Geithner's latest FSOC report attempts to buttress JPMorgan but unwittingly provides Progressives a road map to real reform.

Simon Johnson made mince meat of Geithner's latest report which blatently attempts to enable the, imo, Daley-Dimon plan to expand JPM.  www.economix.blog.nytimes.com/2011/20.

But thanks to Geithner, the report is the perfect bogey for Progressive bank reformers to dissect for years to come. In other words if this is the best they can do in defense of the status quo, it's a rich target.

I think the appointment of Daley pretty much sealed off the chances for significant downsizing of the mega banks under Obama. Assuming Obama is re-elected in 2012, which is my conclusion, Progressives will have to look beyond 2016 to achieve real bank reform. I don't like it but I don't see downsizing in our immediate future. But if we focus our efforts on bank reform in the interim, we may discover Teddy Roosevelt, the Democrat/Tea Party candidate for 2016. And I'm the optimist in thinking, for example, that the Resolution authority will help prepare the way.

As far as Geithner's report goes, in what is an appallingly weak reference to an unpublished study, Geithner dovetails with Jamie Dimon's recent statement that large banks benefit from economies of scale. Johnson points out the problems with the study( by researchers at the St. Louis Fed) and also points to much more prominent "research" denying that there are economies of scale to bank enterprises with over $100B in assets. The argument is significant because JPM, with other mega banks likely to follow, has offered the arguments of "economies of scale" and "diversification" as justification for mega banks and their goal of becoming larger by quantum leaps.

Johnson's summary of Geithner's report is encouraging in the fact that the arguments against mega banks are as strong as Geithner's are ill defined and self serving. I am forced to take the long term view of bank downsizing. But the banks will gamble again and repeat their offenses and we will get another chance. Perhaps we will be better prepared and have a candidate who has evolved beyond the consciousness of Obama, Geithner, Daley, Dimon and Bernanke.