Greider---"Obama's False Financial Reform Is Nothing But Smooth Talk

[bvar22]

"Obama's False Financial Reform Is Nothing But Smooth Talk and Some Fuzzy Plans."
William Greider, The Nation. Posted June 25, 2009.

"The most disturbing thing about Barack Obama's call for financial reform was the way in which the president falsified our predicament. He tried to make it sound as though everyone was implicated in the financial breakdown and therefore no one was really to blame. "A culture of irresponsibility took root from Wall Street to Washington to Main Street," Obama explained. "And a regulatory system basically crafted in the wake of a 20th century economic crisis -- the Great Depression -- was overwhelmed by the speed, scope and sophistication of a 21st century global economy."

That is not what happened, to put it charitably. Unlike some other presidents, Obama is much too intelligent not to know this. The regulatory system was not overwhelmed by historic forces. It was systematically gutted and dismantled by the government in Washington at the behest of the banking interests. If Obama wants details, he can consult his economic advisors -- Summers-Geithner -- who participated directly as accomplices in unwinding the prudential rules and regulations. Cheers were led by the Federal Reserve with heavy lifting by both political parties.

The president's benign version of events reminds me of what compliant politicians and opinion leaders said after the war in Iraq they had endorsed turned disastrous. "Hey, we were all fooled." If Obama were to tell the truth now about what went wrong in the financial system, he would face a far larger political problem trying to clean up the mess. Instead, he has opted for smooth talk and some fuzzy reforms that effectively evade the nasty complexities of our situation. He might get away with this in the short run. Congress doesn't much want to face the music either. But Obama's so-called reform is literally "kicking the can down the road," as he likes to say about other problems. In the long run, it will haunt the country because it fails to confront the true nature of the disorders.

Giving more power to the Federal Reserve to be the uber-regulator of banking and finance is a terrible idea (I examine the dangers in a forthcoming Nation article). Asking the cloistered central bank to resolve all the explosive questions about the over-reaching power of financial institutions is like throwing the problem into a black box and closing the lid, so people will be unable to see what happens next. That is the idea, after all, the reason Wall Street's leading firms first proposed the Fed as super-cop, then sold it to George W. Bush and now Barack Obama. Give the mess to the Wizard of Oz, the guy behind the curtain. He can do miracles with money, but don't watch too closely. This constitutes the high politics of evasion.

http://www.alternet.org/workplace/140891/obama%27s_false_financial_reform_is_nothing_but_smooth_talk_and_some_fuzzy_plans/?page=entire

Wish it wasn't so, but I agree with Greider,
especially about giving MORE regulatory authority to The Fed, a shadowy, opaque Private semi-Corporation that answers to NOBODY, not even Congress.
What America needs is MORE Transparency & Accountability, not LESS.

[Eric J in MN]

1. The only real way to stop a repeat of the bank bailouts...

...is to break up any business deemed too-big-to-fail.

As Senator Bernie Sanders said:
Too big to fail= too big to exist.

[bvar22]

2. Absolutely agree.

I am not an Economist, but "Too Big to Fail" seems to be the base root of the problem.
Nothing in "The Reforms" proposed by the White House addresses this issue.
In fact, the term "too big to fail" seems to have been disappeared down the Memory Hole.
I guess it was only useful when they needed justification for showering $Billions$ on the Wall Street Banks.

"Too Big to Fail" remains the Holy Grail of Big Business.
It is the golden archway to Socialized Losses & Privatized Profits.


NOW we have Your Children’s Money too !!!
And there is not a fucking thing you can do about it!
Now THIS is “Bi-Partisanship” !
Better get used to it!!
Hahahahahahahahaha!

[DemReadingDU]

9. Too Big to Fail, is Too Big. Period.

"Too Big to Fail" remains the Holy Grail of Big Business.
It is the golden archway to Socialized Losses & Privatized Profits.
**********

Exactly.

[MarjorieG]

3. He has some reforms, the best he can get now. He will go back in, if/when he's able, but the big

problem is with Congress, turf battles and outright corruption. Wish these critics got a little more muckraking with shaming Congress and helped Obama, instead. But the people who wanted to totally take apart the system, like Greider, are still the most critical now. It's a different art of the possible.

