It was a comparison that seemed at first too histrionic to enjoy much of a shelf life: Rolling Stone reporter Matt Taibbi called Goldman Sachs a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Funny, but not necessarily something to float in the mainstream financial media.

 

The image has endured, however; nearly a month after it first appeared, the Goldman-as-cold-blooded-marine-monster concept is still bobbing merrily on the surface of public debate about executive pay, bailouts and bank earnings. And more than any other vehicle for populist outrage so far, including the phantom executive pay limits Congress tried to impose on banks (the House Financial Services Committee reported out another, significantly weaker attempt today), it seems to be taking a material toll.

 

Exhibit A: Goldman’s decision to pay the Treasury Department’s full asking price of $1.1 billion for its Tarp warrants last week, believed to be largely motivated by image concerns. This news produced a phenomenon so rare and surprising that it deserves attention even a week after it happened: During a House Financial Services Committee hearing on the Tarp warrants issue, the committee’s ranking Republican Spencer Bachus warmly agreed with Elizabeth Warren, the Harvard professor whose consumer products regulation proposal is the scourge of Washington conservatives.

 

Warren, who was testifying before the Committee that day in her capacity as the chairman of the Tarp Congressional Oversight Panel, said Goldman’s agreement to pay full price for its warrants “proves that oversight works,” giving credit to her committee for having called out the first few banks’ warrant purchase prices as too low. “I agree with you,” Bachus said later, praising Warren’s panel. “Oversight worked.”


But the image of a giant bloodsucking squid may have had more impact than any oversight – and may continue to do so. As long as the image stays intact in the media (it was repeated again today in a column by Michael Lewis satirizing Goldman critics) as a creature the bank itself fears, the squid may be the most powerful motivator there is toward palliative moves like the warrant repurchases.

 

Animal metaphors as a policy lever are nothing new in the banking world. The National Association of Realtors helped fuel its campaign several years ago against bankers’ efforts to win real estate brokerage powers by showing an image of an Octopus reaching out to grab peoples’ homes. The group even handed out buttons and magnets with the Octopus, labeled “The Big Grab.” It’s worth noting that NAR ultimately won the fight.

 

Perhaps policymakers should take a hint. Could the White House get away, for instance, with calling any mortgage servicer who refuses to modify enough loans a raging wildebeest of doom, trampling the most delicate and slow-growing of grasses—the U.S. housing market? Animal nightmares may be all the leverage they have left.