Obama says he told bankers: "Show some restraint. Show some -- show that you get that this is a crisis and everybody has to make sacrifices." That and other political news in today's TPMDC Saturday Roundup.

I wanted to share this graph with you. It's not dispositive of any specific questions in itself. But it's a valuable set of data for evaluating the question we've been discussing in many posts today -- the relative size of the financial sector relative to the rest of the economy.

The graph comes from an article by Simon Johnson in the current issue of The Atlantic, 'The Quiet Coup', which I strongly recommend.

The text is a little small. So the first graph shows financial sector profits as a percentage of US business profits going back to the end of World War II. The second charts income per worker in the financial sector as a percentage of average compensation across the economy. As you can see, the pivot in each case is around 1980.

The number that jumps out at me is that at that peak point upwards of half the profits in the entire US economy was in the financial sector. And it's been near or above a third for most of the last decade. Quite apart from the public policy implications, but rather in the realm of political economy, these graphs provide a revealing look at what the 2005 push to privatize Social Security was all about and what the implications of its success could have been.

For now, late as it is, I'll leave you to make your own judgments about what it means and, I'd strongly recommend, read Johnson's article. And we'll return to this subject over the weekend.

Also check out our TPMtv interview with Johnson from last month.

From the Times ...

The financial giant Goldman Sachs spent tens of millions of dollars to bail out two senior executives last fall who were short on cash, according to the bank's proxy statement filed on Friday.

In an unusual move, Goldman bought back stakes in some internal investment funds from Jon Winkelried, the bank's co-chief operating officer, and Gregory K. Palm, its general counsel.

Both executives are among the largest shareholders in the bank, owning more than a million shares each, and directors were concerned that a large sale of Goldman shares by the two men would alarm investors during a period of market turmoil, according to a person briefed on the matter.

Never fear! We've pulled together all the best stuff from the last week for your reading and viewing pleasure. Bachmann, Jindal and exploding Volcanos, the shiny GOP budget leaflet, Michael Steele and so much more.

As you likely know, on Tuesday a special election will be held in New York's 20th congressional district to replace now-Sen. Kirsten Gillibrand (D-NY). The race pits New York State Assembly Minority Leader Jim Tedisco against Scott Murphy, a venture capitalist.

At the start, national Democrats were not eager to get heavily engaged in this race. The 20th is a Dem-trending but still basically Republican district. George W. Bush carried the district in 2000 and 2004, though Obama won it by a solid margin in 2008. And it was long represented by Republicans until Gillibrand beat scandal-plagued Rep. John Sweeney (R) in 2006.

So it was the kind of race where there was more for Obama and the Dems to lose than gain since a victory would not necessarily make headlines and a defeat, especially if the national Dems seriously engaged, could be spun as the beginnings of a resurgence for Republicans or evidence of deterioration for Obama.

But over the last several weeks, Tedisco, who seemed like the odds-on, though not overwhelming favorite, watched his lead slip away. And the most recent polls suggest that Murphy has opened a minuscule lead.

As interesting to me is that the fact that Murphy, far from charting an independent course in this Republican-or-swingish district, has based his campaign on two things: support of Obama and support of the Stimulus plan. Murphy's latest mailer tells voters: "On Tuesday, you can help President Obama," by electing Scott Murphy.

Tedisco, meanwhile, has been reduced to framing his campaign around the intricate claim that Murphy supports the AIG bonuses because Murphy supports the Stimulus bill and the Stimulus Bill didn't contain the retroactive limits on bonuses that would have nixed the AIG bonuses. Got that?

In any case, now in the final stretch, national Dems are getting in in a pretty big way, signaling they think the chances of a Murphy victory are good enough to take the risk. Obama sent out an email to supporters in the district, formally endorsing Murphy. Biden recorded a radio ad. And the DNC is up on the air in the district reminding voters that Obama supports Murphy.

At this point, they're all in. We'll know more Tuesday night.

Larry Sabato suggests Rep. Michele Bachmann bone up on what Marxism actually is or maybe just take a tranquilizer.

This morning brought news that Democrat Scott Murphy has a tiny lead in the latest poll of the New York-20 special election. And now comes word that Eric Sundwall, the Libertarian candidate who Tedisco's supporters were able to boot off the ballot at the last minute, is endorsing Murphy.

If you've yet to sate your daily appetite for Michele Bachmann's unique brand of slapstick fascism, don't forget the 'Bachmann Effect' from earlier this week.

After months of litigation, Fox Business News managed to get a thick ream of TARP office emails through a FOIA request. Neel Kashkari figures prominently. And we've got some of the choice details.

TPM Reader PW with some more thoughts on the size of the finance 'industry' ...

Absolutely. You've probably been noticing some people talking about "overcapacity" in the finance industry, and in a sense this is what they're talking about. It's like the auto industry's ability to produce way more cars than the world needs or wants to buy in a given year, only worse. Worse because finance wizards, like doctors, are also the ones telling you how much of their product you need to buy to maximize your investment returns -- indeed, in the case of funds that they manage, they're the ones who make that decision for you. So the more masters of the universe there are (attracted by the way-higher-than-median compensation) the more trading and the more deals you need to generate the commissions and underwriting profits to keep them in cigars and summer homes. And the more they tilt the playing field to divert surpluses to themselves, leading to more of the "best and brightest" going into finance...

So what we really need is a downsizing along the lines of the auto industry's, against a lobby that makes the AMA and the legal profession look like the Society of Friends.

We're trying to pull together the many moving parts of the AIG story. And here's some more on one issue that seems particularly important. Yesterday we mentioned that the chief risk officer at AIG, strange as it may seem, still has his job. But now we find that like AIG's in-house auditors and its outside accountancy, the risk assessing team itself was not given full access to the book of AIG Financial Products.

The next step will be to get some read on just when it was that AIGFP Chief Joe Cassano started shutting everyone out. And what didn't he want them to see?

Sen. Arlen Specter's probable primary challenger Pat Toomey teams up with Joe The Plumber.

We're listening to the bank CEO press conference after their meeting with the president at the White House. And among other comments Jim Rohr, chairman and chief executive of Pittsburgh's PNC Financial Services Group, has just noted that the financial services industry is the "biggest industry we have in the United States." I take it that some of that metric may be tied to just how one defines and delimits what constitutes an 'industry'. But this points up a basic structural problem. The point of the financial services 'industry' is to efficiently allocate capital throughout the economy or to put it a bit more cheekily to actual 'industries'. Now, that's a critical function. But when it becomes the biggest 'industry', and in many ways clearly the most powerful, that's a problem.

Republican Rep calls for "revolution" to block Obama's embrace of "Marxism."

Late Update: The DNC responds.

Obama announces his strategy for Afghanistan this morning. That and the day's other news in the TPMDC Morning Roundup.

"America's criminal justice system has deteriorated to the point that it is a national disgrace," said Senator Webb. "With five percent of the world's population, our country houses twenty-five percent of the world's prison population. Incarcerated drug offenders have soared 1200% since 1980. And four times as many mentally ill people are in prisons than in mental health hospitals. We should be devoting precious law enforcement capabilities toward making our communities safer. Our neighborhoods are at risk from gang violence, including transnational gang violence. There is great appreciation from most in this country that we are doing something drastically wrong. And, I am gratified that Senator Specter has joined me as the lead Republican cosponsor of this effort. We are committed to getting this legislation passed and enacted into law this year."

Those are Sen. Jim Webb's (D-VA) words on introducing the National Criminal Justice Commission Act of 2009.

Read more about it here.