Skip to main content

ON June 8 and again on June 9, I diaried here regarding what was clearly [to me, based on my research] turning into an internal war within the Obama administration on regulatory governance. These to me seemed to be huge policy differences that may have an enormous effect on our economic future - and they also seemed exacerbated by ongoing power plays by both Tim Giethner [with Citibank and dissing Warren's panel recommendations] and with Summers [trying to exclude Somers/Goolsbees ideas from being heard by Pres Obama].

Some among my readership wrote off the substance of my diary - despite ,y providing sourcing about those signs of significant policy discord. Now, today's NY Times front page online includes this:

Regulators Feud as Banking System Overhauled
The personal feud between two bank regulators is shaping the president’s attempt to revamp financial regulation.

MORE over the fold - and if my diary appears redundant I ask dkos readers' indulgence - since you read it here first way back on June 8-9

Yesterday, kos readers were treated to an upbeat and well-sourced diary on the economy by Bondad - on possible bottoming out of jobs losses.

I disagreed, in a comment in which I sourced this June 5, 2009 policy paper on comparative downturns through history by the Council on Foreign Relations. I did not yesterday - and do not today - believe that there have been any signs that the several crises listed in that paper have been mitigated. Those who wish to see my longer excerpt of this interesting paper's finding that "real economy indicators ...remain worse than anything hitherto experienced in the postwar period"  - based on its conclusion that there have been "severe" results arising from an "asset market correction that destroyed savings and froze the credit system" can read my summary here.

I also had concerns that looking ahead, there was a big problem in hiring:
another of my comments cited survey data for U.S. employers’ hiring plans for the third quarter regarding my concerns that we were in for a bumpy ride on the jobs front...

First, however, historians of some early sources for my analysis last week can link to those sources in my June 8 diary, Geithner's regulatory merger - the risk of lax regulation and in this comment to my diary, which included a Bloomberg headline, "Citigroup Gains Geithner Backing as Pandit Bucks Bair"
and they can follow the trail further in my June 9 diary on weakness of of the basic statistical foundation of Geithner's stress test - tainting its outcome and reasing concerns about the health of banks. My June 8, 2009 headline concluded, "it's Warren & Bair versus Geithner now"

I admit it: my nose goes towards the sausage aspect of policy - making, as a guide to potential problems in policy coursemaking about which it may be well advised to learn.

Why? I feel it is a good way to, at a minimum, be informed of internal administration problems that can derail policy - and possibly even seek out ways as citizens to head off problems by informing others of these problems. [I was writing back in 2001 papers at law school about Republican policy makers who were beginning to use the 9-11 compensation legislation as a jumping off point to derail investigation of airlines' horrendous record of profit-driven safety actions, particularly at Logan. Watching out for history of how policy gets manipulated and twisted is my "thing."]

on Bondad's diary yesterday, I commentedthat I unfortunately do not share his optimism, because of the absence of mitigating factors since this June 5 paper describing ongoing crises noted by Paul Swartz of the Council on Foreign Relations on the historical context

I also cited this quote from Sheila Bair in Forbes:

"[The Fed] had authority to prescribe across-the-board lending standards for mortgages, and a lot of people said they should do that and they just didn't," Bair says as an example of where too many roles [e.g., a role as, say - protector of consumers] led to lapses.

Note that I annotated her quote to clarify Bair's point -that the FED simply is not capable of adequately protecting consumers because [in her view] it has too may 'roles' - particularly its 'role' as central bank]

In my comment I linked to the June 12 Forbes article.

my nose for concerns over the warfare between the Geithner/Summer duo and others in the administration was also triggered by a throwaway line in a Sunday Times article about policy making in the WH. Commenters are welcome to find that link. In the article, the author noted that Summers had disinvited Ausden Goolsbee [sp?] from a policy roundtable with Obama - and had gotten caught by Obama. Goolsbee is one of three folks on the WH Council on Economic Advisers [CEA] headed by the fabulous Christina Romer and Summers' attempted power play was even then making it clear to me that this duo simply did not like differing opinions to come before Obama

Concerns over the Geithner/Summers policy direction re: Banks were already being broadcast in this June 7, 2009 Washington Post article, which quoted  MIT economist Simon Johnson and Douglas Elliott, a finance specialist at the Brookings Institution, for what WaPo summarized as

independent experts warn that the government's relationship with the industry is entering a precarious new phase. As with mortgage giants Fannie Mae and Freddie Mac, the government will no longer share in the banks' profits, but it still stands ready to absorb losses.

