By Simon Johnson: link to NPR radio interview (and book excerpt) on how 13 Bankers got their hands on so much political and economic power – and why this spells serious danger for the rest of us.
Against all the odds, a glimmer of hope for real financial reform begins to shine through. It’s not that anything definite has happened – in fact most of the recent Senate details are not encouraging – but rather that the broader political calculus has shifted in the right direction.
Instead of seeing the big banks as inviolable, top people in Obama administration are beginning to see the advantage of taking them on – at least on the issue of consumer protection. Even Tim Geithner derided the banks recently as,
“those who told us all they were the masters of noble financial innovation and sophisticated risk management.”
In part this is window dressing. But in part it recognizes political opportunity – the big banks are unpopular because they remain completely unreformed and unrepentant. And in part it responds to a very real danger – Senator Dodd’s bill is so obviously weak on “too big to fail” issues that it will be hard to paint its opponents as friends of big banks.
Senator Richard Shelby knows this and is taking the offensive. The administration can convert an easy win into an own goal if it fails to toughen substantially Senator Dodd’s bill.
Fortunately, there is an easy way to address this issue.
Recall the political history of financial reform during the Obama administration. The economic team (Tim Geithner and Larry Summers) felt that no substantive change in the structure and incentives for deeply troubled parts of the financial system was necessary or even possible during the height of crisis. Consequently, they provided unlimited financial support to the country’s largest banks – communicated by the “stress tests” – with no conditions, and they also proposed an initial set of legislative changes that was slight.
Quite quickly, however, this strategy ran into trouble – because the largest banks immediately and demonstrably went back to their uncontrolled risk-taking ways, now based on obvious government guarantees. The lack of careful management within these banks is not an accident – it’s very much part of the design, which enables large bonuses to be paid at all levels; the point is not that individuals intentionally engender crisis every year, but the system runs through a loop that implies regular (and, in our view, increasing) government support over time. Too Big To Fail pays well; for the banks it is someone else’s problem to fix, and for policymakers the temptation is to kick all available cans down the road.
From summer 2009, leading banks also exuded arrogance – insulting the president and generally carrying on in a high and mighty fashion. The abuse of power by our ever more powerful bankers became increasingly obvious – as did their lobbying (Neal Wolin, Deputy Treasury Secretary, said this week that “big banks and Wall Street financial firms” spend $1.4 million per day on “lobbying and campaign contributions”; and “there are four financial lobbyists for every member of Congress”; good speech).
With perfect timing during the fall, in stepped Paul Volcker. Not someone ever accused of being a populist – let alone carrying a pitchfork – he pointed out, simply and forcefully (and publicly), that our biggest banks were out of control and must be reined in. With the political side of the White House increasingly anxious about the electoral effects of pandering to an apparent financial oligarchy, Volcker was able to persuade the president to adopt the Volcker Rules: a limit on the risk-taking by big banks and an effective cap on their size.
Unfortunately, the specifics of the Volcker Rules were not well thought through by Treasury and their cause was hardly championed with force. The Capitol Hill lobbying machine took over and mush duly appeared from Senator Dodd’s committee on the issue of systemic risk.
But Paul Volcker is not finished, not by a long way. Someone just needs to convince President Obama to call Senator Dodd (or meet again with Dodd and Barney Frank), to ask – politely but firmly – that the Volcker size cap on big banks be legislated, and actually tightened relative to the January proposal. The House already has the Kanjorski amendment, which is a step in the right direction.
On Tuesday, Volcker will go public again. But that’s not the most important conversation. His public appearance is just a way to communicate more directly with the political side of the White House.
Volcker’s point is simple. Without the Volcker Rules, the administration would be in much more difficulty than it is now; these proposals really helped to diffuse pressure. Now it’s time to make the Rules real – and this requires significantly reducing the size of our largest banks. Phase the rules in, as proposed in January, and there is no reason to think this will constrain our recovery.
Chris Dodd can start this ball rolling and Barney Frank would back him up. The consensus is ready to move. This is such an easy and obvious political win. Treasury and the White House economic team can be brought onside by being allowed to claim this was their idea all along – or they can say something along the lines of “the facts changed, so we changed our opinions”.
But if Paul Volcker doesn’t tell the president, who will?
The Baseline Scenario 
More like wait till the last moment, get ‘angry’ at the bankers, pass a bill that implies ‘next time’ they’ll be ready, use said ‘anger’ for fall elections, continue business as usual.(albeit with TBTF propped up and in charge of even more assets-ie. check your local ‘privitization’.)
Again, if Rahm Emanuel had 1/10th the intelligence he THINKS he has, he would know Obama being wishy washy on TBTF and wishy washy on bank/finance regulation will only win him enemies on BOTH sides of the two parties.
The extreme Republicans and the illiterates who listen to A.M. radio ALREADY think he is anti-free market and anti-small businessman.
So he might as well take the correct side, which will stabilize Obama’s base and eventually as they have the high road of the argument, might even win over quite a few in the middle. Even a lot of the illiterates who listen to Glen Beck have been angry at bankers a time or two in their lives.
Obama also needs to make more University campus visits when he can, and make sure the college kids vote in 2010. The Democrats might not lose many seats if they can find a way to inspire the college age crowd to vote November 2010.
Following my own trail of thought here:
I mean, they could do some kind of marketing, after this year’s Supreme Court vote on campaign contributions http://www.newdeal20.org/wp-content/uploads/2010/02/picture-21.png I would think anything is game. How about the Democratic party teaming up with some fastfood places in college towns, like Taco Bell and Dominoes Pizza, etc, and try to give kids coupons on food if they can prove (sticker or whatever) that they voted that day??? They could just give it as a general reward for college kids voting (even if they vote Republican), because a large % of that age group, and “college set” would support Democrats.
I have no loyalty to no political party. I do however have loyalty to the truth and doing what is right.
The Big Banks have to be taken on and new policies have to be implemented to ensure the banks do not bring the US economy to the brink again. Since President Obama is president the responsibility of doing this falls on him – and failure to act in my view will see him become a single term president.
