This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books). Here we go again. When Bill Clinton suffered an electoral reversal after his first two years in office, he abruptly embraced the corporate money guys who had financed his congressional opposition in an effort to purchase a second term. On Tuesday in his Wall Street Journal op-ed piece, Barack Obama veered sharply down that same course, trumpeting his executive order "to remove outdated regulations that stifle job creation and make our economy less competitive."
It is amazing that folks like Gene Sperling and William Daley, the very people who created this banking meltdown, are rewarded with ever more important positions in our government.
The value of the Davis example, as with the parade of Wall Street hustlers so prominent among the Clintonistas, is that his greed has broken his cover.
He employed the same "creating a twenty-first-century regulatory system" rationalization used by Clinton when he signed off on the sweeping deregulation legislation that unleashed the Wall Street greed that ended up being the biggest job-killer since the Great Depression. "Over the (past) seven years, we have tried to modernize the economy," Clinton enthused as he signed the Financial Services Modernization Act that repealed key New Deal legislation, adding, "And today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority." Modernizing was the propaganda constant, as in the Commodity Futures Modernization Act that Clinton signed, thus shielding financial derivatives from any government regulation.
That deregulation, as Obama concedes in his WSJ column, led to "a lack of proper oversight and transparency (that) nearly led to the collapse of the financial markets and a full-scale depression." But Obama now promises that his deregulation efforts will be more sensibly targeted and will "bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislatures of both parties and influence of special interests in Washington over decades."
When he wrote that he intends to accomplish this revamp "with more input from experts, businesses and ordinary citizens," did he have in mind his two new key White House advisers who were the most effective advocates for those special interests? Tom Donilon, Obama's national security adviser, was the Washington lobbyist for the housing behemoth Fannie Mae, which will cost taxpayers $700 billion because of its marketing of toxic derivatives. Obama's new Chief of Staff William Daley was the lead Washington representative for a similarly afflicted JPMorgan Chase. These are the folks, along with many other Wall Street alums in this administration, who will oversee the latest update of already weakened regulations.
The first target will be the administration's puny efforts to protect consumers: "The move is the latest effort by the White House to repair relations with corporate America," the Wall Street Journal's report on Obama's column stated, "Business leaders say an explosion in new regulations stemming from the president's health-care and financial regulatory overhauls has, along with the sluggish economy, made them reluctant to spend on expansion and hiring. Companies are sitting on nearly $2 trillion in cash and liquid assets, the most since World War II."
This is a case of corporate blackmail pure and simple. The economy is sluggish because of a housing crisis that shows no sign of improvement. It stands history on its head to blame government financial regulations that had worked splendidly for six decades for the meltdown or the failure to fix a housing market that is the key to improved consumer spending.
Fixing housing would require efforts to keep the 50 million Americans whose mortgages are underwater in their homes. But the government bailouts under both George W. Bush and Obama have not required any significant cramp-down or reappraisal of mortgages by banks to enable people to stay in their homes. Instead the Fed and Treasury have flooded the banks and top corporations with cheap money and bailouts but, in the classic problem of pushing on a string, the corporate ingrates are hoarding that money.
Obama, and the party he heads, failed to provide a progressive narrative during November's election holding the financial elite that created this mess responsible. The key issue is not big government or onerous regulation but rather transparency and fraud prevention. When you are evicted, it is a government agent, a marshal or sheriff, who will force you out, so shouldn't the government also be involved in assuring that the consumer is protected by a properly vetted contract? Instead the US Chamber of Commerce spearheaded the marketing of an alternative narrative, as successful as it was devious, by Republican candidates that held regulation—rather than deregulation—responsible for the mess. Now Obama seems poised to join their ranks. As the WSJ reported:
On Feb. 7, Mr. Obama will visit the US Chamber of Commerce—a chief opponent to his administration's regulatory approach—for a discussion on how the White House can work with the group to create jobs. The efforts are designed to give companies more confidence in the president's stewardship of the economy, and bolster his re-election prospects among a wealthy constituency not traditionally allied with Democrats.
A constituency that Daley, Obama's new chief of staff, can faithfully represent, having received $5 million a year from JPMorgan Chase. And so ends the season of hope for the less wealthy constituency traditionally allied with Democrats.
Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
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I'm shocked, shocked to find that Obama is an opportunistic Centrist shit just like Clinton.
posted by: cka2nd at 01/19/2011 @ 12:26pm
But the question is, will he turn out to be a sanctimonious smiling clueless one-termer like Carter (and will Russ Feingold lead a primary challenge like Senator Kennedy)?
Exactly. Two sides of the same coin.
Look at the agency that was supposed to oversee offshore drilling. Government department that was paid for by the people they were regulating. That doesn't solve any problems. _____________________________________________________________________________________________
Agreed. Kind of like the energy companies regulating the energy business....oh, and communications companies regulating communications compliance.