Now the problems about which I blogged have 'risen to the surface even at the NY Times, in this article claiming Regulators Feud as Banking System Overhauled

As my focus is historical I am not going to pull text from the NY Times article. Read it and your comments will be welcome.

And a shout out to the great bobswern - whose diaries should be required reading!

PS I am a geezer who learned where the computer on switch was in my 40s and learned to typed after that. Please forgive my numerous typos, some of which I have just edited out.

Originally posted to puffmeister on Sun Jun 14, 2009 at 06:36 AM PDT.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Tip Jar (10+ / 0-)

    We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

    by puffmeister on Sun Jun 14, 2009 at 06:36:23 AM PDT

    •  NOw bad news is good news (8+ / 0-)

      so we lost less jobs than the month before. WE ARE STILL LOSING JOBS.
      The only place hiring are health care (ironic isn't it) and govt jobs.

      I own a small business, and the last three years were dismal, and this
      year is looking no better, I think it seems to be sagging even more.

      And once all the car jobs start folding, it is going to get worse.
      People really have no idea how bad it can get.  The stock market
      is bullshit...Did you notice when they dropped Citibank off, there
      wasn't much of a msm story, or here either. Weird...

      •  It is distressing & I too have a small (6+ / 0-)

        business that is being strangled by ever-lowered caps on credit.

        As I - as with you - have this personal stake in the matter, my concern over Bair's implication that the current powerhouses in the admin have failed to protect consumers has triggered warning bells in my head.

        Bair is dead on right - only the FDIC has truly taken on the mortgage foreclosure issue successfully thru her agancy's takeovers of banks; The FDIC has bravely taken on Geithner - and apparently lost in one skirmish - over the 'too big to fail' issue in regards to Citi's patent weakness.

        And Warren's oversight panel has been repeating essentially the same thing.

        I trust Warren implicitly as she has long been a champion of the middle class. Her blogs on the middle class over at Talking Points Memo were required reading and may still be available thru their archives...

        We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

        by puffmeister on Sun Jun 14, 2009 at 07:13:22 AM PDT

        [ Parent ]

  •  Great catch! (5+ / 0-)

    Oh, it's "Austan" Goolsbee.  Ya, right, Summers thinking that Goolsbee would not be missed at a meeting-haha!  I've heard that Austan has a pretty good chunk of Obama's ear, so that was a dumb move.

    I look forward to reading that article!

    The person who says it cannot be done should not interrupt the person who is doing it.

    by ohmyheck on Sun Jun 14, 2009 at 07:02:41 AM PDT

  •  "As a former pianist"? (5+ / 0-)

    That is funny, isn't it?
    My husband just learned to turn on the computer as well.  I'm glad, because I had to hold his hand before, and I have things to do, so venturing out on his own, into the big scary world-wide web, works for me!   Until he found craigslist, and wants to buy all sorts of toys........always a down-side, eh?

    I'm a fan of bobswern as well.

    I'm off to check out the Sunday babbling shows. Gah...we'll see how long I last.

    The person who says it cannot be done should not interrupt the person who is doing it.

    by ohmyheck on Sun Jun 14, 2009 at 08:20:58 AM PDT

  •  Excellent, puffmeister! (3+ / 0-)

    Keep up the great work.

    "History is a tragedy, not a melodrama." - I.F.Stone

    by bigchin on Sun Jun 14, 2009 at 08:40:05 AM PDT

    •  thx, i do seem to catch off days for readers... (3+ / 0-)

      or else it is my less - than - sterling prose and spelling!!