[bvar22]

6. Thats why he appointed Geithner and Summers?

I'm envious of your faith.
I'm much more cynical after 40 years of Political Activism.

[truedelphi]

8. No one made Obama choose the apppointees that he and he alone

Put in positions at Treasury, and the Fed.

Those crooks should be hanging from lamposts, or sharing a cell with Madoff.


Instead, Obama legitimizes these people. Well, I guess no big surprise there - he taught at the Univ. Of Chicago, the school whose economic "policies" made a travesty of what was once a middle class democracy and now is a Banana Republic.

However, at least in a Banana Republic in Central America and So America, people take to the streets. Here they watch TV about protesters in other countries.

[DemReadingDU]

10. I think Obama asked advice who to select

and was guided into choosing the economic team he has now. But final decision was Obama's.

[bvar22]

13. "Guided" by the same people....

...who "guided" Al Gore to select Joe Lieberman?`
I hope for the day we have Democrats who can stand up and say "NO" to that kind of guidance.

Are these the same people who will be "guiding" our President on Health Care Reform?

[MarjorieG]

15. Obama did not want to blow up the whole system, and hired those who understood how we got here, and

complexity. As passionately populist we are about the conditions. He did say we'd have to help the bad guys, as recoveries don't work without the financial systems also intact.

Our economy more globally interconnected than the Depression, and we caused it. We have a responsibility to fix it, also. No question the banks show no remorse or change of habits, so we're trying to curb the most honerous, with ability for oversight and fix the mixed non-banks for the first time.

[German]

21. Look at the new Rolling Stone article from Matt Taibbi

It shows how you were getting here and where you´re heading to.

http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

"From Tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the great depression - and they are about to do it again"

This should open a new threat, i can´t open it cause of to few postings

[DemReadingDU]

23. Excellent article, n/t

[bvar22]

25. Obama didn't have to "blow up the system."

The System blew itself up.
Obama and The Democrats had to work hard to re-inflate a failed system using our children's money, while promising "serious reforms" at a later date.
I always cringe when I hear politicians say, "We'll fix it later".
They never do.
They said the same about The Patriot Act.

[truedelphi]

26. You say that

"He did say we'd have to help the bad guys, as recoveries don't work without the financial systems also intact."

Obama's notion of "helping the bad guys" is a fallacy, plain and simple. You don't need to ask arsonists how to battle a forest fire, or to ask the foxeshow the ehn house needs to be guarded.

Kucinich and Issa, (or even Maxine Waters) could have explained how very wrong he is/was. And over the past week, Tom Hoenig from the Federal Reserve is speaking up and indicating how well he understands the flaws in this thinking of Obama's. Hoenig says exactly what many here on DU have been saying for the last five months - just friggin' re-instate the mechanisms that were in place from the aftermath of the great Depression until Glass Steagall was revoked.

And in two or three years, everyone will understand how corrupt or bought off or inept Obama was during the early and decisive days of his Administration. I am sure once the dollar is de-valued to the point it is worth less than a piece of currency in Zimbawee, people will be talking about this.

But for now, those who don't get it are simply fond of saying that this mish-mash of strategies needs "more time to work." It doesn't need more time - it is working great for AIG and for Goldman Sachs and a few others, and not so well for the rest of us.

[truedelphi]

18. From what I have read about the selecting of the Federal Reserve Chairman,

The President is typically given a very short list of people from which to select.

However the situation with the Federal Reserve, and how it has been so intertwined with Wall Street was such that had we had a President who was truly for us People here on Main Street, perhaps the Federal Reserve would have been given a back seat and forced to "chill out"

Obama came in at a time when the structural framework of our economic situation was so plagued by "inner termites" that the incoming President could have made serious reforms without having to fear much criticism. Had he wanted true bi-partisian ship, he would have looked to the few who stand valiantly outside the confines of "The One Money Party." Both Kucinich and Issa could have helped him guide new policies into place. The institutions calling themselves "Too big to fail" could have been put into receivership, rather than continuing their onerous practices.
The eleven trillion or so handed over to Wall Street could have instead been offered to regional banks, each one chartered by the state where they were located.

