Posted on Evans Liberal Politics, June 7, 2010, by Robert Kuttner and Danny Schecter, with Commentary by Paul Evans.
Financial reform is making it's way through Congress in what is touted as the biggest overhaul since the Great Depression. In the worst economic turndown since that time, bipartisanship has found it's voice as both parties are eager to be seen as favoring reform. But while the Obama administration publicly has taken on a strong voice for reform, behind the scenes the administration has worked to kill off progressive amendments and substantive reform is lacking.
See From Wall Street To The Gulf Coast: When Will Obama Get In The Ring And Fight For Real Reforms?, AlterNet, June 2, 2010, by Robert Kuttner, excerpt quoted verbatim:
Imagine how much more reform we could get if Obama clearly weighed in on behalf of David rather than Goliath.
Question of the Day: What do the oil catastrophe and the Wall Street collapse have in common?
In both cases, a powerful, politically protected industry invented something that could not easily be repaired when it broke. We seem to be entering an age when complex technologies, whether financial or physical, sometimes literally have no solutions when they go haywire in unanticipated ways. We thought this might happen with nuclear power (and it still could); but for now deepwater drilling is the bigger menace.
Secondly, in both cases the proverbial ounce of prevention was not applied. Had existing laws been enforced, and had the political process not corrupted the regulatory process, these man-made calamities didn't need to happen.
In the case of the oil disaster, which is fast becoming the worst single environmental catastrophe ever, America's long-term failure to move away from dependence on carbon fuels combined with pure short-run political capture. By now, we should have been at the point of energy conversion where high risk, mile-deep undersea wells were not used at all. But even so, this blowout would have been averted had existing laws been enforced.
It's the same story with the financial collapse. We didn't need these exotic, doomsday financial instruments. And had the regulators not been in bed with the industry, the crisis would have been headed off at any of several earlier stages.
But the worst common element is this: both crises are teachable moments that our president could be using to transform public opinion. Yet despite these gifts from the progressive gods, President Obama seems congenitally unable to rise to the occasion.
Read the full article here
Back on May 28th, Danny Schecter was taking a much grimmer view:
See Obama Talks a Lot of Game About Taking on Wall St, While Killing off Reforms in the Shadows, AlterNet, May 28, 2010, by Danny Schecter:
In several high profile speeches, Obama lashed out at Wall Street for its greed and mendacity, proposing financial reforms that appeared to be hard hitting if only because of the way the lobbyists for the financial services industry squealed about them.
But even as he was feinting left, he and his main economic operative, Tim Geithner, were moving right to kill off amendments that the bankers hated like Senator Bernie Sanders's proposal for a deep audit of the Federal Reserve Bank and the Brown-Kaufman Amendment that would have broken up the six biggest banks in America."
As John Heilman explained in New York Magazine, "Geithner's team spent much of its time during the debate over the Senate bill helping Senate Banking Committee chair Chris Dodd kill off or modify amendments being offered by more-progressive Democrats."
He used an old trick: embracing reform publicly while modifying its toughest provisions privately.
No wonder bank stocks went up when the bill passed.
Commentary by Evans Liberal Politics owner Paul Evans: In political parlance, according to Schecter, that's called "talking left and moving right". No wonder we have got, in this tough election climate, bipartisan support for this bill. In the final analysis, what's left really isn't all that progressive. Republicans would embrace it wholeheartedly if they didn't have to campaign against Democrats. The Senate and House versions of the financial reform bill are now being reconciled, and the Obama administration is pushing hard for it. There won't be any problem passing this bill, because it doesn't really reform the system. Reform in the bills being considered by both houses of Congress is in other words quantitative rather than qualitative. Details are being tweaked but the system remains basically the same.
Now both Democrats and some Republicans can campaign on having worked hard for financial reform. Nobody wanted to be on the record as being against financial reform after what happened. But we still have complex and risky investment banking not separated from banking itself, we still have basically unregulated derivatives made up of worthless junk mortgage bonds and packaged as AAA investments for the unwary, and we still have Wall Street rampant and triumphant, with Goldman Sachs only paying out about 1 percent of it's income last year in taxes.
The more things change in this "biggest financial reform since the Great Depression", the more they stay the same. Should we have expected anything different than that with Summers, Geithner and Bernanke running Obama's economic team?
Yes, the President is for regulatory reform of our financial system. But only in the details, not in terms of the fundamentals. One can only hope that now, with a competent and more honest group of regulators in place (as opposed to Hank Paulson's wrecking crew during the Bush years), tweaking the system will be enough to avert future catastrophes.
On the other hand, here at Daily Kos, dvogel001 comments:
Or maybe he is killing off amendments that would effectively kill the chances for the passage of the bill in the Senate...just a thought...
Or we can have all sorts of great liberal amendments that have a snowball's chance in hell of actually becoming law...
But is Obama using "the art of the possible" as an excuse not to intervene on behalf of truly liberal reform? To say "it couldn't pass the Senate" is meaningless when the White House never pushes hard for progressive provisions. We saw the same thing on the health care reform bill when the final version introduced by the White House lacked a public option and Obama never pushed for that. It's easy to simply dismiss actual reform saying "it can't pass" but here Robert Kuttner's caveat applies:
"Imagine how much more reform we could get if Obama clearly weighed in on behalf of David rather than Goliath."
See Robert Reich: Why Wall Street’s Political Poison is Still Catnip for Many Incumbents, Robert Reich.org on Evans Liberal Politics, May 26, 2010, by Robert Reich.
See Elizabeth Warren: "I am Afraid of What I See in the Real Economy", Bob Swern on Evans Liberal Politics, March 7, 2010, with commentary by Paul Evans.
See Congress Begins the Final Push on Financial Regulation, Truthout and McClatchy Newspapers on Evans Liberal Politics, June 1, 2010, by David Lightman and Kevin G. Hall.
See Commentary – Wall Street Reform Begins with Obama: Leading from James K. Galbraith, Evans Liberal Politics, May 15, 2010, by James K. Galbraith and others and commentary by Paul Evans.
Finally, here are two news articles which shouldn't be missed:
See Matt Taibbi: Obama’s Big Sellout, Naked Captialism, December 11, 2009, by Edward Harrison of Credit Writedowns.
and
See No One is Going to Save You Fools, Daily Kos, December 16, 2009, by thereisnospoon.
All the signs have been here for many months.
And see Wall Street's War, Rolling Stone, May 26, 2010, by Matt Taibbi.