Time to step up Mr. President
Obama is going to talk tough and do nothing really. this is his constant mantra. A toothless bill will be pased and a huge victory celebration will happen.
it’s all political theater, 1984 (reality gets altered). If Obama wanted any reform both Geithner and Bernake wouldn’t be there> Lets add Yellin to that mix. PLEASE SIMON YOU ARE STARTING TO SOUND LIKE SOME KIND OF BROKEN RECORD. AND IT IS STARTING TO LOOK LIKE YOU ARE AFRAID TO SPEAK THE TRUTH AND CALL OBAMA OUT FOR IT. sHAME ON YOU.
Financial reform doesn’t come from wishing it to take place. It will only happen if the people with really big money finally understand that it is their fortunes that are in danger from bankers who have no restraints. Corporations need to borrow money from these people. Slowly but surely the American corporate world is being eaten up by investors from China, Russia and the oil-rich countries. They also (intelligently) diversify into Euros and are no longer so tied to the dollar that they suffer each time it stumbles. So, in order for the USA not to self-destruct, it is essential that the banks are reigned in and cut down to a manageable size. In the end, nothing is too big to fail. Even the greatest empires crumble (always from the inside, by the way!) when they over-extend themselves. And allowing these banks to over-extend themselves over and over again will eventually just drain the resources of the lender of last resort, the US government, and lead to the implosion of the free-market empire and therefore to the end of freedom as we like it.
The Dodd Corporate Communist Collusion and Cooperation Bill is so far off the mark that unless President Obama takes strong leadership he will doom his presidency to that single term. His Goldman Sachs & Citi advisors are well known and are a huge liability now. President Obama, step up and do what is required now.
“Instead of seeing the big banks as inviolable, top people in Obama administration are beginning to see the advantage of taking them on – at least on the issue of consumer protection.”
To a large extent, “consumer protection” is a red herring. Do we need to do something about predator lending? Yes. However, it should not be the centerpiece of the bill. “System protection” should be the centerpiece of the bill. Consumers (and everyone else) would benefit greatly from that.
Why doesn’t this article talk about the repeal of the Depression-era Golass Steagall Act, which was the starting point of all this finance chaos?
Correction: Glass-Steagall
The Administraion needs a hands on approach on Financial Reform. Mr. President we dont need plugins to the financial system we need an overhaul of the system that works for the benefit of both wallstreet and consumers. First of all with Dodd leading FR most people have lost faith in Dodd and congress.They feel any bill Dodd proposes is a non starter. They feel congress is too compromised by lobbyists. So any reform that comes from congress has little confidence from the people. And if there is another financial crisis people will not look at Dodd but you Mr, president and your legacy. How many people blame the republican committee head of financial reform for the financial collapse. People dont even know who he is..they blame Bush.
The public wants Strong financial reform. This is not a health care bill so support for a strong FR is widespread. Mr. President the public would like to see you take the lead on FR therefore please bring the bill to the WH and craft one of your own. Have Elizabeth Warren who has credibility with consumers and also have the best economists, economists who saw the financial crisis coming people like Roubini, Volker etc and have them write a strong bill that the public can have confidence in. Mr. President public perception means alot. Its gold.
The republicans as usual will come out against the bill.
Then have a FR summit like HCR and let the republicans bring their ideas to the table. At the Summit have your economic team sitting next to you. Elizabeth Warren, volker, Roubini and others who saw the melt down coming. Dont have too many senators or congress since they are bad optics especially since they are part to blame for the crisis. Have serious economists who the public have confidence in.
Also put the bills online so the public can see both democratic and republican bills.
The public will then see who is for wallstreet and who is for the people.
Call the republicans bluff by taking the bill to the floor to get voted on.The republicans can either filibuster or vote no and let the public make up their minds who is for wall street and whos for the people.
FR is going to be one of the most important bills in for your presidency. Dont just pass a compromised bill just to say we passed the most sweeping FR in history. If another financial collapse happens people are not going to be thinking of Dodd they will be pointing fingers at Obamas presidency like they did bush even long after his term.
The real solution is to Audit the FED and then do away with this private cartel of banking interests who have driven the boom and bust cycles to their obvious advantage.
The real solution is to move the casinos of “investment banking” back behind a wall of separation like Glass-Steagall created.
The real solution is to force transparency into this system that thrives on secrecy and duplicitous acts to squeeze their ungodly profits out of the economy.
I agree. The consumer protection agency, whether inside the Treasury or on its own, seems less substantive than addressing government-backed risk-taking, the whole shadowy market for credit default swaps and the creation of new toxic assets. Unfortunately, the systemtic risks don’t translate well on Main Street. I’m not necessarily talking about the Tea Partiers (I think that recent… was it Quinnipiac?… poll showed a majority of them don’t have college degrees) understanding credit default swaps, but anyone without a degree in finance or econ. For these folks, protecting their loans is more undertandable than making sure Goldman Sachs can’t help another Euro zone government hide its debt.
At the end of the day, better consumer education and clearer terminology in consumer financial transacions (if our newspapers are generally written at a 6th to 8th grade level, why not our loan agreements) AND better regulating the systemic problems will far better serve everyone…
Warren Buffet is another person who can’t be accused of being anti-finance, and has serious credibility.
The Dodd bill is fine as is. It would be nice if a few things were tweaked, but talking as though it assures another meltdown is just plain stupid.
The Fed charges the government $1.04 for every dollar they print. So if the government ever wants to pay back the 4 cents they have to… borrow more money at a $1.04 to pay it back. Which means they can NEVER pay it off.
This has been a creeping disease for the last 30 years. Congress after Congress has been giving more and more power to the Banking interests at the expense of the public.
Under the guise of Deregulation and the intense lobbying and deal making of both parties our banks have become monster so hungry they have even taken to cannibalism of their own industry after depleting all other sources of plunder.
Even foreign governments are not free of the greed of these economy destroying gargantuans. We have to strike at the leviathans and break them up into harmless regulated servants of the people.
We are still in the middle of the meltdown. It isn’t over. We are sinking a little slower, that is all.
I really liked the title to this article “Who Will Tell the President”. It reminds me of the fable about The King’s New Clothes that I heard so many years ago.
Pleas tell him: It’s not just the Wall Street Banks ! It’s also the fact that they are in bed with The Federal Reserve Bank and some of their shenanagans are done with their blessing (i.e. gold and silver price suppression). How many economic insiders used to work at Goldman Sachs ??