With those policies in place, we would be seeing the start of a true recovery. But since those decisions were not allowed the Big Empty Suit who was to occupy the WH, what will instead will play out is yet another "jobless economy" with those Wall Street groups deemed "Too Big to Fail" buying up commodities including local utilities.

SO now only does the average American now face foreclosure, loss of unemployment when the time allotted runs out, and perhaps hyper inflation, the basics that were always somewhat reasonable in price will be going sky high through.

For me, the writing was on the wall when, by late Nov. 2008, Obama was already telling us via "Sixty Minutes" what a good job Paulson was doing.

It is pretty much my belief that Bush was used by the Powers that Be to hand over much of our political might and fortune to the military. And now Obama's purpose seems to be to hand over what is left of our political will and capital to Wall Street.

[DemReadingDU]

22. That is what I was thinking

Sooner or later though, it'll collapse, either from the monstrous financial global debt bubble, or the people revolt, or maybe from the combo of those.

[bvar22]

24. Sucks if you're right....

..and I fear you are.
I can't even find any straws to grasp.
Geithner, Summers, Heck of a Job Paulson, and $Millions from the Wall Street Banks during the campaign.

How did I get so cynical?
35 years of political activism fighting for the Working Class & the Poor.

[bertman]

28. I agree with your sentiments, truedelphi, but I doubt seriously that President Obama had

the option of not "selecting" those who had already been selected for him. Just look at the dollar amounts of "non-lobbyist" money given to the Obama campaign.

Same Golden Rule as always: They who have the gold rule.

I appreciate your posts. They are excellent.

[jgraz]

12. No, it's not the "best he can get". It's the best he's choosing to ask for

And it's pure crap. His "reforms" would not have prevented the current crisis and will not prevent the next one.

How much of your money do you want funneled to billionaire bankers?

[MercutioATC]

4. This is a lot worse than Obama thought and he's out of his depth.

That's not a slight, ANYBODY would be out of their depth.

The problem is that there's no magic bullet. We've passed the point of no return. Obama is just desperately trying to preserve some semblance of the status quo while hoping for a miracle....and that's ultimately going to make it worse.

[jgraz]

11. Then he needs to fire his financial advisors and hire some new ones

Preferably ones that don't have their heads up their asses.

[MercutioATC]

14. That would be a good first step, but it's going to be ugly, regardless.

I don't think that either Congress or the general population have the mindset to do what has to be done.

The best Obama can hope for at this point (in a political sense) is that he gets lucky...which is what he's doing.

Top actually tackle the underlying issues would kill him as a politician and the "cure" really boils down to average people completely changing their lives...which is something he can't control.

We may very well have reached a true "wheat and chaff" point...and the definitions don't conform to most people's measures.

[jgraz]

17. Another economic collapse will kill him as a politician

[MercutioATC]

19. Maybe he can delay it enough to get through one term.

...but I doubt he can hold it off for 8 years.

[balantz]

5. I think it's criminal what the bankers are doing to us. n/t

[truedelphi]

7. Greider nails it as usual. n/t

[jgraz]

16. Greider's wrong. It's not even smooth talk.

Asking banks to maintain a FIVE PERCENT stake in the loans they offload is Obama and his treasury pirates thumbing their noses at us. Remember: 5% is the same stake that Enron maintained in their SPVs and is actually *less* on average than the banks maintained before the most recent collapse.

Allowing a reboot of the secondary subprime market is simply criminal. This is far more of a sellout than anything they've proposed with healthcare.

[bemildred]

20. Keeping the old game alive.

Staving off reform, that is the real game.

[MasonJar]

27. Why are not thinkers like Greider in the loop to advise Obama? He was

supposed to want many voices, but he only listens to the few. Bill Clinton let it rip at his policy discussions and then made decisions. Obama has surrounded himself with neocon dems like Geithner (Wall Street boy personified.) He needs opposing views expressed loud and clear in his policy meetings just like he promised us during the primary and the general election seasons. But that is something he apparently doesn't really aspire to or he'd have it.

[bertman]

29. Reality check: President Obama does NOT have control over the financial elites. They control him.

it's a reality that most of us would prefer not to acknowledge, but it's reality.

He's the new, consumer-friendly mouthpiece for the imperial clique that runs the world. I'm just hoping that he can do more good than harm before he is out of office.