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Robert Scheer: In Financial Crisis, Obama Is More of the Same
It’s not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free-fall in housing foreclosures.
As The Wall Street Journal reported Tuesday, “The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27 percent amid deflating hopes for a boom in refinancing.” The same association said that the total refinancing under the administration’s much-ballyhooed Home Affordable Refinance Program is “very low.”
Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.
State and local governments have been forced into draconian budget cuts, firing workers who are among the most reliable in making their mortgage payments — when they have jobs. Yet the Obama administration won’t spend even a small fraction of what it has wasted on the banks to cover state shortfalls.
California couldn’t get the White House to guarantee $5.5 billion in short-term notes to avert severe cuts in state and local payrolls, from prison guards to schoolteachers. Compare that with the $50 billion already given to Citigroup, plus an astounding $300 billion to guarantee that institution’s toxic assets. Citigroup benefits from being a bank “too big to fail,” although through its irresponsible actions to get that large it did as much as any company to cause this mess.
How big a mess? According to the Federal Reserve’s most recent report, seven straight quarters of declining household wealth have left Americans $14 trillion poorer. Many who thought they were middle class have now joined the ranks of the poor. Food banks are strapped, and welfare rolls are dramatically on the rise, as the WSJ reports, with a 27 percent year-to-year increase in Oregon, 23 percent in South Carolina and 10 percent in California.
And you have to be very poor to get on welfare, thanks to President Clinton’s so-called welfare reform, which he signed into law before he ramped up the radical deregulation of the financial services industry, enabling our economic downturn.
Citigroup, the prime mover for ending the sensible restraints of the Glass-Steagall Act of 1933, is now a pathetic ward of the state. But back in the day, Clinton would tour the country with Citigroup founder Sandy Weill, touting the wonderful work that Weill and other moguls were doing to invest in economically depressed communities. It wasn’t really happening then, and now millions of folks in those communities have seen their houses snatched from them as if they were just pieces in a game of Monopoly that Clinton and his fat-cat buddy were playing.
Once Weill got the radical deregulation law he wanted, he issued a statement giving credit: “In particular, we congratulate President Clinton, Treasury Secretary Larry Summers, NEC (National Economic Council) Chairman Gene Sperling, Undersecretary of the Treasury Gary Gensler, Assistant Treasury Secretaries Linda Robertson and Greg Baer.”
Summers is now Obama’s top economic adviser, Sperling has been appointed legal counselor at the Treasury, and Gensler, a former partner in Goldman Sachs, is head of the Commodity Futures Trading Commission, which he once attempted to prevent from regulating derivatives when it was run by Brooksley Born. Robertson worked for Summers in pushing through the Commodity Futures Modernization Act, which freed the derivatives market from adult supervision and contained the “Enron Loophole,” permitting that company to go wild.
Robertson then became the top Washington lobbyist for Enron and was recently appointed senior adviser to Fed Chairman Ben Bernanke. Baer went to work as a corporate counsel for Bank of America, which announced his appointment with a news release crediting him with having “coordinated Treasury policy” during the Clinton years in getting Glass-Steagall repealed. As a result of deregulation, B of A, too, spiraled out of control and ended up as a beneficiary of the Treasury’s welfare program.
Why was I so naive as to have expected this Democratic president not to do the bidding of the banks when the last president from that party joined the Republicans in giving the moguls everything they wanted? Please, Obama, prove me wrong.
— TruthDig.com editor in chief Robert Scheer‘s new book is The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America. Click here for more information. He can be reached at .(JavaScript must be enabled to view this email address).
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» on 06.26.09 @ 05:09 PM
Amen. Our politicians are failing us… all the way to the top. It’s not about party, it’s about payback… using OUR dollars. Sad, pathetic, and wrong. We’re no longer the home of the brave, we’re the home of the slaves.
Once again folks, here’s the link to the July 4th TEA PARTY. http://www.santabarbarateaparty.com
It’s time to say we’re mad as hell and we’re not going to take it anymore.
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» on 06.27.09 @ 03:47 AM
I think that the administration took a very good first step with the recent securities regulations passed. Now there is greater visibility, restrictions, consumer protection and oversight which will help prevent this from happening again. Hedge funds must be registered and derivities such as credit default swaps are regulated and restricted.
I think that one has to be more patient. There are signs that liquidating the system, providing capital and funding the stimulus package are starting to work. It will take many more months. The stimulus funds in California have resulted in less layoffs in areas such as fire, police and teachers.
