The Obama administration just got its wake up call. All this past weekend the various news programs were grading Obama over the past year’s presidency. If you were Democratic the grades were close to Barack’s own, a B+ average. If you were Republican, the grades were draconian – D or worse. If you were Rush, you were too busy spouting bile and vitriol. If you were from Massachussetts you certainly did not give Obama and his team a passing grade.
This party would give the Obama Team a C-. I tend to agree with the Mass voters – Obama’s domestic priorities are wrong. After correctly staving off a second depression in the Spring the team should have immediately turned to “Jobs, Jobs, Jobs”, getting the ungrateful banks to ameliorate the foreclosures and lending more to small businesses not the reverse as they are currently doing. Finally, putting Health Care Reform ahead of Jobs and financial reforms, seems a waste of limited time, energy and political capital.
Particularly I would have expected the Obama Team to rein in the ever more cheeky “too big to fail” banks and other financial institutions. First, there is their refusal to contribute only to their own instantaneous recovery. Second, their attitude on their own pay and bonuses has become so tawdry and greedy it is simply dysfunctional – moneys that should be going into the economic recovery are going into pay and bonuses at or higher than the pre-recession rates. Their only other effort is shoring up their Balance Sheets with easy, Fed Reserve plus taxpayer supplied 0% interest money which they turn around and lend out at 3-5%.
Why such a Shortsighted Strategy
The Christian Science Monitor has raised the issue that others have echoed – Obama [and Washington in general] are too beholden to the “too big to fail banks”. For half a billion dollars in campaign contributions, the banksters certainly want a return.
So let us consider the power the “too big to fail” banks have over the Obama team:
1)Banksters are still too big to fail – an overhang of 7 million more foreclosures [at $70-150,000 loss per foreclosure that is $70-150 billion in ship that has yet to hit the fan], souring commercial real estate, and continuing high levels of unemployment lowering bank balances despite a new found consumer savings rate.
2)Banksters can upset recovery efforts with legal non-compliance – effectively what they are doing on housing foreclosures and loans to small businesses.
3)Banksters are willing to take down their fellow banks and financial institutions, ruining the whole banking and financial institutions reputations for Fiduciary trust and standing for economic development not venal quick money in ‘easy’ 10-30% return deals .
4)Banksters are willing to blame government and the Obama team for “forcing them to lend money irresponsibly to minorities” which helped bring on the housing crisis; or Obama is continuing to curtail the effectiveness of free markets with regulatory reform ideas and policies that have not worked in the past;
5)Banksters are more than willing to demand delivery on their half a billion dollars of campaign contributions to both parties including the Obama team.
6)Banksters are more than willing to say they will add to the jobs deficits if their pay bonuses are cut by tranferring effected operations out of the country.
So will Obama dare to take on the Banksters? He has kid-gloved them to date. No repealing of the Bush tax cuts to the wealthy despite the soaring need for the money and the fact that the biggest beneficiaries of his policies have been those very same top 2-3% wealthy who now command nearly 30% of US assets. No willingness to reveal who are among 4500 tax dodgers using Swiss banks accounts to defraud the goverment. No willingness to take on the Banksters on their low compliance on so many economic fronts as outlined above – this has jeopardized the economic recovery. Delaying and gingerly tiptoing through the re-regulation reforms. Retaining advisers like Tim Geithner, Larry Summers, Robert Rubin, and others who are deeply entrenched with the Bankster community.
From time to time, Obama has jawboned/tongue lashed against the bankers [but last time they only came virtually]. And he is now demanding repayment of all the TARP funds to the tune of $120 billion in fees over 10 years. But at $12billion per year spread among 20 or more banks it is chump change given a)the banks will just charge their customers more to pay for it and b)most of them make 5-15 times as much each quarter based on the 0% interest moneys they get from the Federal Reserve. So it was no surprise to see the Economist saying that it was time for the Obama team to get tough – they were seen handing him a pair of boxing gloves through the windows of the Oval Office.
What will be equally interesting is how the Senate-filibuster enabled Republican party chooses to do with its new found powers. Will they continue to provide ironclad Senate and House votes in favor of the Banksters?
Or will they seek to avoid the popular wrath and save those filibuster votes for other causes? Stay tuned to see how the US gets used to operating under a Bautocracy, with the Banksters able to dictate national financial policy with increasing regularity.