PDA

View Full Version : Economics Why Obama must take on Wall Street


KC native
01-13-2010, 03:09 PM
I'm not a Robert Reich fan but he nails this editorial.

Why Obama must take on Wall Street

By Robert Reich

Published: January 12 2010 20:40 | Last updated: January 12 2010 20:40


It has been more than a year since all hell broke loose on Wall Street and, remarkably, almost nothing has been done to prevent all hell from breaking loose again.

In fact, close your eyes and you could be back in the wilds of 2007. Bankers are still making wild bets, still devising new derivatives, still piling on debt. The big banks have access to money almost as cheaply as in 2007, courtesy of the Fed, so bank profits are up and bonuses as generous as at the height of the boom.

The only difference is that now the Street’s biggest banks know they are “too big to fail” and will be bailed out by taxpayers if they get into trouble – which means they have every incentive to make even riskier bets. And, of course, American taxpayers are out some $120bn, while millions have lost their homes, jobs and savings.

All could be forgiven if the House and Senate committees with responsibility for coming up with new regulations were about to come down hard on the Street and if the Obama administration were pushing them to. But nothing of the sort is happening.

Last week, Senator Chris Dodd, chairman of the Senate banking committee, announced he would not seek re-election next November, recasting himself as a lame duck who will do whatever the banks want. Mr Dodd’s decision “makes it more likely that regulatory reform will be enacted”, says Edward Yingling, chief executive of the American Bankers Association, because it “frees him from political dynamics that would have made it more difficult for him to compromise”. Translated: Dodd’s committee will report out a bill – Democrats would be embarrassed not to – but it will be weak because voters can no longer penalise Mr Dodd for rolling over for the Street.

The bill that has already emerged from the House is hardly encouraging. Dubbed the “Wall Street Reform and Consumer Protection Act”, it effectively guarantees future Wall Street bail-outs. The bill authorises Fed banks to provide up to $4,000bn in emergency funding the next time the Street crashes. That is more than twice what the Fed pumped into financial markets last year. The bill also enables the government, in a banking crisis, to back financial firms’ debts – a wonderful insurance policy if you are a bondholder. To be sure, the bill authorises the Fed and Treasury to spend these funds only when “there is at least a 99 per cent likelihood that all funds and interest will be paid back,” but predictions about pending economic disasters can be conveniently flexible, especially when it comes to bailing out the Street.

If this were not enough, the House bill creates regulatory loopholes big enough for bankers to drive their Jaguars through. Consider derivatives. Last year, as taxpayers threw money at the Street, congressional leaders promised to put derivative trading on public exchanges. The prices of derivatives could be disclosed and margin requirements imposed, making it more likely that traders would make good on their bets. Yet the House bill exempts nearly half the $600,000bn of outstanding derivatives trades.

The bill also allows – but, notably, does not require – regulators to “prohibit any incentive-based payment arrangement”. This makes fat bonuses the norm unless a regulator has reason to prevent them. And as we witnessed last year, bank regulators tend not to disturb the status quo. The House bill does not even make an attempt to unravel the conflict of interest that led credit ratings agencies to turn a blind eye to the risks the Street was taking on.

To its credit, the House bill does create a Consumer Financial Protection Agency to protect borrowers from predatory lending. Banking regulators have authority to protect consumers but failed to do so, so consolidating these powers in a new agency makes some sense. But Senate Republicans are dead-set against it, and Mr Dodd’s new willingness to compromise may well doom it in that chamber.

What is truly remarkable is what Congress and the administration have shown no interest in doing. Large numbers of Americans have lost their homes to bank foreclosures or are in danger of doing so. Yet American bankruptcy law does not allow homeowners to declare bankruptcy and have their mortgages reorganised. If it did, homeowners would have more bargaining power to renegotiate with banks. But neither Congress nor the administration has pushed to change the bankruptcy laws. Wall Street opposes such change and was instrumental in narrowing the scope of personal bankruptcy in the first place.

Nor have lawmakers shown any enthusiasm for resurrecting the wall that used to exist between commercial and investment banking. The Glass-Steagall Act, passed in the wake of the Great Crash of 1929, separated the two after it became obvious that commercial deposits needed to be insured by government and kept distinct from the betting parlour of investment banking. But Wall Street forced Congress to take down the wall in 1999, enabling financial supermarkets such as Citigroup to use its deposits to make all sorts of bets. Even Obama adviser and former Fed chief Paul Volcker has argued that the two functions should be separated again.