The hearings this week at the CFTC should be pointing the enforcement boys to a bigger story than Bernie Madoff or Enron. This kind of “insider corruption” that should have been properly policed has put the whole country on the brink of disaster. It is business as usual on Wall Street.
A jobless recovery is just the tip of the iceberg; it’s time to man the lifeboats.
I don’t want to be an apologist for the administration, but any president willing to do his job is walking a tight rope over a nest of vipers. The banks and the financial services industry dominate our economy. They should be the driving force in this economy but have become a cesspool unto themselves, serving mostly themselves. They are providing no sustainable vision for the American economy, and government has chosen so far not to take the reins. Its not easy to stop people making money. You have to tell them things they don’t want to hear. And the dukes and duchesses of New York feel entitled to every last dollar they are draining out of the economy. But they are setting aside a good chunk of change to make sure the status quo remains. The question should be are you going to let them fall hard or let them fall slow, into the realization that they can’t play with complex financial instruments all day-it makes their hands dirty and doesn’t do much for the general economy. Obama is an incrementalist-he is going to naturally let them fall easy. He needs pressure from the people on this point. So an alternative plan backed by economists like Simon Johnson should be offered and people should get vocal about this. Obama needs to hear other voices.
Taming the big banks is only a small part of what ails the financial system. Nobody anywhere is talking about credit default swaps, which is what brought down AIG. Watch Europe.. if you hear that Spain, Italy or England are in real trouble, be afraid. Very afraid.
As long as Geithner, Summers and Bernanke are there to ‘serve’ the interests of Wall Street, the rest is just so much smoke and mirrors.
These three Republicans can and will either destroy or make inoperable any meaningful reform.
At the very heart of this debate lays the theory of too big to fail and this must be addressed:
http://americaspeaksink.com/2009/06/time-to-study-too-big-to-fail-theory/
We are deluding ourselves if we think that this Congress or this Administration are going to down-size the TBTF banks. We can, however, get agreement across the board that TBTFs enjoy a substantial federal subsidy as a result of the implicit guaranty of their debt and that the subsidy translates into a substantial and ongoiung wealth transfer from taxpayers to the TBTFs (think Fannie and Freddie but without the public purpose mandate). That “wealth transfer” should be reclaimed for the taxpayers. TBTFs will then downsize themselves. CKH
Well, as said before: Obama may express his wishes, Ccongress has to do the job, I guess…
“The Democrats might not lose many seats if they can find a way to inspire the college age crowd to vote November 2010.”
For what – and why?
I have a really ingenious way of capping the size of too-big-to-fail banks:
Let them fail.
Robert Henry Eller
Milan, Italy
Sure, Obamacare is just Bells&Whistels, right?
Soon too obvious to be False…
What is unchanged is that one of the stupidest groups of people of all time, who nearly drove us all to a financial collapse based on a house of cards, have now resumed the same ruinous business activity,same paydays, but now with government guarantees. what a country.
” So, in order for the USA not to self-destruct, it is essential that the banks are reigned in and cut down to a manageable size.”
They won’t have the appeal of Chinese sovereign funds, won’t be able to finance large infrastructure plans in developping world and keep the third world on their side.
If Chinese banking is to fail, national reforms are worth it.
But if, due to lower competition from America..they get sufficient market power to strenghten their balance sheet..they will not fail.
Time is not right, Chinese and Indians are in whishfull mindset and you need them for effective reforms.
Right on. Re-enactment of Glass-Staegal is job number 1. It is already written and ready to go.
SHAME ON YOU DCB
you are the one that does not get it
Obama’s mantra is that of a wiseman
his path is such – he is careful not to raise to the likes of you or the far right …
His wisdom is beyond people like you – who cannot accept that he is your President and a very good one to that
Watch him carefully – watch how he manages to help us the American people progress in a steady and healthy manner
God Bless
Tall Paul has done Yoeman’s service to the nation.
May God Bless him for his continued concern and advice. Let him nominate ” little timmy’s ” replacemnt.
WEB OF DEBT
“The Shocking Truth About Our Money System
and How We Can Break Free”
by Ellen Hodgson Brown
ISBN 978-0-9795608-2-8
This is not a sales pitch, it is a education.
Everything I thought I knew about business and economics after 2 years of MBA grad school was turned on its head after reading this book. I didn’t know squat.
We’re all standing around commenting on how pretty the flames are as our house burns down. At its core, our system is unsustainable and we are guaranteed to loose. The banksters have rigged the economic system better than a goldfish toss game at a carnival.
Until we understand what is going on and the level to which we are gamed, no effective conversation is possible.
Read it and we will talk.
I don’t think you can do this, it’s too much like paying someone to vote.
The real question is who is going to tell Volcker he’s advocating building a Maginot Line?
For the survival of our economy.
Who will tell the President? I think you just did.
Will the President take heed? We shall see.
Obama is a consensus and long-distance person. He knows that you need to have a minimum of consensus to get anything done that will last.
He is right. Change must come, but in nature is happens slowly. There is disruptive change that always causes pain and destruction.
Democracy is achieved by consensus and it takes time, so Obama is the man for the job, and we need to continue to make our voices heard, but we need to have a little patience.
Anyone who looked at Obama’s campaign, not the rallies and speeches, could see that he is a process person and he know were he is going. Not always how he will get there, but he has the confidence in himself and his ideas that the road he is on will lead to here he is going.
In part this is window dressing. But in part it recognizes political opportunity
An opportunity that has always been there, but the Obama Administration is loath to seize it – what’s different?.
Senator Richard Shelby knows this and is taking the offensive. The administration can convert an easy win into an own goal if it fails to toughen substantially Senator Dodd’s bill.
The republicans have been “offensive” for a long time now. I doubt this will move the Administration.
The economic team (Tim Geithner and Larry Summers) felt that no substantive change in the structure and incentives for deeply troubled parts of the financial system was necessary or even possible during the height of crisis.
Your being too kind here. Really. Geithner, Summers, et al. have always given Wall Street what they want because they are tied at the hip to Wall Street. Conveniently, the crisis was so pressing that they were simply forced to give money away with no strings attached. Sound familiar?
