Obama's Bad Bank Plan - Democratic Underground

paulk

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Wed Apr-15-09 02:38 PM
Original message

Obama's Bad Bank Plan

posted without comment, other than the moderators have once again chosen to lock a thread because the OP "is no longer with us"

even though the thread itself was not cause for tombstoning ...

posted originally by "leftchick"

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Obama's Bad Bank Plan Could Destroy His Promising Presidency -- How Do We Push Him in the Right Direction?

By Robert Kuttner, Huffington Post
Posted on April 14, 2009, Printed on April 14, 2009
http://www.alternet.org/story/136456 /

"Part of the Way with LBJ" --Students for a Democratic Society button, circa 1964

Progressives now find themselves in an awkward position of simultaneously wishing Barack Obama well, but feeling dismayed by his policies on some key issues, most notably the banking bailout. If this were a normal economic situation, the posture of semi-opposition would not be that big a deal. We would simply gratefully accept the decent policies and keep pressing for bolder ones. But a failure to revive the banking system would be Obama's Vietnam. It would wreck everything else.

It's a too-familiar position for progressives, one that winds back through all of the postwar Democratic administrations of my adulthood. We wanted Lyndon Johnson to push harder for civil rights and anti-poverty and not ruin it all in Vietnam. We were appalled at Jimmy Carter's attacks on government, his failure to use his large Democratic majority in Congress to press for progressive legislation, his refusal to lift a finger on behalf of labor law reform. The memories of Bill Clinton are sufficiently recent that we need little reminder of the needless tilt to the right on economic issues from NAFTA to welfare reform to financial deregulation.

What makes this situation different is, first, our gratitude on so many fronts combined with the very high stakes of the financial rescue. Barack Obama is an exemplary leader in so many ways, the leader we've been waiting for. His commitment to restore constitutional government is no small achievement. Those fighting for anti-poverty efforts and children's initiatives have never seen increases in federal resources comparable to the present ones. His foreign policy initiatives, from his reaching out to Iran to his efforts on behalf of nuclear non-proliferation are a breath of fresh air. And speaking of which, Obama seems serious about reducing the carbon footprint.

But all of this promise could come to naught if the economy remains mired in recession. And despite large scale stimulus spending, the economy will remain stuck in first gear until the banking system is revived.

The economists whom I most respect, such as Joseph Stiglitz, Jeff Sachs, Simon Johnson, and Paul Krugman, all have grave doubts about whether the Geithner-Summers plan can work. The more details are revealed, the more curious it looks. If the plan did succeed in bringing zombie banks back to life, we might hold our noses at the fact that hedge funds and private equity companies were profiting, while taxpayers and the Federal Reserve bore the risk.

http://www.huffingtonpost.com/robert-kuttner/obamas-loyal-opposition_b_186025.html