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Michael Lewis writes for Reader’s Digest?

Matt Levine, Bloomberg,  Secret Fed Tapes Recorded Goldman’s Capital Game, here. Ok, I think I understand.

It’s silly to get hung up on whether this made Santander “appear healthier than it might actually be,” or whether it “artificially” enhanced Santander’s capital.9 There is no actual health. There is no natural capital. These are all abstract, artificial constructs, and regulators just get to decide what should count as capital. I think Santander’s exchangeables should have counted as capital with or without the Goldman window-dressing. You might think they shouldn’t have counted either way. The Spanish regulators counted them with the dressing but not without. None of this is real or natural. It’s just a game, and there are rules, and the regulators set them, and then the banks get to play. And Goldman helped Santander win.

Or … wait. Is that not how it’s supposed to go? One conclusion you might draw from the tapes is that the regulators and the banks had a very different conception of what social practice they were engaged in. Goldman was helping Santander play a game against its regulators, while the New York Fed just wanted to be friends with Goldman and not make too much trouble. It certainly makes it easier to win a game if the other side doesn’t know it’s playing.

Michael Lewis, Bloomberg, The Secret Goldman Sachs Tapes, here.  So Lewis can walk down the hall at Bberg and just ask Levine to explain, but that is too hard? What is the plausible arc between Liar’s Poker and this? Could Tom Wolfe check out of reality like this?

I don’t want to spoil the revelations of “This American Life”: It’s far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices — and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it — as when you were faced with the newly unignorable truth of what actually happened to that NFL running back’s fiancee in that elevator — consider the following:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn’t.

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