Randomly Noted

If you asked a trader in U.S. stocks at the beginning of this week what the main catalysts would be for price action, it’s unlikely you would have been told an Obama administration plan to separate banks from their trading activities and limit their size would turn out to be a big one.

Another factor: the unlikely election of a Republican to a Massachusetts Senate seat, changing the balance of power in the U.S. Senate and changing the outlook for health care reform legislation, among other things.

Oh, throw in a deterioration in the position of Federal Reserve Chairman Ben Bernanke’s standing in the Senate, where he needs approval to carry on with his responsibilities passed the end of this month.

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Did you read Dorothy Rabinowitz’s WSJ opinion piece on Massachusetts District Attorney Martha Coakley, the Democratic Senatorial candidate who’s up for election on Tuesday? You should, because it will make you wonder why President Obama is bothering to stump for Coakley in a last-ditch effort to save the seat for his party. Oops! That’s why he’s doing it. The Dems are in trouble as the 2010 midterm elections loom, and the party’s leader is doing what’s necessary to protect each and every Congressional vote. As I wrote yesterday in another context, desperate times call for desperate measures. But do they? If I were the president’s advisers, I’d be telling him to take a deep breath and craft a noble plan to salvage a presidency that still has a lot of potential to re-tie the fraying bonds which Peggy Noonan writes about today. All this said, I and perhaps you, too, took a bit of satisfaction from Obama’s attack on big banks this week, even as one felt slightly seamy for doing so. Rich bankers are such a cheap and easy target these days that it almost seems beneath the President of the United States to go after them when the problems afflicting our economy – including the financial services industry – are so much bigger and complex than what amounts to a payroll issue. The fundamental fin services issue before policy makers, regulators and us, the voters, is: what should a bank look like? Should it be a multi-tasking, uncontrollable behemoth like Citigroup or a slim, streamlined boutique like Lazard or the cliched Main Street deposit-taking bank? Is there a particular industrial structure, regulatory regime and compensation system that will protect us from the dangers of the just-ended decade – easy credit and easy mortgages put through the derivative department’s Cuisinart and peddled to the gullible? Aren’t we, who squandered our savings on McMansions only to get anti-foreclosure assistance,  as blameworthy as the be-suited M.B.A.s we’re flogging so publicly?