The Treasury HAD to give the banks $700 billion dollars, the Fed HAD to give AIG creditors 100%, the Administraton HAD to eliminate Mark-to-Market accounting…
Volcker was able to persuade the president to adopt the Volcker Rules
I think it was Scott Brown who “convinced” the President.
Unfortunately, the specifics of the Volcker Rules were not well thought through by Treasury and their cause was hardly championed with force. The Capitol Hill lobbying machine took over…
Geithner simply does not believe in the Volcker Rules. Volcker’s place in the administration has always been secondary. Sometimes I think they brought him on as “window dressing.”
But Paul Volcker is not finished, not by a long way. Someone just needs to convince President Obama to call Senator Dodd . . .
I’d bet that Volcker wanted to see stronger reforms. As part of the administration, Volcker was a big stick that the administration could threaten the banks with … now that his limited Rules have been announced and sidelined, his power to influence the debate is . . . questionable – especially if he continues to play the role of elder statesman.
On Tuesday, Volcker will go public again. But that’s not the most important conversation. His public appearance is just a way to communicate more directly with the political side of the White House.
OR, his communications with the White House have broken down to the point where he has to go public.
Chris Dodd can start this ball rolling and Barney Frank would back him up. The consensus is ready to move.
Oh happy day!
This is such an easy and obvious political win.
It always has been . . . the Obama administration will not get behind this “win” as long as Geithner and Summers are running interference for Wall Street. Its as simple as that. Don’t expect any real reform until Geithner and Summers are shown the door.
Treasury and the White House economic team can be brought onside by being allowed to claim this was their idea all along – or they can say something along the lines of “the facts changed, so we changed our opinions”.
Fantasy.
But if Paul Volcker doesn’t tell the president, who will?
You just did. But more importantly, you and many others have been writing about the need to rein in the banks for months – to no avail. In fact, an astute observer would already see that the Obama administration is not going to push much for real reform.
From Geithner: The financial crisis cost us only about 1% of GDP;
From Obama: We’re going to get back every dime we gave to the fat cat bankers.
If they were interested in pushing for real reform, they’d be making comments that embarrass the bankers, not let them off the hook for the true cost of the financial crisis and its aftermath.
CONCLUSION
Most Americans don’t understand Too Big To Fail issues. They DO understand consumer protection. The Obama Administration will push consumer protection and the mildest version of the Volcker Rules (no excessive risk taking by prop trading – as determined by the Fed, haha). To get this, they will accept that the consumer protection agency is part of the Fed. The Fed’s control undermines the effectiveness of consumer protection but the spin will be “we got consumer protection!”
The effective thing to do, for those who want to push the To Big To Fail issue is to sign a joint petition and publish it in major newpapers. THAT would get some attention and elevate the issue.
remember when bush ran on sending everyone a $600.00 rebate check from the irs?
obama has to lead. where does that buck stop?
Barry, your comment on “help us the American people progress in a steady and healthy manner” what you are really saying is; I’m to lazy to stand on my on two feet so I need someone help hold me up…..
You are intitiled to nothing except to persue on your on behalf….time for the American people to get off their duff…..
News flash. The college students are now very disillusioned with “The One.” They wanted to see change in the way Washington worked, instead they are seeing the corruption, lobbyists influence and bribery being taken to new heights.
generally agree with this article.
Obama administration needs to take on the big banks. Big banks, along with big health insurance, are predators.
Democrats are in bed with the big banks, but not as much as are the Republicans.
They, along with Wall Street sleazy schemers with their MBAs but total lack of morality, will destroy this great nation if permitted.
I once believed in unfettered capitalism…the wonders of rthe marketplace.
No longer.
These greedy, amoral SOBs need to be regulated, strongly regulated.
Well said.
You can’t look to Geithner or Bernacke for unbiased solutions or controls. Both are Goldman shills and are looking out for a secure next job once they are booted out of Washington. Their interest is not for the American people, but their buddies at the likes of Goldman Sachs.
Dodd doesn’t write the legislation. His Banking Committee staffers write it.
How many of his soon-to-be unemployed staffers:
1) have already been offered positions on Wall Street or K Street; or
2) are currently in the job interview process with Wall Street or K Street firms?
NOTHING will change. Dodd no longer has any interest in doing the right thing since he’s not running for office. Now he’s simply trying to build up favors (without benefiting from any actual money), so that they’ll be returned to him in the future. Included among those favors is letting Wall Street and K Street write the banking bill.
The only alternative is for Obama to promise Dodd his dream job right now… whatever that is… probably some Cabinet-level position with a great big budget that can allow Dodd to move most of his staffers to that department.
So they can have a job, and a future, when they graduate? Graduates are now getting out of school with crushing debt and fewer opportunities than any generation since WWI.
Mr. Greenspan recently published a very well written paper that addresses major issues starting from the meltdown of Lehman Brothers. While I disagree with Mr. Greenspan on several accounts, I do encourage one to study his paper available here:
Click to access spring2010_greenspan.pdf
give the big banks the choice: Government control or break up & size limits.
Just a couple of weeks ago, it was the healthcare bill whose failure or passage (depending upon who was talking) would see President Obama become a single term president. Now, you’re moving on to financial reform as his Waterloo. I think you’re under-estimating this President.
correction… it may not be the only option… but it is the most likely option that comes to mind.
Unfortunately for America, Durbin put it best:
The banks “own” Congress.
Obama, like Bush, is largely clueless on all-things-money. Thankfully, Volcker understands money. But President Judgment has repeatedly demonstrated that he has no idea what to do about the banks… look no further than The Crime Syndicate’s top-ranked cheerleaders – Timmy, Benny and Larry!
Wise men don’t perpetuate two illegal wars and maintain a global police force. Cut defense and put some of the money back into America!
Some of these comments are so stupid that I pray for the extinction of our species.
So far, Obama has only been a good speaker, and weak on the issues. Why would he change now. Keeping Bush lite policies and listening to Emanuel and Geithner is extremely discouraging.
We keep waiting for him to get an ephiphany and it may not ever come. Aint voting for the guy unless he wakes up (SOON!).
I remember that. I also remember sending it back, and more, when I filed my tax return the next year. Thanks for loan, Dubya.
