top investment banking officials for charges arising out of the financial crisis. For one thing, said Khuzami, decisions on mortgage-backed securities weren't made at banks' highest levels. For another: “We are responsible for regulating 35,000 entities, and yet we are about the size of the D.C. police force.”

The SEC investigator suspended last month after he confided in co-workers his desire to carry a handgun had previously applied for a permit to carry a concealed weapon, but was denied.

One insider trader hit the speaking circuit, hoping to build up some goodwill ahead of his sentencing today.

What's in a hedge? Rule makers contemplate the Volcker rule and JP Morgan's recent $2.3 billion "hedging" loss.

Fee fie: Bankruptcy lawyers are under pressure to justify fees that often exceed $1,000 per hour. The lawyers will have their chance to defend themselves today, at a public meeting with the Justice Department's Trustee Program.

Golden oldies: AIG CEO Robert Benmosche looks to the European debt crisis and sees retirement ages moving as high as 80.

The rule—named for former Federal Reserve chair Paul Volcker—essentially aims to erase all conflicts of interest within the investment banking and private equity business, especially targeting proprietary trading, or "prop trading": the practice of banks trading for their own profits instead of a cut of a client's profits.

[Another especially cynical but somewhat astute definition definition: "The Volcker rule basically stops banks from doing their normal business."]

Today being the last day anyone (including financial sector lobbyists) can file official, public comment on it, they did, and in what great style. The Wall Street Journal's Deal Journal takes note of a 173-page letter handed over by

• The Securities Industry and Financial Markets Association
• The American Bankers Association
• The Financial Services Roundtable, and
• The Clearing House Association

 
which collectively comprises the Voltron of Wall Street lobbyist groups, who didn't just voice their objections in said 173-page letter together, but also separately, in four different letters.

The Voltron Letter basically contends that people assume Wall Street is up to bad things, which, come on, of course it isn't:

The groups also argue that by writing the rule with so many negatives presumptions, the regulators have made assumptions that activities are prohibited unless shown not to be. The groups say this impacts the definition of allowed activities and “shoehorns all permitted activity into one or a few archetypes.”

Like 'lawful conduct' and 'unlawful conduct,' perhaps? For them, this is just a few sleeping bags and maced faces short of an 'Occupy Occupy Wall Street' movement. Angry letters to the Government: They happen.

At least one person—who was all "WHUH?" after reading an earlier draft of the rule, yielding one of the funnier headlines of the last year—is pleased with the legislation's newest look:

I cannot help but be impressed by the success the regulatory agencies so far in reaching agreement on the preliminary rule and by your confidence that the regulation can and will be successfully implemented. I am also certain that simplicity and clarity are challenging objectives, which for full success, require constructive participation by the banking industry.

Paul Volcker, everybody.

[Photo via Bill Clark/CQ-Roll Call Group.]

fkamer@observer.com | @weareyourfek

• One way to sidestep the new "Volcker rule" that seeks to ban proprietary trading: Call it proprietary investing. [FT]
• Not so fast, insurers and trade clearinghouses: You, too, are under consideration for stricter capital requirements because, like other financial firms, some of you are too big to fail. [Bloomberg]
• The Panic of 2008 did not purge the financial system of all the bad assets that hobbled some of America's biggest firms. The assets are still gathering dust on assorted comanies' balance sheets, waiting for opportunistic hedge funds and private equity firms to snap them up at bargain-basement prices. [NYT]
• The G20 group of economic powerhouses is close to an accord on foreign exchange rates and trade imbalances, but the dual specters of protectionism and emerging-economy resentment continue to haunt the proceedings. [WSJ]
• Despite these tough economic times, companies are very excited about selling insurance to rich people. [Reuters]

mtaylor [at] observer.com | @mbrookstaylor

By that morning, all around town, Dinesh D'Souza's Forbes cover story had begun making the rounds. "Barack Obama is the most antibusiness president in a generation, perhaps in American history," it opened. "Critics in the business community--including some Obama voters who now have buyer's remorse--tend to focus on two main themes. The first is that Obama is clueless about business. The second is that Obama is a socialist," he said. "These theories aren't wrong so much as they are inadequate." It's that he's an anti-colonialist, the Forbes cover story explained, just like his father, a "philandering, inebriated African." (See Lee Siegel's take on the piece here.)

Fury has been flourishing lately. Professor Todd Henderson, a former McKinsey man now at the University of Chicago Law School, where Obama taught from 1992 until his election to the Senate in 2004, wrote a widely read essay that detailed the unacknowledged struggles of living on hundreds of thousands of dollars. "Life in America is wonderful, but expensive," he explained. On CBS, Ben Stein said the president's tax proposals would reprimand him for success: "When did it turn out that was a crime to be punished?"

Blackstone's Steve Schwarzman registered the same kind of complaint, only more floridly, when he compared the proposal to close what's known as the carried-interest loophole to Hitler's 1939 invasion of Poland. As it stands, that rule taxes the money that private-equity executives make as if it were capital gains, not income. Mr. Schwarzman apologized last month. "However," he said, "the fundamental issue of the administration's need to work productively with business for the benefit of the overall economy is still of very serious concern." Two weeks later, in a letter to investors, the hedge fund star Dan Loeb likened the president's tax policies to the violation of "constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination."

And even before the president's sporadically astonishing town hall meeting hosted by CNBC on Monday, Paul Krugman dedicated his column to the anger of businessmen, diagnosing belligerence, blood lust and self-righteousness. But that isn't exactly right. What's been blossoming, according to interviews with senior executives from four of the major New York financial institutions, is a very different king of rage.

