Obama, behind in late innings, smacked a solid double on Thursday. He came out in favor of a law to separate banks that take deposits from consumers (what we used to just call "banks") and investment banks and other speculators.
In the 1930s, we had the Great Depression, largely as the result of speculation by banks. In response, Congress passed and FDR signed the Glass-Steagall Act and related bills, now all referred to loosely under the rubric "Glass-Steagall." The intent was simple---separate banking and speculative investment.
For about 60 years, we had nothing resembling the Great Depression. Then in the 1990s, it was claimed that our economy no longer needed these types of protections, because the market was so "sophisticated." In addition, banks could make more money if we simply "set them free."
A sensible person might have said, "Even if all this is true, is it worth risking the entire economy to find out?" However, sensible people were apparently in short supply. There is no sense pointing political fingers; the House and Senate were Republican and Clinton willingly went along with it.
A decade or so after the laws were repealed, we had our second Great Depression-like banking collapse. Clearly, we need Glass-Steagall back. The problem is---even though it will put our entire banking system back on a firm footing and put us on the road to a real recovery---it will cut into the profits of the big banks. So few politicians have had the guts to talk about it.
Now Obama has stepped up. This will provide a solid basis for a real recovery with jobs, etc. Why do I only give Obama a double instead of a home run? He's got a man on base, but he has to bring him home to score. He needs to stay focused on this, provide more specific proposals and guidance to the Congress on what he wants, then apply pressure to individuals to try to get it. None of this: "come up with a bill" stuff. That is not leadership.
Of course Obama will not get everything he wants. Compromises will happen. The point is, as President, you stick your neck out. You specify what is best for the country---as best you can. You go first, make yourself vulnerable to attack. You stick your neck out. That is leadership.
Of course Geithner, while publicly supporting the proposal as he must to keep his job, actually opposes it in private. This guy needs to go immediately. If Obama needs a court jester in his administration, it should be someone with a less important job
Obama hammers Wall Street banks
The global banking industry was thrown into turmoil on Thursday after President Barack Obama , responding to public rage over the financial crisis, proposed the most far-reaching overhaul of Wall Street since the 1930s.
In reforms that could force the restructuring of some of the biggest names in US finance, including JPMorgan Chase and Goldman Sachs, Mr Obama promised that "never again will the American taxpayer be held hostage by a bank that is too big to fail".
Flanked by Paul Volcker, the former Federal Reserve chairman, who has advocated the move for months, Mr Obama called for banks to be banned from running their own trading desks and "owning, investing in or sponsoring" hedge funds and private equity groups.
Republicans responded coolly, but did not reject the proposals out of hand. Richard Shelby, senior Republican on the Senate banking committee, called for more details and new hearings.
Geithner aired concern on bank limits-sources
U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources.
The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness.
He also has concerns that limits on proprietary trading do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.
But a White House official said Geithner was on board with Obama's economic team behind the proposals.