1. posted by: jedi_mindtrick at 01/19/2011 @ 2:32pm
The games still on. I agree with everything you said but, if the government wasn't making it so easy for banks to have bad debt to bet on in the first place that wouldn't have happened. There's a movie fixing to hit DVD that was a small release in theaters called "Inside Job" I'm not sure who made it but it was narrated by Matt Damon. It was about the collapse and it was pretty amazing. Unlike Michael Moore running around wall street asking anyone he see's what a derivative is this movie actually explains it in less time. No bad debt to bet on= no (risky) derivatives= no collapse. Derivatives have been used safely and not that I'm pro derivative but a lot of them help it's just these were done in such a way where they knew mortgages would default (banks and sorry guys government, big bankers have or will work for government at some point and the other way around for politicians.) In the words of Jack White "You can't take the effect and make it the cause."
Thanks for playing, "black sheep", but you got the gist of it dead wrong.
The derivatives were at the heart of the '08 financial collapse because it was the slicing and dicing of debt and the subsequent selling of said debt (marketed as "triple A") that drove the entire f#cked up process of, essentially, NINJA (No income, no job? no problem!) mortgages--i.e. get as many people in on the home ownership game as possible to feverishly drive up the value of the housing market.
Of course, we all saw what happened when housing values imploded and the "triple A" rated debt tranches were discovered to be pretty close to worthless.
So yeah, TBTF needs to be an untenable stiuation, but super sharp regulators like Brooksley Born--who warned us about the critical need to regulate the derivatives market in '99, and was ignored by virtually all of official Washington as well as our "mainstream media"--need to be heeded, not stampeded.
Back to the tireless work on my Mars rocket ship. Hoping to finish on time to leave planet Earth, and escape the final implosion of the planetary ecosystem driven by unchecked human greed. Peace.
;-)
3. posted by: Beethoven1 at 01/19/2011 @ 1:18pm
Now I'm not that far right by any means I think that was a mistake. (Glassman Steagall) But that's not the jist of it. The jist is we have banks that are too big to fail and in a capitalistic nation you should never have that (or so much dependence on federal reserve.) Our government (both dems and repubs) were telling banks to give out loans like hotcakes even if they were adjustable rate to help people who couldn't afford a homes get into homes. People who could hardly afford them when they bought them really got nailed when the rates went up. That's the American way a nation that buys a bunch of crap they can't afford and tells it's citizens to do the same. That was the underlying problem I agree with you about derivatives but that was just a small piece of the puzzle. If government really cared about a prosperous free market they would have let the banks fail and gave large loans to new/smaller banks to let them take the throne. But from what the news said we would have had collapse. That's the first thing that needs to be handled. This hogwash oversight group (passed with the financial reform) wont do a thing. Look at the agency that was supposed to oversee offshore drilling. Government department that was paid for by the people they were regulating. That doesn't solve any problems.
The following are viewed as the conditions necessary for Stockholm syndrome to occur.
Hostages who develop Stockholm syndrome often view the perpetrator as giving life by simply not taking it. In this sense, the captor becomes the person in control of the captive's basic needs for survival and the victim's life itself.
The hostage endures isolation from other people and has only the captor's perspective available. Perpetrators routinely keep information about the outside world's response to their actions from captives to keep them totally dependent.
The hostage taker threatens to kill the victim and gives the perception of having the capability to do so. The captive judges it safer to align with the perpetrator, endure the hardship of captivity, and comply with the captor than to resist and face murder.
The captive sees the perpetrator as showing some degree of kindness. Kindness serves as the cornerstone of Stockholm syndrome; the condition will not develop unless the captor exhibits it in some form toward the hostage. However, captives often misinterpret a lack of abuse as kindness and may develop feelings of appreciation for this perceived benevolence. If the captor is purely evil and abusive, the hostage will respond with hatred. But, if perpetrators show some kindness, victims will submerge the anger they feel in response to the terror and concentrate on the captors' "good side" to protect themselves.
wiki
Companies are sitting on nearly $2 trillion in cash and liquid assets, the most since World War II."
This is a case of corporate blackmail pure and simple.
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Hey - if they could collaterize everyone's pension, IRA or 401K they would gladly do that - and maybe that is coming. Doubt they will collaterize future social security benefits since that is even more intangible than than the present value of retirement accounts. Every collaterized loan will likely have a 3 to 5 year call. But I suspect that there would be some steep discounting by the banksters - and they might give you say 30 to 50% LTV loan against your retirement accounts with the right to foreclose the whole thing (remember your house mortgage?).
Man - corporate blackmail is on the mark.
Stockholm Syndrome anyone?
1. posted by: black_sheep at 01/19/2011 @ 12:50pm __________________________________________________________________________________________________
So, are you telling us in hindsight that repealing the Glassman Steagall act was solid thinking ( By the way, A republican came up with the bill and Clinton signed it as president). That regulation would not have allowed banks into derivative business in the first place. Deregulation caused the last monetary collapse no matter how much you idiots on the right want to spin it. Corrupt buyers on Wall Street gambling with shadow money they didn't have and doubling and tripling down on that caused this mess.
I don't think it's a bad thing. The reason banks are too big to fail and the problems with so much that's going on is ignorant regulations. I'm for good oversight and transparency but I've never heard the Democrats actually try to do something about that. When the Democrats mean regulation they really just mean taxing which hurts the consumer in more ways than one.
I haven't seen Obama do anything but a hard turn to the right. There's no veering involved, we're talking about about a hard 90 degree right turn here.
I'm shocked, shocked to find that Obama is an opportunistic Centrist shit just like Clinton.
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