Michael Hirsh: How Wall Street Rolled Obama

Newsweek:

Barack Obama was "incredulous" at what he was hearing, said one of his top economic advisers. The president had spent his first year in office overseeing the biggest government bailout of the financial industry in American history. Together with Federal Reserve chairman Ben Bernanke, he had kept Wall Street afloat on a trillion-dollar tide of taxpayer money. But the banks were barely lending, and the economy was still mired in high unemployment. And now, in December 2009, the holiday news had started to filter out of the canyons of lower Manhattan: Wall Street's year-end bonuses would actually be larger in 2009 than they had been in 2007, the year prior to the catastrophe. "Wait, let me get this straight," Obama said at a White House meeting that December. "These guys are reserving record bonuses because they're profitable, and they're profitable only because we rescued them." It was as if nothing had changed. Even after a Depression-size crash, the banks were not altering their behavior. The president was being perceived, more and more, as a man on the wrong side of an incendiary issue.

Read the whole story: Newsweek

Comments

[Saidas]

02:22 PM on 08/31/2010

"Wait, let me get this straight, these guys are reserving record bonuses because they're profitable, and they're profitable only because we rescued them?" "Doh!"

[WriterGirl]

01:59 PM on 08/31/2010

Face palm. (sigh)

[rory talbot]

11:10 PM on 08/30/2010

Obama's a master of thought. Oops...I left out a word after "thought."

[freecitizen1946]

10:39 PM on 08/30/2010

Electing somebody president because he speaks well, has a great smile and makes us feel good about ourselves, doesn't automatically imbue him with the innate power to challenge the persistent power structure. There just isn't enough progressive off the shelf expertise and political horse power to reclaim a government long since sold off to the highest bidder.

But have no fear, for those who have had their way with the corpse have also made off with ALL the cash and have effectively seceded from the union. One can hope that they may be content to finally leave us alone as citizens of just another third world debt ridden nation they have raped and drained to the bone.

[Bon1042]

11:20 PM on 08/30/2010

WOW, fantastic assessment in a nutshell "freecitizen1946." I'm afraid your last sentence is all we can hope for. I just retired and will be about 97 when Social Security starts reducing benefits. And I don't want to think of the state of Mother Earth and that continuous rape of our land, air and water. I hoped for so much more fm Obama.

His comments on first visit to Gulf was embarassingly pathetic as was his speech... "we have over 5 million feet of boom", blah blah blah. Any child cld see that boom was useless, w/oil and water lapping over and under. They just watched and watched while over 6 wks oil moved ever closer to marshes and estuaries.

Never shld've happened. As former VP shell, Hoffmeister said, "the executive shld've had the courage to over ride BP et al, take over and get European and Arab tankers in, as well as those fm Houston (Ari Belcher interviewed big guy fm Houston on CNN in May). The ineptitude and incompetence is crushing. I can't get over it. Even yesterday with Brian Williams he defended w/"we responded right away w/thousands of boats."
You know, all those little boats out there scooping up mostly water with some oil. Gee, they cld've taken breaks and played bumper cars (boats).

[rf-hawaii]

01:29 AM on 08/31/2010

About the oil spill -- perhaps he knew that skimming was virtually useless with the dispersant used. Most of the oil never surfaced.

It's hard to argue specifics when you (and we) are so often very short on the particulars.

[freecitizen1946]

02:22 AM on 08/31/2010

The oil spill and Wall Street heist have a lot in common. In both cases the Federal Government just doesn't have the off the shelf hardware and expertise to deal with EVERY possible industrial disaster that might occur. Such an apparatus would not only be hugely expensive to maintain but would represent still another subsidy to an industry that has never failed to take an opportunity to screw us.

The American presidency, has at this point, devolved into a cheap convenient receptacle for blame and Obama seems more than willing to serve that function again and again.

[rhomsky]

08:20 PM on 08/30/2010

Mr. President call Brooksley Born. http://www.pbs.org/wgbh/pages/frontline/warning/interviews/born.html

If she won't take your call have Volcker call her for you.

[dcb64]

08:06 PM on 08/30/2010

I am so sick of reading about Obama the good guy taken advantage of. it just doesn't fly anymore. He reappointed Bernanke with well over 60% of americans not wanting that failure on the Job. he appointed geither (another historic failure of a human being and a pathologic liar).

Obama is the problem. the problem is we have one party that uses social issues to divide people and get them to vote against their own economic interests.


Gay marriage choose republican or democrat (divide). Screw the middle class (both parties)
Why isn't Warren working on the consumer at the consumer protection agency. Because Obama isn't on our team. Neither are the republicans. what you see in the press is a scam.

The american people are at war with their own government and economic leadership. *If you follow the news closely those in power know it. Even under the "socialist" Obama we have ever decreasing civil liberties, warentless spying, we imprison people for ever without trial, the internet kill swtch for freedom of speech.