Nor is anyone talking seriously about using antitrust laws to break up the biggest banks – the traditional tonic for any capitalist entity that is “too big to fail”. Five giant Wall Street banks now dominate US finance. If it was in the public’s interest to break up giant oil companies and railroads a century ago, and the mammoth telephone company AT&T, it is not unreasonable to break up the almost infinitely extensive tangles of Citigroup, Bank of America, JPMorgan Chase, Goldman Sachs and Morgan Stanley. No one has offered a clear reason why giant banks are important to the US economy. Logic and experience suggests the reverse.

What happened to all the tough talk from Congress and the White House early last year? Why is the financial reform agenda so small, and so late?

Part of the answer is that the American public has moved on. A major tenet of US politics is that if politicians wait long enough, public attention wanders. With the financial crisis appearing to be over, the public is more concerned about jobs. Another 85,000 jobs were lost in December, bringing total losses since the recession began in December 2007 to over 7m. One out of six Americans is unemployed or underemployed.

Yet if the president and Congress wanted to, they could help Americans understand the link between widespread job losses and the irresponsibility on Wall Street that plunged America into the Great Recession. They could make tough financial reform part of the answer to sustain-able jobs growth over the long term.

True, financial regulation does not make a powerful bumper sticker. Few Americans know what the denizens of Wall Street do all day. Even fewer know or care about collateralised debt obligations or credit default swaps. To the extent Americans have been paying attention to the details of any public policy, it has been the healthcare reform bill. But that only begs the question of why financial reform has not been higher on the agenda of the president and Democratic leaders.

A larger explanation, I am afraid, is the grip Wall Street has over the American political process. The Street is where the money is and money buys campaign commercials on television. Wall Street firms and executives have been uniquely generous to both parties, emerging as one of the largest benefactors of the Democrats. Between November 2008 and November 2009, Wall Street doled out $42m to lawmakers, mostly to members of the House and Senate banking committees and House and Senate leaders. In the first three quarters of 2009, the industry spent $344m on lobbying – making the Street one of the major powerhouses in the nation’s capital.

Money is powerful. Talk is cheap. Mr Obama recently called the top bankers “fat cats”, and the bankers insisted they were shocked – shocked! – to learn how intransigent their lobbyists had been in opposing financial reform. The bankers even claimed a “disconnect” between their intentions and their lobbyists’ actions. This was all for the cameras, of course.

But the widening gulf between Wall Street and Main Street – a big bail-out for the former, unemployment checks for the latter; high profits and giant bonuses for the former, job and wage losses for the latter; buoyant expectations of the former, deep anxiety and cynicism by the latter; ever fancier estates for denizens of the former; mortgage foreclosures for the rest – is dangerous. Americans went ballistic early last summer when AIG executives got big bonuses after taxpayers had bailed them out. They will not be happy when Wall Street hands out billions in bonuses very soon. Angry populism lurks just beneath the surface of two-party politics in America. Just listen to Sarah Palin or her counterparts on American talk radio and yell television. Over the long term, the political stakes in reforming Wall Street are as high as the economic.

The author, a former US labour secretary, is professor of public policy at the University of California at Berkeley. His latest book is Supercapitalism

ClevelandBronco
01-13-2010, 03:16 PM
That's all very well and good, Naive, but what does any of that have to do with your paranoia concerning perceived racism?

KC native
01-13-2010, 03:17 PM
I got nothing so I'm just going to attack the poster

FYP

CoMoChief
01-13-2010, 03:17 PM
CLIFF..................NOTES....................PLEASE!!!!!!!!!!

KC native
01-13-2010, 03:18 PM
CLIFF..................NOTES....................PLEASE!!!!!!!!!!

JFC it's an editorial. It should take you less than 2 minutes to read it.

ClevelandBronco
01-13-2010, 03:18 PM
FYP

I'm not laughing AT you.

Well, yeah. I guess I am.

KC native
01-13-2010, 03:19 PM
I still have nothing

.

ClevelandBronco
01-13-2010, 03:22 PM
.

Okay. I'll make a comment about the item.

I'm on Wall Street's side.

There. Feel better?

KC native
01-13-2010, 03:23 PM
Okay. I'll make a comment about the item.

I'm on Wall Street's side.

There. Feel better?

:facepalm:

Still devoid of any intelligent thought. Want to try again?

Donger
01-13-2010, 03:25 PM
Obama? What is he supposed to do about it?

