President Barack Obama shakes hands with people in the audience following remarks on the economy at Monaco RV manufacturing in Indiana. Wednesday, Aug. 5, 2009.

At a time when the Obama administration is battling Republican appointed regulators resisting changes in the regulatory regime, Democratic critics of its policy of accommodation towards Wall Street, will have been emboldened by news that Goldman Sachs traders made more than $100m in revenues on each of a record 46 days during the second quarter, while losing money on just two days.

When Goldman last month reported $2.7 billion in second-quarter profits, reflecting record revenues of $6.8 billion from trading fixed-income securities, commodities, currencies and interest rates, fears were raised that rivals would increase risk exposures, while Wall Street continued to use the federal government as the insurer of last resort.

Nobel laureate Paul Krugman wrote in the New York Times on Monday that "crashing the economy and fleecing the taxpayer aren’t Wall Street’s only sins. Even before the crisis and the bailouts, many financial-industry high-fliers made fortunes through activities that were worthless if not destructive from a social point of view.

And they’re still at it. Consider two recent news stories.

One involves the rise of high-speed trading: some institutions, including Goldman Sachs, have been using superfast computers to get the jump on other investors, buying or selling stocks a tiny fraction of a second before anyone else can react. Profits from high-frequency trading are one reason Goldman is earning record profits and likely to pay record bonuses."

Krugman said, on a seemingly different front, Sunday’s Times reported on the case of Andrew J. Hall, who leads an arm of Citigroup that speculates on oil and other commodities. His operation has made a lot of money recently, and according to his contract Hall is owed $100 million.

He asked: What do these stories have in common?

"The politically salient answer, for now at least, is that in both cases we’re looking at huge payouts by firms that were major recipients of federal aid. Citi has received around $45 billion from taxpayers; Goldman has repaid the $10 billion it received in direct aid, but it has benefited enormously both from federal guarantees and from bailouts of other financial institutions. What are taxpayers supposed to think when these welfare cases cut nine-figure paychecks?"

Krugman said high finance - - securities and commodity trading, as opposed to run-of-the-mill banking - - has become a vastly more important part of the US economy, increasing its share of GDP by a factor of six. And soaring incomes in the financial industry have played a large role in sharply rising income inequality.

Lloyd Blankfein, Goldman’s chief executive in an e-mail message this week, disputed a private account of his fears in the aftermath of the collapse of rival Lehman Brothers, saying Goldman’s survival was never in doubt.

Now that safe harbour has been reached, the New York Times says other Goldman executives reject the notion that the bank was rescued at all.

However, in September 2008, Blankfein worked with his predecessor as Goldman CEO, Henry Paulson, US Treasury secretary from mid-2006, in the financial rescue and Goldman's exposure to rescued insurer AIG, of $12.6 billion, was effectively guaranteed by the US government.

Paulson had worked at Goldman since he left the Nixon administration in the early 1970's and his decision to let Goldman rival, Lehman Brothers, fail, was a big boost to his former colleagues.

The Huffington Post says: "The banking and insurance industries have traditionally been among the most politically influential sectors. That was especially true during the George W. Bush years, when regulatory policies and tax legislation -- especially cuts in the rates on dividend and capital gains income -- produced a corporate bonanza. In the 2004 election, these financial interests demonstrated their gratitude by contributing hundreds of thousands to the Bush-Cheney '04 campaign. Employees of Morgan Stanley gave Bush more than any other company, $600,480; followed by Merrill Lynch, $580,004; PricewaterhouseCoopers, $513,750; UBS Americas, $472,075; Goldman Sachs, $390,600; MBNA Corp, $356,350; Credit Suisse Group, $331,040; Lehman Brothers, $329,725; Citigroup Inc, $320,620; and Bear Stearns, $309,150."

On Monday, the Wall Street Journal reported on a meeting last Friday between US Treasury secretary Tim Geithner and federal regulators including Fed chairman Ben Bernanke, at which it was claimed Geithner had used expletives and obscenities in lambasting them for opposing aspects of the administration's regulatory proposals.

The New York Times reports that the public dissent, which brought to the surface long-running debates that had been going on behind closed doors while the administration was drafting its plan, has taken senior Obama aides by surprise. The administration fears that it feeds industry opposition that has delayed action in the House and reinforced challenges in an already hostile Senate.

Administration officials, confirmed an account in the Wall Street Journal, according to the NYT

One participant in the meeting said that the bank regulators felt that Geithner treated them like children being reprimanded by a parent. But the meeting appeared to do little to discourage the regulators from once again returning to Congress to express their concerns with elements of the plan, which two of them did on Tuesday.