Try to remember why our government was formed:
“to promote the general welfare, and secure the blessings of liberty to ourselves and our posterity”. Compassion for people less fortunate than yourself is not an evil concept. In fact, it is a central concept to almost all religions and is reflected in the policies of most enlightened governments.
Any attempt at reforming banks will be flawed and compromised, just as the health care reform failed the average American.
Neither banking, health nor even war will ever be truly reformed until our elections are. Without first getting the influence of cash out of electoral politics, these issues will continue to go in cycles, with legal bribes buying power through parties each taking alternating turns at pretending to improve on the last guys.
We need a map showing who took banker money in Congress and how much, along with symbols representing which lawmakers are on the corporate-government merry-go-round.
oh don’t worry about the college crowd. we’re voting. since healthcare passed i have an obligation to vote.
if obama’s health care “reform” bill is any indicator, his financial industry “reform” bill will be all hot air with no teeth. obama has NEVER been even close to liberal, never mind progressive. just another pretty face with the right color of skin at the right moment, that is, for the 400 families that own the entire country.
I think you missed the sarcasm. I detect a dittohead name dBarry.
To be published in all major papers:
DECLARATION OF INDEPENDENCE
From Bank Oligarchy
1. How the banks amassed too much power
2, How that is detrimental to democracy
3. How it contributed to the financial crisis
4. How the administrations reforms fail to address the problem
5. What needs to be done.
6. Where you can find more information
Signed by:
Stiglitz, Reich, Johnson, Warren, Smith, DeLong, Krugman, . . . and many more
Gusw you are right!
The administration and congress are heavily indebted to interests such as David Heller’s (head of securities at Goldman Sachs) Thirdway.org (http://thirdway.org/trustees). Organizations such as these in this case chaired by Goldman Sachs officers have raised substantial amounts of money for Obama (Heller being a top donor), and in my view have been responsible in getting the administration focused on the “middle road” which might have even resulted in the death of the public option in the health care debate.
I wonder what sort of advice Thirdway has and will provide to the 12 congressman and three cabinet members and the three top cabinet officials on their board. While the media is focused on the obvious connections like Geithner and Paulson and Gensler who practically run all the government and semi governmental financial bodies, it has taken its eyes off the think tanks and donors.
Same thing AEI was to Bush in terms of policy development and funding, organizations like Thirdway are to Obama. The American public is never going to get what it deserves (what was wrong with the ability to import drugs from other countries???). Wall Street and the corporations, have realized that in this economic crisis you have to give people “something” so give them something that really doesn’t change much at all and even benefits the large corporations. That my friends is the “third way” that Obama needs to follow. Don’t expect miracles. I have tremendous respect for the president and his win on health care but he is fighting right wing extremists, with people on this side that are constantly getting him to look after their own corporate interests. As Gus W said it is the reality of our elections system. Check out the organization. Look at all the GS officials in the admin, then tell me we have a chance at real financial reform.
NOTE: Just a suggestion. “To be published” doesn’t mean that it is planned or will be.
I just wanted to make my suggestion for a petition or open letter more concrete.
If Obama won’t take the issue to the people, then maybe those who understand the problem best should do so.
Btw how much money do you all think these guys have between them?
http://thirdway.org/trustees#trustee_20
Your future will be whatever the banking industry says it will be my friends. Check out their recommendations on health care and what eventually came to pass.
“Check out:
http://clevelandssecretclub.blogspot.com/2010/03/truth-about-financial-reform.html”
watch both videos
Simon is a soccer fan!!!! Nice use of “own goal.”
1. Banks are not casinos. It should illegal to gamble with my deposit money. I didn’t not place my savings and checking account with an investment firm, I put it in a BANK. Please bring back these regulations. THEY WORK.
2. Everyone tell the President. Stop being a bunch of cowardly whining babies.
I DID NOT. I DO need more caffeine. Apologies for hideous word usage early on a Sunday.
The Obama administration has shown no willingness to confront major financial institutions, perhaps because they are major campaign contributors–they certainly did not do it with the health care insurers. Sometimes the worm does turn, but I wouldn’t, ah, bank on it.
LRV – I must say I agree with Barry. The issues at hand are extremely complicated Healthcare for instance, the right seems to feel that requiring everyone to have insurance is a infringment on their basic rights.. and think they are doing so because the “lazy” people feel like they should be entitled to it. This is such a sadly symplistic view…there are far more facets to the issue. It requires a suberb strategist to navigate all of the ramifications one piece at a time.
Obama’s team has that level of ability. He really cut his teeth on the healthcare passage, the only fault I see is that he should have stepped in with more force earlier. I truly believe we will see both sides realizing this bill is a great step in the right direction, for everyone in the country, especially small businesses. The Public option needs to get added for it to be what he promised.
Good Point!
Add my voice to that idea! Is there any reason why this can not be done??
That miserable SOB banker in “It’s a Wonderful Life”… is ALIVE AND WELL and living in Manhattan.
I’m real glad to read that! Please don’t forget it come November…
What would our government be like if 99% of us voted?
Larry Schuler, MSgt (Ret.), USAF
Cedar Park, Texas
I ponder how far down the tubes we need to go before we ALL wake up and put a stop to this.
Also I wonder how many foreign money interests, which by my definition is an entity set about to topple the USA, sit on the boards of these companies, and who sit at the Federal Reserve Bank? I prefer the true name of the bank because it is NOT part of the FED, meaning Federal Government. It is a private business entity with a federal contract. As such it SHOULD BE LOYAL to America. I don’t believe it is.
Speaking as someone who will vote again for Obama, I must say I am deeply disappointed with his continued reliance on Bernanke and Geithner, two of the folks who drove us off that financial cliff. I don’t think much of anything will get done as far as financial reform with them still at the Fed, and especially after that Supreme Court ruling, not to mention that $1.4 million banks spend each day on lobbying and donations. In a way, campaign finance reform would be better than any other effort, as it might free Congress a bit from the grip of big money.
But another massive crisis that, in many ways, is larger and more permanent that the current financial meltdown is our national debt. However, the best and really only way to begin to deal with it, apart from financial reform, is what nobody’s willing to advocate: drastically reducing our “defense” budget to, say, only defense expenditures. The massive global police force needs to be reigned in and gradually phased out.