Taco John
01-13-2010, 03:28 PM
Cliff notes: Obama must take on the banks without addressing the source of the problem: The Federal Reserve.

Also, the government intervention failed because it removed moral hazard, and all hell is breaking loose because of it.

Taco John
01-13-2010, 03:29 PM
Cliff notes: We should have been listening to Ron Paul all along.

HonestChieffan
01-13-2010, 03:38 PM
Well suprise suprise. A liberal old Clintonite wants to take the opportunity to scare the hell out of people with calls of doom looming on the horizon if we dont rush in and regulate.

Garbage. Pure Garbage.

First it was in large part regulation that got us into the housing bubble and the resulting housing and mortgage crash. We dont need any more help from Barney and Chris. Hell Chris needs to go to jail.

Second, calling for Obama to fix anything appears to be in and of itself lunacy. His power has dropped to a level no one willl follow him in bringing up new wacko legislation between now and the November election.

Third, any meddeling by the Obama team will cause a contraction in the market and that is the last thing dems need right now is to cause peoples savings to diminish further.

ClevelandBronco
01-13-2010, 03:40 PM
:facepalm:

Still devoid of any intelligent thought. Want to try again?

You first.

KC native
01-13-2010, 03:41 PM
Well suprise suprise. A liberal old Clintonite wants to take the opportunity to scare the hell out of people with calls of doom looming on the horizon if we dont rush in and regulate.

Garbage. Pure Garbage.

First it was in large part regulation that got us into the housing bubble and the resulting housing and mortgage crash. We dont need any more help from Barney and Chris. Hell Chris needs to go to jail.

Second, calling for Obama to fix anything appears to be in and of itself lunacy. His power has dropped to a level no one willl follow him in bringing up new wacko legislation between now and the November election.

Third, any meddeling by the Obama team will cause a contraction in the market and that is the last thing dems need right now is to cause peoples savings to diminish further.

Once again, you display an awesome amount of ignorance.

KC native
01-13-2010, 03:42 PM
Cliff notes: We should have been listening to Ron Paul all along.

:rolleyes: Run along. I don't feel like dealing with twisted definitions that only you and BEP use.

petegz28
01-13-2010, 03:43 PM
Wall St. needs a reality check. Several figureheads on Wall St. the other day even said in an interview on Bloomberg that Wall St. is out of touch.

KC native
01-13-2010, 03:45 PM
You first.

Still got nothing huh?

Saul Good
01-13-2010, 08:02 PM
Still got nothing huh?

Speaking of "got nothing", how's your net worth doing these days oh wise financial one? By the way, did you ever figure out what a W-4 is or what withholdings are?

vailpass
01-13-2010, 08:51 PM
Speaking of "got nothing", how's your net worth doing these days oh wise financial one? By the way, did you ever figure out what a W-4 is or what withholdings are?

ROFL We need to regulate the Fetzer valve in order to maximize returns. Its all ball bearings these days anyway.

Bwana
01-13-2010, 09:12 PM
What a complete load of bullshit.

Taco John
01-13-2010, 09:22 PM
Wall St. needs a reality check. Several figureheads on Wall St. the other day even said in an interview on Bloomberg that Wall St. is out of touch.

Reality check? The reality is that The Fed prints all the money it wants, and companies who are in the inner circle don't have to worry about reprocussions of their actions anymore because the Federal Government will mandate more dollars due to the Too Big To Fail principle.

What kind of reality check do you think you can give to Wall Street under these conditions? They're just sitting back waiting to be bailed out or acquired by the feds.

KC native
01-13-2010, 09:32 PM
Speaking of "got nothing", how's your net worth doing these days oh wise financial one? By the way, did you ever figure out what a W-4 is or what withholdings are?

Another quality post. So I take it you don't have anything to say about the editorial?

KC native
01-13-2010, 09:33 PM
What a complete load of bullshit.

And another quality post. Glad to see you guys don't have any problems with what is actually written. :thumb:

KC native
01-13-2010, 09:34 PM
Reality check? The reality is that The Fed prints all the money it wants, and companies who are in the inner circle don't have to worry about reprocussions of their actions anymore because the Federal Government will mandate more dollars due to the Too Big To Fail principle.

What kind of reality check do you think you can give to Wall Street under these conditions? They're just sitting back waiting to be bailed out or acquired by the feds.

At least TJ tries. He may be bat shit crazy and like to twist definitions like BEP but he at least tries to put substance in his posts.

