Volcker Prevails, Geithner & Summers Lose
Undoubtedly, the loss of the senatorial race in Massachusetts Tuesday, has acted as a wake-up call to the Obama administration that something simply must be done about Wall Street. The anger that pervades the rest of the nation (including this writer) over the kid-gloved treatment of the very institutions and their leaders that brought about financial near-calamity is completely justified on a number of grounds, not the least of which is the obscenely large bonuses to be handed out to the miscreants with the attitude that its recipients are entitled to them.
Obama is reacting because he must.
From his comments yesterday, which I missed because of high fever, it appears that the Goldman Sachs contingent, Tim Geithner and Larry Summers, were shut out of a come-to-jesus meeting between President Obama, former Federal Reserve Chairman Paul Volcker, and Bill Donaldson, former head of the Securities and Exchange Commission. It is further clear from Obama’s remarks that the Glass-Steagall Act, the Depression Era statute that separated commercial banking and investment banking, must be reenacted in some form, and that the government cannot ever again allow itself to be put in the position of standing behind banks that speculate with their depositors’ money.
Obama also made it clear that something would have to be done about institutions that are “too big to fail.”
It was only a couple of months ago that the New York Times reported that there was no possibility of Glass-Steagall becoming reenacted, but what a difference two months and the election of a right-wing Republican in a safe Democratic state can do!
As I see it, Obama was expected to do two things in his first year: 1. See universal health care enacted and 2. Take affirmative action to fix the financial system. The first has certainly hit a buzz-saw, and as for number 2, Obama simply did not seem to have the stomach to pick a fight with Wall Street—or anyone else, for that matter. I was aghast when I learned who Obama’s economic team would be and predicted that they would sooner or later have to be cast overboard if there were to be any real hope of reform. The gangplank was prepared at 11:34 AM, EST yesterday. Expect the Goldman Sach contingent to soon discover the importance of spending more time with their families.
The Obama honeymoon is over. The low-hanging fruit, admittedly meager after eight years of Bush, has been harvested. The hard and unpopular decisions that have been put off must soon be made. Obama has been as bipartisan as any president could be and he has been rewarded with snarls, curses, prevarication and stonewalling from his opponents. He will have to use the immense power of the presidency to push through real change. Not to draw too fine a line—he will have to put his foot on the neck of Wall Street and some of the other powerful corporations that are fattening themselves on the back of average Americans. That is not his preferred mode of dealing, but it is the only way that will produce results in the political climate today.
How Obama handles himself and his administration over the next six months will determine the success of his presidency.
Here beginneth the trial—by fire—of Barack Obama.
Obama is reacting because he must.
From his comments yesterday, which I missed because of high fever, it appears that the Goldman Sachs contingent, Tim Geithner and Larry Summers, were shut out of a come-to-jesus meeting between President Obama, former Federal Reserve Chairman Paul Volcker, and Bill Donaldson, former head of the Securities and Exchange Commission. It is further clear from Obama’s remarks that the Glass-Steagall Act, the Depression Era statute that separated commercial banking and investment banking, must be reenacted in some form, and that the government cannot ever again allow itself to be put in the position of standing behind banks that speculate with their depositors’ money.
Obama also made it clear that something would have to be done about institutions that are “too big to fail.”
It was only a couple of months ago that the New York Times reported that there was no possibility of Glass-Steagall becoming reenacted, but what a difference two months and the election of a right-wing Republican in a safe Democratic state can do!
As I see it, Obama was expected to do two things in his first year: 1. See universal health care enacted and 2. Take affirmative action to fix the financial system. The first has certainly hit a buzz-saw, and as for number 2, Obama simply did not seem to have the stomach to pick a fight with Wall Street—or anyone else, for that matter. I was aghast when I learned who Obama’s economic team would be and predicted that they would sooner or later have to be cast overboard if there were to be any real hope of reform. The gangplank was prepared at 11:34 AM, EST yesterday. Expect the Goldman Sach contingent to soon discover the importance of spending more time with their families.
The Obama honeymoon is over. The low-hanging fruit, admittedly meager after eight years of Bush, has been harvested. The hard and unpopular decisions that have been put off must soon be made. Obama has been as bipartisan as any president could be and he has been rewarded with snarls, curses, prevarication and stonewalling from his opponents. He will have to use the immense power of the presidency to push through real change. Not to draw too fine a line—he will have to put his foot on the neck of Wall Street and some of the other powerful corporations that are fattening themselves on the back of average Americans. That is not his preferred mode of dealing, but it is the only way that will produce results in the political climate today.
How Obama handles himself and his administration over the next six months will determine the success of his presidency.
Here beginneth the trial—by fire—of Barack Obama.
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