Felix Salmon examines the newly released unredacted version of the Valukas Report and finds what he calls a scandal in the CME’s auction of bankrupt Lehman’s assets.

Salmon points out that Goldman got the best deal and pulls this passage from Valukas:

Goldman Sachs assumed the equity positions cleared through the CME, as of close of business on Wednesday, in consideration for the transfer to Goldman Sachs of $445,132,487 from LBI’s margin and collateral deposits at the CME. The equity positions included options with a net option value of $4,867,513 so the amount transferred to Goldman Sachs exceeded the Wednesday close of business position liabilities associated with the positions by $450 million.

What does that mean? Here’s Felix:

In other words, Lehman’s equity-derivatives positions were worth $4.9 million. And Goldman, in bidding for those positions, didn’t bid a single penny — instead, it demanded a whopping $445 million from Lehman’s margin accounts in order to take them over. So it got the positions for free, and another $445 million as gravy, on top. You can almost see the money being sucked up the Goldman blood funnel, no?

Goldman bid negative $445 million for a $5 million portfolio of equity derivatives? I don’t get it at all. Sounds like a story to me.

— The Financial Times’s John Gapper looks at the blockbuster Magnetar investigation ProPublica unleashed last week and says this:

I am not sure, however, that it proves Magnetar was doing something wrong. The fact that the fund had noticed that the subprime emperor had no clothes, and was taking advantage of the fact, does not make its behaviour worse than those who looked the other way.

First of all, relativism with Wall Street is a slippery slope to hell. But more important: something doesn’t have to be illegal to be wrong. This is something the press all too often doesn’t want to accept. Even if Magnetar’s activities were technically legal, and I’d say hold your horses on that one, the idea that we can’t condemn them for doing hugely destructive things to the country (and indeed, the global economy) for profit is just, well, wrong.

— Clusterstock’s Joe Weisenthal pulls from the Asia Times what he calls “One Sentence That Explains the Monster Banking Comeback.”

Give banks unlimited access to financing at close to 0% and a steep yield curve, exempt them from marking their worst assets to market, and they will earn money, even when their combined commercial loan book is shrinking at an annual rate of 20%

All of you talking about how cheap we’re getting off with the bank bailouts would do well to try to consider all the massive indirect subsidies these guys are getting.

Weisenthal does well to note that bank profits are soaring even as their lending plunges. See his chart.