Wouldn’t it be cool if Obama’s held a press conference and said, “Today I look beyond what might be politically advantageous, and act simply for what’s best, in the long term, for America’s future generations.” The same might be said about global warming.
I truly believe Obama himself is not part of the problem. However, he needs to get himself a few new advisors, and definitely fire Bernanke and Geithner.
The banks are no inviolable. They are running the show. Check out thirdway.org.
You can refer to the banks now as the “banking cartel”. They operate like the Mexican cartel.
It’s ok to let go of delusions… I have.
I wrote something before,but lost my access and it didn’t go through. Barry, you havethe right to believe what you want. Some people belive the world is flat, the pope is net to God etc. My comment is based upon a careful analysis of all the available evidence over many months. In truth I do not know where to begin and how to argue with someone who appears not to grasp what has been happening.
I voted for Obaama. I believed what he said on the campaign trail. I was wrong. It doesn’t mean I’m republican. But I KNOW THIS. ALL OF THE MAJOR CAMPAIGN PROMISE BILLS HAVE BEEN WRITTEN BY CONGRESS AND SENATE. THAT MEANS MAX WATERED DOWN BY SPECIAL INTERESTS. ENERGY, HEALTHCARE, NOW FINANCE. wE STILL HAVE GUANTANIMO, STILL IN iRAQ, ETC. BERNAKE WAS REAPPOINTED, GEITHNER WAS ATT HE CENTR OF THE ny FED CORRUPTION THAT ALLWED THIS WHOLE MESS TO HAPPEN. THE OFFICE OF COMPTROLLER OF THE CURRENCY IS HEADED BY A LOBBYIST.
I let those who want make their own choice. But I suggest you ignore what is said and just look at policy and the results. the people who determined the failed polices that lead to the financial crisis are still in charge. The list goes on and on.
Healthcare. we just mandated 40 million americans buy insurance with no public option and the government is prohibited by law from negotiating the best drug prices (get them in canada for 40% less). Energy was a 400 billion dollar give away to heavy pollution industries.
If you know the arcane details of every bill passed you will quickly realize these things won’t do much and give away billions to corporations. for example the mortgage reduction programs that piad banks to alter mortgages without principle reductions. THEY DIDN’T WORK BECAUSE IT WASN’T DESIGNED TO. Obama backed off having judges alter mortages.
There are unbiased facts, and then there is hope, pray, faith, and belief. take your pick. I’ll take activism against the wall street money lobby over hope and prayer in influencing Obama against his biggest campaign contributers any day. Lets fact it, he know where the money comes from, and he knows who is going to pay him crazy speaking fees when he leaves office. It isn’t the harlem baptist church, it’s wall street and the big money doners. Piss them off and that is the end of you.
In truth we have one party. they are controlled by the corporations who determine who is on the ballot (both parties). You get to pick between the two sides of that party (republican and democrate). don’t fool yourself, you are only voting for the approved candidates. Just like commmunism. you get your choice of which member of the communist you waant to vote for. they have been screened before. this is how they ensure they will do well regardless of the outcome.
Don’t believe me. I suggest you all read the quite coup, the doom loop (haldane), this time it will be different (carmine and rogoff) and 1984. when you realize we have been making the same stupid mistakes for 500 years and still not learning you have to wonder why. it’s because those mistakes benefit those in power.
See more photos hear http://apps.facebook.com/joolbum/
He that troubleth his own house shall inherit the wind:
and the fool shall be servant to the wise of heart.
The foolish bankers grabbed for the money without concern for the consequences. Now they and their cronies want to play down the grievous harm that was done and paper over the problem with weak reforms that can be easily compromised.
It behooves us all to look beyond the spin, scare tactics, and excuses. Its time that the banks and the politicians served the interests of the people.
Fool me once, shame on you. Fool me twice, shame on ME.
I wish that someone would ask President Clinton why he signed off on the repeal of the old Glass Steagal law
Sen Carter Glass must be rolling in his grave Ditto for Rep Steagal.l
Oh just found this on the Huffington Post on how the Goldman Sachs backed thirdway.org apparently had lobbyists for CIGNA and other insurance agencies do its write-up on healthcare (recommending they do away with the public option).
http://www.huffingtonpost.com/2009/06/08/third-ways-anti-public-he_n_212816.html
That is just what they did on healthcare. How do you think these guys who are all bankers and are supported by David Heller at GS (their co-chair and writer of 100k checks to them) are going to “advise” all the 15 lawmakers and cabinet members on their board, on financial reform?
Google Heller’s and the other financial cartel thirdway.org “trustees'”donations to the democratic party including Obama.
Any tea partiers around who want to look at this organization? The moderate and progressive press doesn’t seem to want to. This time around it won’t be about watering down healthcare but the financial reforms.
Thirdway.org another public service brought to you by Goldman Sachs!
Their motto should be: Who owns your country baby?
“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”
Woody Allen (1935 – ), My Speech to the Graduates
you are right, we have been working to give this country away to the world eversince ww2. so sad and so stupid…….
I know some on the blog may not be comfortable with the biblical reference but it seems appropriate because the magnitude of the failure is of biblical proportions. Plus, like it or not, many Americans connect with biblical references for moral issues more than pages upon pages of academic studies (I myself am not very religious).
Who will tell Prez Obama to get tough with the banks?
How about his mother-in-law ?!?!
Hmmmmm i noticed you encourage obama visit more universities to pray upon the weak minded college students to support his socialist agenda. ( poor bastards will never see it coming)
again
Who are these 13 banker functionaries that have gained so much power? Are they not much different than the functionaries that ran the USSR? The Royal Order of the Suspender Yuppie or Apparatchik?
Joseph Stiglitz in his book Freefall really puts the 13 banker functionaries problem in the right perspective. They want to continue functioning as rulers of something that has died. Not yet showing Rigor Mortis though.
Here is Stiglitz. Page 219.
