Does Obama Really Work For Wall Street?

[SlowDownFast]

Does Obama Really Work For Wall Street?

Henry Blodget|Apr. 10, 2009

So far, we've laid the Obama administration's decision to keep propping up failed banks at Tim Geithner's feet. Geithner's boss, meanwhile, has so far avoided blame. We wonder how long that will last.

* First, it was the administration's ongoing insistence (via Geithner) that this is a liquidity crisis, not a credit crisis--the Wall Street view.
* Then it was the failure to do anything more than express "anger" at the AIG bonuses.
* Then it was Geithner's plan to, yet again, bail out banks at taxpayer expense.
* Then it was the administration's decision to force GM into bankruptcy, fire its CEO, and hit its bondholders--setting up a bizarre double-standard with Wall Street.
* Then it was a "stress test" for banks in which the baseline scenario has already been eclipsed by the deterioration of the economy--once again slamming the administration's credibility
* Then it was the revelation that Larry Summers made $5+ million from Wall Street last year, which added to the perception that he, Geithner, Rahm Emmanuel, etc. are reluctant to bite the hands that feed them.
* Now it is the leaked announcement that "all banks have passed the stress test!", combined with a refusal to share the results of that stress test on a bank-by-bank basis.

Obama has never explained why he's acting so out of character here, so we have to speculate. The charitable explanation is that Tim Geithner is paralyzed by fear of triggering another post-Lehman credit meltdown and has convinced Obama that that's what will happen if the government holds banks and their bondholders accountable or just comes clean about the shape that banks are in.

As we've said, we disagree with this No one is arguing for the sort of uncontrolled bankruptcy that Lehman went through. And the seizure, restructuring, and sale of a few major institutions should not be unmanageable, especially if the bondholders are required to pick up the tab.

The more disturbing explanation, meanwhile, is that the Obama administration really is in Wall Street's hip pocket. Jonathan Weil at Bloomberg thinks there's a chance this is the case. And Obama certainly isn't doing anything to discourage this.

By maintaining a double-standard and refusing to address the elephant in the room, Obama is risking his credibility and his reputation for telling it like it is. This behavior, both toward the banks and toward Americans, is a disturbing echo of the Bush administration. It's time for Obama to address it head on.

http://www.businessinsider.com/henry-blodget-is-obama-in-wall-streets-pocket-2009-4

[FLAprogressive]

1. Isn't it obvious?

[westerebus]

2. We're from the government and we're here to help.

I'm in your camp, it's what they do that counts.

[notesdev]

15. help lighten your wallet

pay no attention to the bank behind the curtain

[patrice]

3. Should we be angry at President Obama for dealing with financial realities the way they are or for

not calling a (No pun intended here!) "spade a spade".

As far as not dealing with financial realities the way they are, and doing something else, shall we try to specify the concrete effects upon People of "starting over with something new"? We may make the case that some of those effects will be temporary, but others will be permanent, and even of the temporary ones we need to think what that means in terms of suffering and damage. Sure it may not be your own suffering and damage, but if we say it's okay to hurt others, who? and how much? and where/when/how do we draw a line?

BTW: What happened to JFK not long after he started a nationally backed currency?

BTBTW: All we can do is hope that President Obama will get the lay of the land and, then, do whatever substantially fundamental change he can, otherwise whatever he/we do will be good money thrown after bad, because it's all going to come down ANYWAY, then the changes WILL occur, so the questions are what kind of changes and how controlled will the demolition be. I'm pretty sure the President is smart enough to do this; I don't know if TPB will LET him.

[westerebus]

5. We could just call a politician, a politician.

It's not like we haven't been sold a bill of goods before.

[patrice]

6. Until the People really learn about and focus on the Issues, politics is the way it's done.

If you asked me to cut my wrists to fertilize a garden, I'd probably say no, unless a whole bunch of others were going to do likewise. There IS such a thing as a relatively honest politician (RELATIVELY, that is), but until we throw campaign-finance completely out of the window and enact districting and election reform (e.g. instant run-off voting), I will not fault politicians for being political, within reasonable limits. I do admit, though, that I wish they'd just be more up front about the political realities that shape what they say and do; they NEED to just talk to us about that stuff!

[westerebus]

8. So where's the change?

Where's the leadership? Are we going to go along to get along?

[patrice]

10. Local.

Who is your real/organic community? What are its functions and processes? What does it produce? What does it need? What are its resources? What are its liabilities? . . . . Stuff like that.