ClevelandBronco
01-13-2010, 09:39 PM
At least TJ tries. He may be bat shit crazy and like to twist definitions like BEP but he at least tries to put substance in his posts.

And you still haven't offered a fucking opinion of your own this whole time. Shut the fuck up.

Taco John
01-13-2010, 09:42 PM
At least TJ tries. He may be bat shit crazy and like to twist definitions like BEP but he at least tries to put substance in his posts.


I don't twist definitions. I un-twist them.

Norman Einstein
01-13-2010, 09:59 PM
FYP

JFC it's an editorial. It should take you less than 2 minutes to read it.

.

:facepalm:

Still devoid of any intelligent thought. Want to try again?

Once again, you display an awesome amount of ignorance.

:rolleyes: Run along. I don't feel like dealing with twisted definitions that only you and BEP use.

Still got nothing huh?

Another quality post. So I take it you don't have anything to say about the editorial?

And another quality post. Glad to see you guys don't have any problems with what is actually written. :thumb:

At least TJ tries. He may be bat shit crazy and like to twist definitions like BEP but he at least tries to put substance in his posts.

And you still haven't offered a ****ing opinion of your own this whole time. Shut the **** up.

ClevelandBronco has nailed your whole mode of operation here. You haven't posted anything quality about the original post. Your whole response to virtually every reply has been to call them ignorant, twisted, bat shit crazy, etc. etc. etc.

First off, the government should have nothing to do with wall street. They are inept, not just this administration but any administration, although this administration has given a totally new view of ineptness. this country is going to shit and they are doing their best to take control of the country.

You posted an article by someone that might be considered a flaming liberal, and boasts about his professorship at UC Berkeley, one of the most liberal if not the most liberal university in the nation.

You posted the editorial and you haven't lifted a finger to support your post, all you can do is whine and attack the other posters. I've never had any respect for your pov, but at least as a human being you had a modicum of respect. That is gone, you are useless.

KC native
01-13-2010, 10:11 PM
And you still haven't offered a ****ing opinion of your own this whole time. Shut the **** up.

Have you not read any of my posts since I've started posting here? I've been very vocal about the need for Glass Steagall to be implemented again as well as other regulations.

Norman Einstein
01-13-2010, 10:14 PM
Have you not read any of my posts since I've started posting here? I've been very vocal about the need for Glass Steagall to be implemented again as well as other regulations.

You expect everyone to hang on your every post? If that's the fact you need to be less antagonistic and keep more on the topic at hand, especially if you start the fucking thread.

Support your point of view or just shut the fuck up!

KC native
01-13-2010, 10:15 PM
I don't twist definitions. I un-twist them.

Suuuuuuuuuuuuuuuuuuuuuurrrre you do :evil:

KC native
01-13-2010, 10:18 PM
You expect everyone to hang on your every post? If that's the fact you need to be less antagonistic and keep more on the topic at hand, especially if you start the ****ing thread.

Support your point of view or just shut the **** up!

Tom, please point out any of the posts that I responded to that even addressed what was written. I know you are fucking retarded but for a substantive argument to happen someone posts a thought/idea and then someone who disagrees posts why they disagree and then a back and forth ensues. So, when you can find a post that actually addresses what was written then I will shut up. Until then you can take your sanctimonious holier than thou act and die in a fire.

Norman Einstein
01-13-2010, 10:24 PM
Please point out any of the posts that I responded to that even addressed what was written. I know you are ****ing retarded but for a substantive argument to happen someone posts a thought/idea and then someone who disagrees posts why they disagree and then a back and forth ensues. So, when you can find a post that actually addresses what was written then I will shut up. Until then you can take your sanctimonious holier than thou act and die in a fire.

Fixed your initial f*ck up.
Now;
You are uninformed, but that has been a continuous trait of yours.

You cannot find any posts in this thread, you know dumb f*ck, the one you started, that you have written anything of value.
NOT A SINGLE F U C K I N G POST AFTER THE OP.

I'm not holier than anyone with the exception of you.

Your POV is flaming liberal, what kind of responses do you expect from the normal people of the board?

TJ had posts here that were legit, but called him bat shit crazy?

Get off your soap box and :STFU: like you promised.

KC native
01-13-2010, 10:40 PM
Fixed your initial f*ck up.
Now;
You are uninformed, but that has been a continuous trait of yours.

You cannot find any posts in this thread, you know dumb f*ck, the one you started, that you have written anything of value.
NOT A SINGLE F U C K I N G POST AFTER THE OP.