” The fall of the Berlin Wall in 1989 marked the end of communism as a viable idea. The problems with communism had been manifest for decades, but after 1989 it was hartd for anyone to say a word in its defense. “…
” September 15 ,2008, the date that Lehman Brothers collap[sed , may be to market fundamentalism( the notion that unfettered markets,all by themselves, can ensure economic prosperity and growth) what the fall of the Berlin Wall was to communism. The problems with the ideology were known before that date,but afterward no one could really defend it. With the collapse of great banks and financial houses and the ensuing economic turmoil and chaotic attempts at rescue,the period of American triumphalism is over. So too is the debate over ” market fundamentalism”.
Our 13 apparatchik bankers are fighting for their turf. The problem is to remove them by every means so that the dead edifice itself may be razed and supplanted with an edifice that works for the nation. It must be a realization to some, I hope, that the administration itself is composed of similar type apparatchiks and a legislature filled with ideologues of the dead beast. Nothing will really be solved until the system clears away the living ideological and conditioned human detritus.
The cleaning out is not yet really underway. It is too soon and there has not been sufficient pain to force the political issue.
The political upside of playing hardball with the banks is almost too obvious to point out. Everyone from the teapartiers to rabid liberals would applaud.
Is it only Obama’s prudent conservatism that’s preventing it?
Has he been “captured” (cognitively) by the Bernanke/Summers/Geithner cartel?”
Are Emmannuel and other political advisers not pushing him “use it” because they’re concerned about financial-industry donations to senators and congressmen? (Or are they pushing him to use it, and he’s resisting?)
Those are some of my questions, given the fruit that hanging there, nice and low, for Obama to pick.
Wake up. Obama is on the same side as the Banksters.
To eliminate the grip of the Banking Cartel you need the political will to start the same sort of war that Mexico opened on the Drug Cartels. They just don’t have the will to fight that epic a battle. Look at how they sort of folded in with health care reform (though I am glad at least something passed).
By the time they are done slapping the banks on the wrist it will look like some sort of heroic endeavor. Lobbies are too powerful. Look at my other links here.
Mr. Hurley,
Ya, TBTFs “will downsize themselves”. You’re not friends with the pustule who writes “Economics of Contempt” or as he refers to himself “EoC”, are you???
Perhaps, emboldened by their recent health reform “victory” (which I really think is quite bogus, talk about kicking cans down the road), the White House, Chris Dodd and Barney Frank may get the courage to move in a much bolder way to pare down the culprit TBTF’s by passing something really meaningful. I just want to know how even four lobbyists per representative is enough to overcome the negative opinions of 95% of the population. I guarantee that there is no extreme too far to go to curb these greedy bankstards.
Obama needs to fire Summers, Geithner and that whole rotten lot of Wall Street insiders, lead congress to renact the Glass Steagall Act and regulate and reign in the banks and financial services firms now before it’s too late!
I look at the political gridlock and the deep ideological division and
then I see historical examples from other countries and times and I
wonder whether what we see played out today may lead to an inevitable
power grab by an imperial executive, with all the parties contributing
to that eventual outcome, including those who warn about it and who
protest against it.
I mean, I look at other places that used to be established republics
or fledgling democracies, such as ancient Rome, France after the Revo-
lution, Germany after World War One, and I always see it played out
that way. Some crisis or shift in logistics makes things no longer
work the way they used to and power becomes shaky. There are those
who wish to adapt and then there are those who blame everything on the
people who wish to change things. Eventually the ideology that wishes
to return to a perceived golden age thinks that the only way to
achieve their goal is to stall everything until those foolish “revolu-
tionaries” in power relent.
So eventually nothing moves until someone comes along who cuts through
the deliberately entangled red tape like Alexander the Great through
the Gordian Knot. The problem is, such a knot-cutter is more likely
an authoritarian, totalitarian force rather than someone who would
then cede power to a committee again, which might return to the grid-
lock that went before anyway. If such a usurper is only mildly com-
petent then the situation might temporarily improve again under such
centralized rule, warming the people to the concept of more monarchic
form of leadership, not calling itself a kingdom, but essentially giv-
ing the head of state such powers.
And before you know it you’re suddenly an empire under a Caesar or a
Napoleon or, in the worst of cases, a Hitler or a Stalin.
All the signs point to a lot of people being ready for such a power
shift and the whole political climate sounds like a prelude to this
kind of change. I’m not saying it has to happen, but if it happens
this is the kind of time when it usually happens.
I wonder how it will all play out in the end…
Ool
http://ulrichschreglmann.wordpress.com/
Simon, why do you think Obama will suddenly change his whole style of governing? The AP reported a few days ago that Obama met with Dodd and Frank and told them he “could live with” both of their bills. We may see a lot of populist rhetoric for a while against Wall Street, but Obama’s true commitments are to Wall Street and the medical industry, not to his base or to ordinary Americans in general.
Obama may be right to take his base for granted the way he does, since so many of us are constantly showing that we crave even the slightest chance to trust him again and forgive all his betrayals in order to once again be able to believe in his wisdom, intelligence, and ability to transcend mere politics. As long as latent Obama-worship continues to transfix so many Dems, Obama will take Dems for granted and make deals with the center-right and water down all significant reforms. Even though the health insurance reform bill was on track to be passed after negotiations between the Senate and House, Obama suddenly claimed these negotiations were too slow, and he grabbed center stange and stampeded a very flawed bill through Congress. His main reason for rushing seems to have been to kill the plan being negotiated between Pelosi and Reid to pass the public option by using reconciliation. After Obama’s big push finished, the public option was not only killed; it became nearly a taboo word. And yet the press and even Moveon.Org praised this emotional stampede to the skies, and suddenly Obama was praised as a liberal again.
It is precisely this kind of mindless adulation and willingness to call a moderate Republican-style bill a great liberal achievement that encourages Obama to keep Geithner and Summers, to use Volcker as a liberal mascot, and to ignore the cogent warnings of Simon Johnson and other clear-eyed critics who want to avoid another very probable meltdown.
Who will tell the president? This president’s only absolute commitment is to getting reelected. So if large numbers of the Dem base and liberal independents start organizing and protesting more effectively against faux financial reform, the WH will listen. Only when the president feels he may genuinely be in danger in 2012 will he listen to those who want to bring back Glass-Steagall in an updated form, to mandate rigorous, no-loophole regulation of derivatives, and to carry out other true financial reforms.