And I hope you know that I mean "organic" here in the sense of un-mediated, concretely necessary, absolutely fundamental, life-sustaining relationships and interactions.

P.S. "leadership" should be distributed and collaborative.

[westerebus]

12. Local is good.

Home grown is better. Organic locally home grown is best. Now that we have the garden planted and the dog coming, can we get about to providing "leadership" and "change".

Leadership as in follow me.

Change as in this isn't working well, time for a new plan.

[patrice]

13. I think we can. I happen to be in a field that is ALL about the future and we know

we must fundamentally improve how we do "business" or die and our leaders, health care professionals many of them, are clear that this WILL seriously involve things such as alternative energy and environmentally conscious housing design.

This is one of the projects we are orienting ourselves by: http://www.ncbcapitalimpact.org/default.aspx?id=146 Something many do not know about long-term care in this country is that Federal regulations do not prevent residents from being employed where they live. This lead to abuses in the past, so the questions are about how to avoid that and how to protect the possibility of private equity in systems that are also supported by state and federal money in public-private partnerships.

[dixiegrrrrl]

21. Amen to all you said.

[Myrina]

4. .. sure seems like it.

:(

[SlowDownFast]

7. Here's another by a different author:

Obama Stakes His Fortunes on Failed Banksters: Jonathan Weil

Commentary by Jonathan Weil

April 9 (Bloomberg) -- Now that we have a rough idea how President Barack Obama and his lieutenants plan to prop up insolvent financial institutions using taxpayers’ money, we’re left with a more difficult question: Why?

Why doesn’t the Obama administration force insolvent banks and insurance companies to come clean about their losses first? It’s the “why” that’s so vexing. The who, what, when, and how are mere details, by comparison.

More than anyone else’s, it should be in Obama’s political self-interest to accelerate the worst of the financial crisis and get as much of the inevitable pain behind us as quickly as possible. Every day he waits is one less day he will have between the time we hit rock bottom and the next election. And yet, Obama and his minions are doing all they can to delay the reckoning, which only will make it worse.

When publicly owned companies change management, often the smartest thing a new chief executive officer can do is clear the decks and take a “big bath” charge to earnings. In other words, the company writes off all its worthless assets and reports huge losses, pushing every conceivable drop of red ink into the past. The new CEO gets to blame his predecessor’s dumb mistakes. The company gets a fresh start with the investing public.

Obama could have taken the same approach with the banks the moment he took office, while he still had standing to blame the financial crisis on George W. Bush’s administration, stupid regulators, and corrupt lawmakers -- that is, everyone but himself.

read more:
http://www.bloomberg.com/apps/news?pid=20601039&sid=aNMQDysdnKRc&refer=columnist_weil

[patrice]

9. I think he's trying to break the fall. Everyone knows it's going to happen anyway, because we

traded away too much of our assets, real and derivative.

We're going down and he's trying to break the fall. What happens besides that

is up to Us.

[notesdev]

16. amazing how 'breaking the fall'

so closely resembles 'allowing the financial sector robber barons to loot the Treasury'

[patrice]

17. Not so amazing really, considering what's been going on in this country for so long, I don't

know why anyone is surprised by this.

And other than to create blood-and-circus distractions by going galavanting off to kill and help to kill millions of foreigners, I don't know why people think a president has the power to make it all different.

The only ones who can change anything are individual persons who work together for common goals such as campaign finance and election reform and, of course, "new" economies.

[bvar22]

20. He is trying to break the fall....

...for his friends in the Inside Investor Class, and save their fortunes.
If you build automobiles for a living (Blue Collar)....you're just plain fucked.

[westerebus]

11. Now your getting picky.

You want to know why?

[patrice]

14. S/he may not, but I do.

[GoesTo11]

18. I wish McCain had won.

[pa28]

19. This is a good, clear summary of what happened.

Consensus seemed to be building in February for some kind of institutional receivership program. Isn't it strange how it was swatted down in a matter of days by a combination of death shrieks and prounouncements of doom and socialism from the likes of Jamie Dimon and the financial media.

Give it a backdrop of fear coupled with a declining market and the idea died without any serious public discussion of who the ultimate winners and losers would be in each rescue scenario.

I'm not sure if I was troubled more by the awesome influence financial institutions showed or by the speed at which all the trial balloons came down.