When it comes to bank bailouts, the Obama administration is continuing right where the Bush administration left off, says the former high-ranking official who used to run the program.
Neel Kashkari, the widely-criticized former Goldman Sachs banker who led the team that administered the Troubled Assets Relief Program, said in an interview Tuesday that while the messaging of the Obama administration is different from the previous administration, the actions are pretty much the same.
"I think the Bush administration or the [potential] McCain administration may talk about things a little differently than the Obama administration. But I think the substance of the actions are very consistent," Kashkari said during an interview on CNBC. (Bonus detail: Kashkari also says that since leaving government, he's been busy chopping wood outside of his home in Lake Tahoe, CA)
"[Treasury Secretary] Tim Geithner's a very smart guy, [National Economic Council Director] Larry Summers is a very smart guy. They know what we need to substantively. I think that the way that a Democratic administration talks about certain issues is probably a little different than the way a Republican administration does, and that's appropriate, and that's to be expected. But the substance of the actions, I think, are very consistent, and that's been important," Kashkari said.
And at least one prominent critic of the bailout agrees with that assertion.
"One thing I'd give [the Obama administration] credit for is that at least they've proposed reform measures, like higher capital requirements for 'too big to fail' banks," said Dean Baker, an economist and co-director of the progressive Center for Economic and Policy Research. "But suppose you didn't know when the election took place, and you looked at what was happening with the bailout month by month, could you have detected a break? I sure can't."
In discussing TARP, Baker added part of the problem is that there was, and continues to be, a lack of meaningful conditions imposed on bailed-out banks. Baker points to Goldman Sachs, for example, who after repaying taxpayers the $10 billion it received last fall, has set aside more than $16 billion this year for employee compensation. The firm continues to have a taxpayer guarantee on some $25 billion in FDIC-backed debt, according to regulatory filings.
President Barack Obama, while campaigning for the presidency last fall, personally lobbied reluctant members of Congress to quickly pass legislation authorizing the eventual $700 billion bank bailout, Baker says. "He personally called progressive members of Congress and lobbied them. There certainly was a lot of support to put conditions on the bailout, but all the conditions that were put in there were a joke," Baker says. "They haven't restricted the banks in any serious way."
Baker adds that he'd take back his criticisms if Congress passes a strong regulatory reform package, but says "it doesn't look like that's gonna happen."
The Treasury Department didn't respond to an immediate request for comment.