Well put, D-Man. Far too few observers view these issues from the larger perspective of the American Empire. Clearly, the trajectory of this empire is emulating that of others before it. As you say, over-extension … coupled with the arrogance of unquestioning assumption of one’s invulnerability. As one small example, the British actually convinced themselves that pre-World War II Singapore was “the Gibraltar of the East,” based solely on the presence of a small contingent of British troops. The Japanese knocked it over in about a day.
As for us, we are fond of calling ourselves “the greatest country in the world,” whereas it would be hard to find any category in which we are even competitive with the high performers. Delusional.
When the Captain and crew finally realized that the EXXON-Valdez was on a collision course, what could they do? The Financial Ship is still on course. Who will be around to clean up the devastating damage?
The consumer financial protection agency, if an independent agency, should bring the simplification of contracts and transparancy because that is what is needed by consumers to make informed investment decisions. It won’t solve all the problems, but it would be a significant step in the right direction if it is independent and has enforcement powers. If it becomes part of the Fed, or Treasury, it will be worthless since those agencies are captured by the industry.
“I wish that someone would ask President Clinton why he signed off on the repeal of the old Glass Steagal law.” – Dan Tillmanns
Because it seemed like a good idea at the time? Looking back it wasn’t exactly a banner year for logic. Phil Gramm was an authority on finance and DOW 36,000 was one side of a debate.
Excellent post and comments (mostly).
Chris is right, it MUST be the voters – the president’s base voters – who tell him. And it must be soon.
A great option. Hmmmm. Let’s see how it breaks down.
Bring down the cost- No, everyone now admits that premiums will rise. Taxes on medical devices will increase those costs to all.
Better quality- No, More patients less doctors will limit access to everyone as there is only so much time in a day. Cutting payments to doctors and medicine will mean even less availability.
Cutting medicare by 500 billion will cause care rationing for seniors. As far as cutting fraud and waste, not very likely. Our government has a less than effective track record on that. They’re always to busy trying to get reelected.
Will decrease the deficit. Well if this stands the young and their children and grandchildren get to enjoy all those trillions in defict to payoff. If it doesn’t collapse our economy first.
I do agree with one thing, Obama will be remembered.
I tend to run very conservative. I do think the current ideas being run through Washington lead down a slippery slope towards socialism. If we ever got there, there would be no reason to go to college because the more u make the more they take, but we arent even close to that yet.
One idea I have always liked of obamas was volunteer work for financial aid assistance…Id prefer that approach, but the government having more control over the banks, insurance companies, auto industry ect will not lead to a better future or more jobs, actually just the opposite. Government, both republicans and democrats, have proven that they are not fiscally responsible and cannot run any federally funded and controlled program efficiently.
Mark
http://exposingliberty.wordpress.com/
Thumbs up, for u, keep it up
@drmiddleground
“everyone now admits that premiums will rise” – who is everyone? Gov’t analysts? Market research? Right/Left media? This kind of statement would be a lot more meaningful to me if I knew who everyone consisted of and where their info is coming from.
More patients and less doctors? I don’t know about the “less doctors”, but more patients…yes I agree. The reason there are more patients is because sick americans will be able to afford to go to the doctor instead of sitting at home hoping they will get better, or by suffering. Folks will be getting more preventative or early care, which will help us as a nation see improved standards of living (at least for small businesses, kids between high school and their first post-collegiate job, and other Americans targeted by the bill). I went to Canada recently for business – Canadians love their “socialist” medical system. It may not be right for the American mindset, but I didn’t hear complaints of people dying or suffering because they couldn’t see a doctor.
Medicare – I don’t have enough knowledge of that to discuss, you could be right…I don’t know.
The bill wouldn’t have gone anywhere if there wasn’t a clear method for paying for it. That being said it will ultimately come back to the American people to pay, but that is the point of gov’t. We pay them, and they provide us with roads, order, protection, healthcare, means for education, and on, and on. I personally am fine with paying part of my salary to provide myself and others with more peace of mind when it comes to healthcare, and I know a number of friends that will receive benefits from this legislation. If you and other Americans think this bill is weak or don’t feel like you should be paying for an overarching American healthcare system, I understand your complaint. Obama did run for office though, and win a majority of the votes running on a platform where this kind of bill was well known about by voters.
Sorry for the novel.
I dont think its that confusing to be honest. Yes health care in general is confusing, but the idea that govt is infringing on our rights is not. The constitution is only 4 pages long and approx 4000 words, its very simple. The constitution explains the powers of the federal govt and all other powers are delegated to the states. 10th amendment.
I assure u that both sides will not see this as a great step in the right direction. The right will never be happy with increased govt control over private matters, even if it does work, which history would indicate it wont.
Look at California and Mass. both have this or a similar plan in place and face massive budget problems.
I wont argue that something must be done to help those hard working people that have a hard time making ends meet or have a preexisting condition and cant get covered. However, this much government involvement is truly frightening. History has shown that the more power govt has the more they trample on the people. IE the soviet union, china, cuba, and chile.
Im not saying Obama is a dictator by any means, but bills like this certainly lead us towards a very (and in my opinion) too powerful federal govt.
God Bless. I love intelligent conversation amongst respectful people.
Mark
http://exposingliberty.wordpress.com/
democracy is usually acheived at the point of a gun (in the case of the united states) or other extreme action against vested interests in place.
the civil war (slavery), how about ending segregation. all forced down. the myth is that we have democracy. the corporations choose who gets to run in either party. they donqate the money and someone doesn’t move up the ranks without their say so.
Think about it, soon we will be voting for corporate sponsored elections unlimited spending. I’m always going to vote for the coke candidate over the pepsi one. Yeah Coke
Thank you Marco,
YOUR SUGGESTIONS WOULD BE AN EXCELLENT BEGINNING!
IMHO
Firing, Summers, Geithner and that whole rotten lot of Wall Street insiders, lead congress to renact the Glass Steagall Act and regulate and reign in the banks and financial services firms now before it’s too late!
MarcoWhite
You can check out this open letter I wrote to Obama about this …
http://pursuitofhappinessyoga.com/2010/01/27/dear-mr-president-standing-by-geithner-you-have-got-to-be-kidding-time-for-him-to-go/