      We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

      by puffmeister on Sun Jun 14, 2009 at 09:02:09 AM PDT

      [ Parent ]

      •  I suspect that, like bobswern, (4+ / 0-)

        your clear-eyed, rational take on the economic nightmare we are facing does not appeal to many (most?) here who equate criticism of Obama's economic team and policies as "trollish."  Especially when the more popular money diarists are telling them things are getting better.

        Lot of cheerleaders here...

        you rock the boat too much.

        Keep rocking!

        "History is a tragedy, not a melodrama." - I.F.Stone

        by bigchin on Sun Jun 14, 2009 at 09:22:27 AM PDT

        [ Parent ]

        •  [blushing] [but i would be thrilled @ BoS's #s.] (2+ / 0-)

          he is just a etter writer. and he knows where qwerty is!

          We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

          by puffmeister on Sun Jun 14, 2009 at 10:00:51 AM PDT

          [ Parent ]

          •  I'm not a better writer, actually! It takes me... (1+ / 0-)
            Recommended by:

            ...too long to write well, so I just slap the stuff up here after doing a half-assed (or less than that) job of proofreading it. LOL! Thanks for the compliments here, folks. I'm truly not worthy. (And I sincerely mean that.) There was a time when these Progressive "rants" were a bit more warmly welcomed around these parts. I expect that will change in coming months as the pain deepens. And, for those that think that some of us "gloom and doom" diary-posters get some sort of sick, cheap thrill out of this, the truth is just the opposite. I post to inform folks of the pain, which is all-too-often overlooked, glossed-over, or otherwise obfuscated, of late.

            You're posting some great stuff, puffmeister. But, when you shower all these undue accolades upon yours truly, it kind of intimidates me from participating! LOL!

            "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

            by bobswern on Sun Jun 14, 2009 at 02:55:56 PM PDT

            [ Parent ]

      •  Sundays are often slow. you are a good writer. nt (2+ / 0-)
  •  Thanks for this diary and for linking (3+ / 0-)

    to it over in bobswern's current diary.  I'd have missed this otherwise.  That's a fascinating article in the NY Times and I'm rather glad to see the feud between Summers/Geither and others like Goolsbee, Bair, Warren, and Volcker get put out there for people to be aware of.  I'm glad to know that there are those opposing Summers/Geithner because it will ensure that they don't get to preach their Wall Street-babble at Pres. Obama without others getting the opportunity to present different views to him.  Also, I think it's important for people who are interested in the economy and Pres. Obama's plans for it to know that this is not as simple as some would like to believe.  There needs to be push-back against Summers/Geithner because they come from a very limited viewpoint and they need to know that the care and comfort of obscenely wealthy Wall Street bankers is NOT what it's all about.  There's a whole country out here who helped get Pres. Obama elected and too many of those folks are losing their jobs and their homes and their very future.  I'm very relieved to know that this feud is on-going----it means there are others in this Administration who see a different picture than Summers/Geither and who will not back off  and that can only be to the good.

    •  thx - make sure to read all the way to SECOND pg (1+ / 0-)
      Recommended by:

      of the times article.

      ps the older article w the ref on Goolsbee was 'Prez econ circle keeps tensions a'Prez econ circle keeps tensions at a simmer

      and even WaPo had something today or yesterday on this...

      I wrote back last week that I'd hoped the Kennedy awards of Bair and Borne would push Obama to ensuring that alternative views not get shut out.

      restricting Bair's oversight merely to insurance woudl be a shame.

      It was her stalwart refusal to back down on her opposition to Citi's government-financed buyout proposal for Wachovia - - when Citi itself is so poorly capitalized - that seems to have gotten her lots of banking enemies.

      But she was right. Months later and Citi is still in terrible shape. Imagine if it had gotten even bigger.

      And the OCC - comptrollers' office - is full of crap. They were part of the problem in overruling the near-unanimous complaints by state banking officers over OCC allowing predatory practices by banks, back in 2004 when OCC suddenly asserted federal preemption over state 'police powers' to protect consumers from usury. Don't get me started on the OCC. For any article to quote OCC complaints about Sheila Bair over at FDIC - as thie newest NY Times article does -  just gets me steamed.

      We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

      by puffmeister on Sun Jun 14, 2009 at 01:03:21 PM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site