Krugman points out (again) that the administration should have nationalized troubled banks. They didn't, and the under-regulated, undisciplined banking industry is hurting everyone else as a result:

Ask the people at Goldman, and they’ll tell you that it’s nobody’s business but their own how much they earn. But as one critic recently put it: “There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system.” Indeed: Goldman has made a lot of money in its trading operations, but it was only able to stay in that game thanks to policies that put vast amounts of public money at risk, from the bailout of A.I.G. to the guarantees extended to many of Goldman’s bonds.

So who was this thundering bank critic? None other than Lawrence Summers, the Obama administration’s chief economist — and one of the architects of the administration’s bank policy, which up until now has been to go easy on financial institutions and hope that they mend themselves.

Why the change in tone? Administration officials are furious at the way the financial industry, just months after receiving a gigantic taxpayer bailout, is lobbying fiercely against serious reform. But you have to wonder what they expected to happen. They followed a softly, softly policy, providing aid with few strings, back when all of Wall Street was on the ropes; this left them with very little leverage over firms like Goldman that are now, once again, making a lot of money.

But there’s an even bigger problem: while the wheeler-dealer side of the financial industry, a k a trading operations, is highly profitable again, the part of banking that really matters — lending, which fuels investment and job creation — is not. Key banks remain financially weak, and their weakness is hurting the economy as a whole.

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It was my understanding that there were penalties for early repayment of TARP loans, but this Daily Beast story doesn't mention it. According to them, Goldman Sachs will soon be out from under government control:

Wall Street may have another reason to hate Goldman Sachs: The venerable firm with contacts throughout the federal government looks as though it may be the first financial institution to be allowed to repay government bailout money, The Daily Beast has learned. Repaying its TARP loan would free Goldman from various restrictions, including those on the compensation of key executives.

The decision as to which banks would be given the green light from banking regulators, most notably the Federal Reserve and the Treasury Department, could be made as early as next week, these people say. Goldman already has a tentative approval from the Treasury and is awaiting approval from the Federal Reserve, according to one person with knowledge of the matter.

JP Morgan feels comfortable they have convinced both the Treasury and Fed that they should be allowed to repay the money along with the first group of banks.

During the height of the financial crisis the federal government handed out billions in aid to the big banks in an effort to boost capital levels depleted by bad real estate loans and bonds. While the bailout money helped stabilized a spreading financial panic, it also led to massive government ownership of some of the nation's largest banks and controls on business practices and compensation.

As the financial crisis has abated, some banks, most notably Goldman Sachs, JP Morgan Chase, Bank of America, and Morgan Stanley have said they can now repay the money and get out from under federal control. The government must first approve the measure; last week it announced results of so-called stress tests to determine which banks have the most capital to withstand further erosion in business conditions. The government also announced two conditions to repay the money: The issuance of debt that is not backed by FDIC insurance and sufficient so-called "tier one" capital levels. Tier one capital is the strongest capital in the market.

Based on the stress tests, Goldman Sachs and JP Morgan were deemed to be among the strongest of the big banks; unlike Morgan Stanley, Bank of America and Citigroup, both Goldman and JP Morgan were not required by regulators to raise capital levels. Since that time, officials at Goldman and JP Morgan have been pressuring regulators to allow them to repay the bailout money that was granted from the Troubled Asset Relief Program or TARP.

ZDNet: (link fixed)

Five of the largest ISPs in the US are to start charging businesses for guaranteed delivery of their emails, in a bid to combat spam.

Goodmail Systems, which provides a service called CertifiedEmail, announced on Thursday that it had signed up Comcast, Cox Communications, Time Warner Cable's Road Runner and Verizon as customers. Emails certified using the system are marked with a blue ribbon to show they come from a trusted source, thus bypassing spam filters - a privilege which will cost the sender a quarter of a US cent per email.

The voluntary scheme is aimed at large corporations and financial institutions whose mass mailings are most likely to be spoofed and caught in spam filters. Non-profit groups will be able to use the service for roughly a tenth of the commercial rate.[..]

According to Goodmail, seven US ISPs are now using CertifedEmail, accounting for 60 percent of the US population. Goodmail - which takes up to 50 percent of the revenue generated by the scheme - will for now only approve mail sent by companies and organisations which have been operational for a year or more. Ordinary users can still apply to be whitelisted by individual ISPs, which effectively provides the same trusted status.

I'm reading their justification, but...call me cynical, this just seems like a very dangerous slippery slope. In fact, I asked a few other bloggers their opinion and one directed me to this EFF statement:

Remember the famous email rumor that made the rounds in the 1990s: "Congress is trying to tax your Internet connection, write in now!"

Well what wasn't true in the 1990s is apparently coming true in 2006, only the beneficiaries won't be Uncle Sam -- it will be Yahoo, AOL, and a company ironically called Goodmail.

Cory Doctorow: There's an inverse correlation between the regulation of speech and the freedom of a society. Trying to filter the internet is ridiculous and dangerous.