I'm not holier than anyone with the exception of you.

Your POV is flaming liberal, what kind of responses do you expect from the normal people of the board?

TJ had posts here that were legit, but called him bat shit crazy?

Get off your soap box and :STFU: like you promised.

http://www.downfallguild.org/files/images/1241311768176.gif

ClevelandBronco
01-13-2010, 10:50 PM
This probably isn't going as well as you hoped.

Norman Einstein
01-13-2010, 11:04 PM
htt://ww.downfallguild.org/files/images/1241311768176.gif

Which means you got nothing. You fail you dumb f*ck.

Bwana
01-13-2010, 11:05 PM
And another quality post. Glad to see you guys don't have any problems with what is actually written. :thumb:

Hush and go fetch me a beer.......bitch.

KC native
01-13-2010, 11:08 PM
Which means you got nothing. You fail you dumb f*ck.

http://tenletter.files.wordpress.com/2009/07/zoolander_school_1.jpg

KC native
01-13-2010, 11:09 PM
Hush and go fetch me a beer.......bitch.

And another quality post that displays your awesome breadth of knowledge.

Norman Einstein
01-13-2010, 11:12 PM
htp://tenleter.files.wordpress.com/2009/07/zoolander_school_1.jpg

Again, you got nothing and getting further from reality. Monumental Fail on your part.

Norman Einstein
01-13-2010, 11:15 PM
And another quality post that displays your awesome breadth of knowledge.

Another attack on poster rather than sticking with the OP.

On your next thread why don't you just start out calling everyone on the board assholes, ignorant, bat shit crazy, etc. and get it all out of your system. That way nobody will post and you will have the last word. That's all you are wanting to do.

While you're at it you might throw in a little race baiting so you can argue with yourself about the merits of being racist.

KC native
01-13-2010, 11:21 PM
Again, you got nothing and getting further from reality. Monumental Fail on your part.

You don't read good do you? ROFL

Norman Einstein
01-13-2010, 11:28 PM
You don't read good do you? ROFL

In this thread nobody needs to even know how to read, all you do is cut and paste pictures of your abiltiy.

When we look up Epic Fail in the dictionary it has your picture.

Come back when your IQ gets above 3 and give us some more cut and paste pictures.

Taco John
01-13-2010, 11:32 PM
Apparently the only way to get a discussion out of this thread is to insult someone.

Hey KC Native, you fucking suck!

SNR
01-13-2010, 11:59 PM
This is incredible. I haven't found anything valuable posted in this thread. You must all be dumbfucks! Yes, yes, that's definitely it.

Norman Einstein
01-14-2010, 12:22 AM
This is incredible. I haven't found anything valuable posted in this thread. You must all be dumb****s! Yes, yes, that's definitely it.

The old idium falls in place with this thread. An idiot posted and the rest of us were lowered to his level and he tried to beat us with his experience.

KC native
01-14-2010, 02:15 AM
Apparently the only way to get a discussion out of this thread is to insult someone.

Hey KC Native, you ****ing suck!

ROFL

Just for clarity's sake I didn't engage you on that post because I didn't feel like arguing the existence of the fed. I was trying to reinforce how the lack of reform is setting us up for more of the same.

KC native
01-14-2010, 02:20 AM
The old idium falls in place with this thread. An idiot posted and the rest of us were lowered to his level and he tried to beat us with his experience.

http://memegenerator.net/Instances/852/Asinine-America-I-3-AMUUUUUUURICA-I-CAN-HAZ-SPELL-CHEK-NOAW.jpg

Taco John
01-14-2010, 02:43 AM
ROFL

Just for clarity's sake I didn't engage you on that post because I didn't feel like arguing the existence of the fed. I was trying to reinforce how the lack of reform is setting us up for more of the same.

I wasn't really that bothered by it. You're not going to change my mind on the Federal Government being the solution to all our ills, and I'm not going to change your mind that sound money is the solution.

Really, I just thought it was a good opportunity to call you a name while drawing a laugh at the same time. A two-fer-one.

Mission accomplished.

Norman Einstein
01-14-2010, 05:51 AM
htp://memegenerator.net/Instances/852/Asinine-America-I-3-AMUUUUUUURICA-I-CAN-HAZ-SPELL-CHEK-NOAW.jpg

I have to say, you still have nothing and there is a striking resemblence between you and your momma. Who is the pic of? Your or your momma? You'll have to tell us all. Your intelligence is showing.