Trying to ban “obscene” profits is a bad idea.

The real objection of Taibbi and other Goldman bashers is that Goldman, except for one bad quarter at the nadir of the financial crisis, has made profits. Big profits. Or as some folks—such as economist William K. Black, writing in a New York Times "Room for Debate" roundtable—like to say, "obscene" profits. (What obscene means no one is sure, except that they know it when they see it.) Those profits are ipso facto evidence that Goldman has gamed the system to screw everyone else. "If America is circling the drain," Taibbi writes, "Goldman Sachs has found a way to be that drain."

The argument that if a company made huge profits, it must have the game rigged has been made at just about every bank in periods of high profits. Occasionally—as with the technology stock boom, from which most banks walked away unscathed—it turns out to be right. More often, it turns out to be wrong. Drexel Burnham Lambert, which was supposed to have the junk bond market all figured out, is no more. Neither is Bear Stearns, which ostensibly had the secret to turning mortgages into infinite cash. Same for other financial players, such as the hedge fund Amaranth, which lost billions trying to corner a segment of the natural gas market. In almost every case, the theory that a speculator has somehow cheated in some mysterious way is proven untrue in some spectacular way.

Some markets have been successfully gamed and manipulated for the profit of a few key players. The Internet public offerings market—in which Goldman was certainly a major player, though not, as Taibbi claims, any more culpable than others—is one example. The California energy market that was essentially cornered by Enron, Reliant Energy, and a few other companies with catastrophic results was another. (That, by the way, was a market designed by government experts.) There is nobody at this point who imagines that there is not a big role for regulators in preventing this. Nor is it unreasonable for companies that benefit from what is essentially an implicit federal insurance plan in times of crisis—and yes, that does mean Goldman—to pay for that.

The attack on profits per se, however, goes beyond this. It takes aim at the wrong target, serves the wrong interests, and will lead to wrong results. Frequently, the attack on "speculative" profits serves as a useful cover for the very people whose ineptitude and self-dealing has attracted the attention of speculators in the first place. An excellent example comes from the efforts of Icelandic bankers to attack hedge fund "speculators" for destabilizing the country's currency—a strategy of shifting blame to outsiders for problems that, when the Icelandic banking system blew up soon after, were revealed to be the clear result of those very same bankers' hair-raising incompetence.

The weak links in the financial system are not mainly the speculators who are reputed to be collecting obscene profits. They can just as well be government-sanctioned institutions—think Fannie Mae—that are supposed to be content with what are thought to be reasonable profits for what is ostensibly a socially desirable role. Those institutions manage to combine a thorough-going incompetence with a vested interest in hiding what profits they do make—again, think Fannie Mae—and making the financial system as opaque as possible.

Worse, the attack on profits in themselves creates the bizarre assumption that those who are making less in profit are operating more ethically. Nothing—nothing, nothing, nothing—that we have seen since the great bank collapse should give anybody a reason to think that. The collapse of the mortgage bond market is the perfect case in point. Goldman was certainly a player in this, but it was not the lead player by any means. Who drove the mortgage bubble? Lenders like Bank of America (BAC), Washington Mutual (WAMUQ), and Countrywide; investment banks like Bear Stearns, Lehman, and the U.K.'s Royal Bank of Scotland that were the market leaders in mortgage-backed securities; and one-stop-shop Citi (C), which packaged derivatives. All of them managed to combine cynicism and cupidity with colossal ineptitude.