The right wing terrorist nut jobs were right. I see both parties working against the constitution. if you stand up for the constitution you get attacked as terrorist friendly. we are seeing the rise of facism in america. The oligarcy is working to maintain control. No matter which side you vote for it benefits the bankers.My only question is: will US troops fire on civilians when we fight back.

[Truthb4u]

09:47 PM on 08/30/2010

With such nonsense you deserve your 1 fan, and that one will unfan you after reading this mean-spirited post.

[castlerider]

07:34 PM on 08/30/2010

I think there's still time for Obama to come out swinging, but he's definitely at an advantage and already has the spectre of a William Jennings Bryan, the Cowardly Lion of the depression of just over a hundred years ago.

[lynjs]

06:09 PM on 08/30/2010

Honestly, look at the timeline, folks. President Obama and the public was rolled on this before the 2008 election.

Wall Street came a knocking. Bush gave...but without strings. After President Obama was inaugurated and finally got to look at the real deal, he realized he had no leverage.

Hence, he couldn't make the banks stop the foreclosures, modify loans and credit card bills. And hence the arrogance of the bankers of Wall Street.

[racetoinfinity]

04:11 PM on 08/30/2010

I've read several commenters take the point of view that Obama tried and should not be faulted, but that an obstructionist Congress blocked any strong reform both of health care and Wall St., because of not only the Republicans, but blocking of strong reform by Conservadem Senators like Ben Nelson and Blanche Lincoln.

He CAMPAIGNED for the re-election of Lincoln - he went to Arkansas to campaign for her in the primary against a moderately more progressive one, Bill Halter. What does that tell you?

[rick91]

04:55 PM on 08/30/2010

That he thought the moderate Democrat Lincoln had a much better chance of getting elected in the red state of Arkansas.
Period.

[Takebackourmoney]

03:54 PM on 08/30/2010

They pushed out the TARP so fast only Wall Street grabbed faster. We did not see this coming?

[taxpaying]

03:43 PM on 08/30/2010

The author should be writing on how his Treasury Department Rolled the President. President Clinton said he was misled and the main culprit of that would be his then Treasury Secretary Larry Summers. The same Summers who has Obama's ear and restricts access to him and to this day will not say repeal of Glass Steagull was a possible error.

Wall Street, the Federal Reserve and Treasury run the economy and those who created this mess are now fixing it? I think not, I believe Mr. Summers ego will just let it be tweaked some so he can once again make millions in a hedge fund and/or speeches on Wall Street. Giving Bernanke another term was bad for President Obama but if the audit of the Fed is done at least he'll be there for answers or should I say the coverup?
President Obama will roll Main Street just as President Clinton rolled them when his Administration stopped Brooksley Born from regulating derivatives, when he nominates the Wall Street choice, not Elizabeth Warren to head the Consumer Protection Agency.

[joetherealist]

06:37 PM on 08/30/2010

He is going to lose A LOT of staunch supporters like me if Warren isn't nominated to run the new agency.

[taxpaying]

11:14 PM on 08/30/2010

For the average citizen the choice is a no brainer and the only choice is Warren who's idea it was to begin with but his delay in doing this is making me think Geithner, Summers and Senator Dodd will get their way and Main Street will lose.

Senator Dodd could fear exposure of the sweet mortgage deal he was given by Countrywide. Geithner and Summers could fear exposure of the ponzi scheme run by Wall Street that they are supporting at the expense of the taxpayer and how the financial reform was done to save the global economy not the USA economy.

[ZeraLee]

03:42 PM on 08/30/2010

Meritocracy? What meritocracy?

[rogi99]

03:31 PM on 08/30/2010

Though I was (and I guess still am) pro-Obama (heck, I've worked for the campaign) I am beginning to wonder if Hilary was not right when she was talking about him not being tough enough...

[castlerider]

07:33 PM on 08/30/2010

I think that's been proven, unfortunately. If she was to come out with a populist and progressive fervor and decide to run, Obama could forget about 2012.

[WriterGirl]

01:58 PM on 08/31/2010

I wish SOMEONE would. Seriously, I worked hard in the 2008 campaign and I'm proud to have been a part of the crowd that elected him, but I have to say that his desire to work with both sides of the aisle has severely compromised his ability to get anything done. His economic team is abysmal and he has not approached a single election issue with the energy - or conviction - of his stump speech.

[tallcoolone47]

03:04 PM on 08/30/2010

America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many.
Overwhelmed by liabilities, the government collapsed.

Globalism had run its course. Life reformed on a local basis.

[fightorleave2]

02:29 PM on 08/30/2010

Why would Obama be incredulous: when you keep the same players from the prior administration, why would you expect different results, especially when these people (i.e. Bernanke, Geither, Summers) were not only responsible for the meltdown (in fact, I would argue the meltdown was deliberate by players like Goldman Sachs) but don't want Obama to succeed because then the people would vote Democrat.