John K. Galbraith: "Obama must break his devil’s pact with the banks in order to succeed."

[Better Believe It]

Obama’s Problem Simply Defined: It Was the Banks
By James K. Galbraith
November 5, 2010

The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

Up to a point, one can defend the decisions taken in September-October 2008 under the stress of a rapidly collapsing financial system. The Bush administration was, by that time, nearly defunct. Panic was in the air, as was political blackmail — with the threat that the October through January months might be irreparably brutal. Stopgaps were needed, they were concocted, and they held the line.

But one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.

President Obama didn’t see this. Or perhaps, he didn’t want to see it. His presidential campaign was, after all, from the beginning financed from Wall Street. He chose his team, knowing exactly who they were. And this tells us what we need to know, about who he really is.

Please read the full article at:

http://www.newdeal20.org/2010/11/05/obamas-problem-simply-defined-it-was-the-banks-26159/

[David Zephyr]

1. Enthusiastic K&R.

"Original sin". Spot on.

[femrap]

2. It's JAMES, not John....that

was his father.

[Mopar151]

3. This seems to ring true to me.......

Pure speculation on my part - but I think that Obama got the nod when he was playing peacemaker at the White House in Sept.08, and McCain's campaign was going down like his last airplane.

[truedelphi]

4. I have speculated the same damn thing -

Late Sept 2008, right around the time of the Financial Crisis, Barack got a visit from the Key Players and he agreed to do X, Y and Z. And then the Powers that Be had McCain "choose" Palin, and the rest is Hisotry.

I also believe that as long as Barack continues to give the Key People what they want, Palin will be his to run against and defeat.

Except the country is getting crazier by the minute - and while a year ago, I wouldn't have thought that PAlin had a snowball's chance in hell of winning, that may not be the case by Nov 20102.

[truedelphi]

5. Some terribly scary quotes from article:

But one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.

Team Obama did none of these things. Instead they announced “stress tests,” plainly designed so as to obscure the banks’ true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was “to get credit flowing again.”

And thus did a nation BailOut its banks, to the everlasting ruin of the small businesses on Main Street. To the tune of Eleven Trillion Bucks and counting.