Is there waste and inefficiencies? YES. Should these be addressed? YES Is a teabag party the answer? NO The answer is get involved. Work towards what you believe in. Recognize that you get what you pay for. Stop treating the government as the bad guy but as the vehicle towards a solution.. Many of your friends work for the government. Work towards solutions with legislation, etc. For example, maybe we need to stop picking on the teacher’s union and address the very large education departments filled with paper pushers that do not interact with our children at all?
Prop 13 in California has bleeded the state and local governments of large amounts of tax revenue. Unfortunately, commerical real estate was included in Prop 13 along with a 2/3 majority rule to pass any tax changes. Since its passage a smaller and smaller percentage of propety tax revenue has come from commericial real estate and a smaller percentage of overall revenue comes from property tax altogether. This has shifted the tax burden to individuals in the form of fees and income tax and sales tax.
In other words stop complaining and act. The tea baggers are all out no more tax but but we want strong schools, fire departments, police etc but no solutions. Do not be fooled this is organized by Fox News and other conservatives. If you have some ideas lets hear them and get them on the ballot ASAP.
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» on 06.27.09 @ 05:51 AM
I said this from day one, and all his socialist programs are going to destroy America—Tax and spend fool who has never had a real job getting dirty, and never served in the armed forces, We are at war..??
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» on 06.27.09 @ 08:32 AM
“I think that one has to be more patient. There are signs that liquidating the system, providing capital and funding the stimulus package are starting to work. It will take many more months. The stimulus funds in California have resulted in less layoffs in areas such as fire, police and teachers.”
How nice for fire, police and teachers, but in case you haven’t noticed, California’s unemployment rate is about to hit 12%!
And, no, we should NOT be more patient. The porkulus package was sold as a quick fix, so important that it had to be passed before anyone could even read it. And it’s so important that some of the funds won’t be distributed for years. WTF?!
The fact of the matter is that Obama and his toadies in Congress like Lois Capps were flat out lying about their BS plan. It’s not working, and neither are more and more of us. We should be demanding the heads of these idiots, not making excuses for them.
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» on 06.27.09 @ 08:46 AM
Unemployment is a lagging indicator in assessing whether any economy is starting to turnaround. This has been true from recession to recession. This is the deepest recession we have had, thanks to eigh years of George W. Last September the economic situation fell off a cliff and needed an immediate and radical fix followed by several other measures to keep us out of a depression. These acts worked and we were spared a much bigger catastophe. So it will take longer than 6 months to recover. Look at the numbers in th past few months and there is light at the end of the tunnel. The stock market is up 35% from its low and traditionally is a leading indicator looking out 6 to 9 months. So once again, patience is not an excuse but the correct way to assess the current situation. Panic and calling names is not.
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» on 06.27.09 @ 10:30 AM
Hey Local Yokel,
Check this out—is this your version of “regulation?”
...Obama’s firing of Inspector General Gerald Walpin without cause could become a burgeoning scandal for the new Administration. Walpin was investigating the misuse of AmeriCorp funds by a nonprofit agency in Sacramento headed by Obama friend and supporter Kevin Johnson. During the course of his investigation, Walpin discovered that Johnson had dispersed significant funds to individuals who were providing personal services for him: washing his car, running errands, etc.
Walpin blows the whistle on the scam, and was summarily fired by Obama — no reason was given for the perfunctory dismissal. (see link for more)
This is just another example of the outrages occuring. Which the MSM ignores!
IF YOU CARE ABOUT YOUR COUNTRY SPEAK UP NOW WHILE YOU STILL CAN.
http://www.santabarbarateaparty.com
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» on 06.28.09 @ 11:46 AM
Mr. Scheer may or may not be right. But why the mock surprise? Looks like Scheer was hoping, literally, for an old-fashioned iconoclast. That’s wrong. Obama was a “raging liberal reformer” only in John McCain’s press releases, not in real life as a law professor, or in his brief stints in the Illinois state senate and the U.S. Senate.
On the other hand, you must crawl before you can run. The fiscal-economic mess
Obama’s team inherited from Rove-Cheney-Bush was - and remains - dreadful, its
ramifications still being played out on the world-wide stage. Government being the
slow-moving giant that it is, there’s only so much anyone can do in their first six
months in office.
Given that some form of “health care reform” and “energy independence/climate
change reform” are still alive, and moving forward; that the bankruptices of GM
and Chrysler have not triggered mass hysteria; that the military withdrawl from
Iraq remains on-schedule; that Pakistan has not imploded; that there have been
no more spectacular new Wall Street collapses (so far), Scheer could equally say
that, given the challenges he faces, Obama is off to a better-than-decent start.
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