Bankers are offended. They speak of betrayal. Feelings have been hurt.

ON MONDAY AFTERNOON, a sturdy-looking man with well-combed hair and a good suit stood up in front of the president. Anthony Scaramucci was a vice president in private wealth management at Goldman and a Lehman Brothers managing director before he started a hedge fund that, as he told the president, has "$7.4 billion under management." Another program on CNBC, Untold Wealth: The Rise of the Super Rich, once showed him waking up at dawn in a Long Island mansion decorated by a jumbo gold harp. "I also went to law school with you," he told the president this week.

"It's great to see you. You've done very well," the president joked.

"If I fouled you on the hoop court, it wasn't intentional," Mr. Scaramucci said, for some reason. He has the air of a prosperous brother-in-law.

"I remember that!" the president said. Everyone laughed.

"You would remember if I fouled you," Mr. Scaramucci said. Chuckles faded. "I've got a low center of gravity." The president did not respond. "The question I have, sir," he continued, "and this is something I really, you know, a lot of my friends are thinking about. Listen, I represent the Wall Street community. We have felt like a piñata. Maybe you don't feel like you're whacking us with a stick, but we certainly feel like we've been whacked with a stick," he said. "When are we going to stop whacking at the Wall Street piñata?"

"There is a big chunk of the country that thinks I have been too soft on Wall Street," the president answered, before discussing hedge fund pay and tax problems, like carried interest.

"I didn't see any olive branch," Gordon Bethune, the former Continental Airlines CEO, and a current board member at Prudential Financial and Willis Group, said on CNBC afterward. "I'm looking for one, but I didn't see it." The reason why executives like Mr. Scaramucci and Mr. Bethune were not reassured, and were looking for reassurance in the first place, has something to do with a question that had come a little bit earlier. "There are some people in business who think, to use a phrase that you used recently about your critics, you talk about them like dogs," moderator John Harwood had told the president.

"We haven't increased taxes on businesses. Actually, we have instituted about 50 tax cuts, many of them going to businesses large and small," he answered. He reminded his audience that income taxes are lower than they were under Reagan, and Eisenhower, too.

But there is a difference between a question about insults and emotion and an answer about policy. "I think of it first as a language issue," a managing director at one of the largest private-equity firms in the city complained, when asked to explain the anger at the administration. "The language they use is the language of villainy and populism."

MR. HARWOOD HAD said that Wall Street felt Obama treated them like dogs, but he'd mixed his metaphors. "He went on 60 Minutes and said 'fat cat bankers,'" one of the four senior executives The Observer talked to complained. "He didn't say Dick Fuld or Ken Lewis, he just said 'fat cat bankers.' Meaning all bankers are fat cats. And we have over one million bankers in this country. And they're all taxpayers." That interview was in late December, after the year's huge bonuses were announced. Later on in the interview, the executive, who watched the CNBC town hall but, exasperated, had to turn the sound off after five minutes, came back to the slur. "He just said that we are all fat cats! All of Wall Street! He said 'fat cat bankers.' He said 'fat cat,' he's doing name calling, stereotyping, which is pretty amazing."

Back during the second month of the administration, writing in New York magazine, Gabriel Sherman documented the anxious rage of a privileged class that was unsure of what to expect. What has happened to Wall Street under Obama, though, has not been bad at all. But never mind the death of the Brown-Kaufman amendment, which would have limited the size of the nation's mega-banks; or the softened Volcker Rule; or Goldman Sachs' record 2009, followed by a quarter this year when Bank of America, Citigroup, Goldman and JPMorgan made a trading profit every single day; let alone the administration's satisfaction with the new Basel III rules on leverage and capital ratios, which were much laxer than they would have been without the banks' massive global lobbying effort.

"We've been ostracized," another source said. "I went to jury duty about a year ago, and when I said I'm in investment banking, the people in the jury room were making ugh sounds, and I'm like, fuck you. I'm proud of what I do. And I think this firm did a lot to get the recovery going. Somewhere ranked below a pimp and well operator is not right."

A White House spokesperson did not comment. But Wall Street's emotions have consequences. "If, as a result of this anger, credit becomes unavailable, particularly for small and mid-size businesses," Mr. Schwarzman wrote in The Washington Post this year, before his Poland blunder, "then at best the economy will slow and, at worst, we will find ourselves in a dire situation." He said bankers felt under siege and were responding by "becoming conservative," a lovely little pun about lending and politics.

"He's pissing on us and Wall Street and bankers and capitalism; then we have gotten afraid," the executive who turned CNBC on mute said. "We then are not investing in maybe what we should invest in."

mabelson@observer.com

SEE HIGHLIGHTS FROM JAMIE DIMON'S POWERPOINT>>

Citing "two people with knowledge of the decision," Bloomberg said the decision was an effort to conform to new financial regulations. The so-called Volcker Rule, a part of the financial-reform legislation that President Obama signed in July, prohibits banks from conducting proprietary trading, which as the name sort of suggests, means trading one's own capital.

The fate of the traders on the principal strategies desk wasn't entirely clear. However!

Some traders and support staff may get roles within the firm, while a team in Asia may raise money for a new hedge fund, the people said. ... The team's members in New York, led by Bob Howard, are in talks to join another asset-management firm, according to two people.

Ten percent of Goldman Sachs' revenue comes from proprietary trading.

Earlier this week, Bloomberg and The Wall Street Journal reported that JPMorgan was shutting its commodities proprietary trading desk. Fellow financial firm Citigroup sold its commodities trading business in October.

Update:

Here's a video from Bloomberg TV about the Goldman situation.