Why Obama Won't Be Able to Reform Wall Street
Listening to President Obama's heartfelt, well-intentioned, but ultimately naïve speech on financial reform today, my mind kept flashing on a story I heard the last time Washington, in the wake of the Enron scandal, promised to reform Wall Street.
The story came from a friend who took a family trip on a cruise ship. Her 10-year-old son kept pestering the crew, begging for a chance to drive the massive ocean liner. The captain finally invited the family up to the bridge, whereupon the boy grabbed hold of the wheel and began vigorously turning it. My friend panicked -- until the captain leaned over and told her not to worry, that the ship was on autopilot, and that her son's maneuvers would have no effect.
And that's the way it is with our leaders. They stand on the bridge making theatrical gestures they claim will steer us in a new direction while, down in the control room, the autopilot, programmed by politicians in the pocket of special interests, continues to guide the ship of state along its predetermined course.
Standing on the deck at historic Federal Hall, the president said all the right things, eloquently pointing out how American taxpayers had "shouldered the burden of the bailout" and are "still bearing the burden of the fallout -- in lost jobs, lost homes, and lost opportunities."
And I don't dispute for a minute that his heart is in the right place, and that he means it when he says "the old ways that led to this crisis cannot stand" and touts "the need for change and change now."
But we've been hearing similarly great sentiments for months now -- and they've had the same impact as my friend's ten year-old yanking on the cruise ship wheel. None. President Obama won't be able to change the course our financial system is on unless he goes down into the boiler room and disengages the autopilot -- which means taking on the bankers and their hordes of lobbyists who continue to dictate policy in DC.
To do that, the president will have to do more than deliver great speeches. He'll need to stand firm when the lobbyists, working behind the scenes, work to gut real reform, leaving only the appearance of reform in its place.
This is exactly what he failed to do when the banking lobbying killed cramdown legislation back in April.
But instead of telling the Wall Street power players watching him today that he was going to insist on making cramdown a part of his financial reform package, he tried to appeal to their better angels, reminding them that they didn't have to wait for Congress to pass new laws... they could just start acting better on their own.
It was shockingly naïve. Wall Street has been spending hundreds of millions of dollars, doing everything in its power to kill things like cramdown legislation, derivatives regulation, and the proposed Consumer Financial Protection Agency, and the president is asking them to be nicer people. That's like tossing a wounded seal into the middle of a school of Great White sharks and hoping the beasts will nurse it back to health.
There was a moment in the speech that spoke volumes about the high hurdle financial reform is facing.
The White House had sent a copy of the president's remarks to reporters and I was underlining key parts of it as he spoke. Near the end of the speech, Obama movingly exhorted his audience to demonstrate that they have taken to heart their obligation to help "families who need their mortgages modified," "small business owners who desperately need loans," and "communities that would benefit from the financing [they] could provide." In the speech as written, he was supposed to end this run by calling on Wall Street "to embrace serious financial reform, not fight it."
But when the president actually delivered the line, he edited it, saying instead that Wall Street should "embrace serious reform, not resist it."
That one-word change says everything you need to know about why all the president's well-intentioned pronouncements won't actually lead to fundamental reform. The president is utterly misreading the opponents of reform. They are not passively resisting; they are aggressively fighting against reform with every weapon they have in their extremely well-funded arsenal.
As a result, Obama's rhetoric has not been matched by reality. In his speech today, the president claimed that the actions of his administration have "spurred lending" and "helped responsible homeowners refinance to stem the tide of lost homes and lost home values."
But, in truth, credit for Main Street is still very hard to come by, and only 12 percent of eligible homeowners have had their mortgages modified by the president's home ownership plan. Meanwhile cramdown legislation remains lobbyist roadkill (though Barney Frank is vowing to revive it this fall) and mandatory mediation between homeowners and lenders prior to foreclosure is going nowhere on a national level.
That's why I could picture all the heads of the big banks sitting there today, listening to Obama and smiling -- knowing that, in the end, his claim that his administration is "proposing the most ambitious overhaul of the financial system since the Great Depression" won't mean anything as long as Wall Street's relentless lobbying and contributing continue to hold sway in the control room of the S.S. America.
Follow Arianna Huffington on Twitter: www.twitter.com/ariannahuff
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If President Obama wants to achieve his financial reforms, he has to do some house-cleaning first.
May be, in this case, it has to start, not from bottom up, but top down. I would suggest that the first to go is Obama's Treasury Secretary Tim Guitner. How can you reform Wall Street with a guy who is soaked from head to toe with Wall Street ointment placed at the front gate to do the guard duty?
Next to go is Larry Summers, the Harvard throw off. A man with million ties with Wall Street.
Obama cannot seriously hope to bring about any financial reform with these guys at the top of the ladder in his financial and economic team. In Arianna's analogy, these guys are the auto pilots aboard Obama's financial cruise ship!
Wall Street and Federal Reserve are twins they are evil and they will never be reformed but can be eliminated. Usury and greed emanate from here. Destroying the root will solve the problem.
"We the people" have to demand that the status quo definitly has to go.Obama is a very good speaker like most politicians and his promise to bring changes during the campaign has yet to be seen if any of the changes would benefit majority of the people-- the middle class, the working people the poor at the end. After the election,what has puzzled many people most was his choices of his financial , economics advisers and cabinet members -- basicly Many of them were from wallstreet or the former lobbyists and few of them even had helped create the economics mess from the beginning.Also what people heard during the campaign and seeing what is happenning now is the opposit and many are loosing trust in politicians and questioning what change really is. We all know it's never easy to change anything in a short time but hopefully with a good leader,as people hope, can lead the way for the good things for the country.After all what people really want from their government is a working government that is free from corruption,scandals besides doing their jobs well and it will be very good services to the country if these congress men and women really set out to work for the people instead of spacial interest groups.A good example:
http://www.youtube.com/watch?v=Gkf8VG3HL_8&feature=related
Yes Arianna, We are on a ship called "Oblivion"! Question is when will Obama realize that he's "captain" and will go down with the ship also?
The struggle is against the personal relationships publicly-elected officials have with lobbyists. I would underline the word, "personal" if I could. That's why you can't get any real change. Politicians and lobbyists are joined at the lips. Most scandals involve lobbyists. Many political figures become lobbyists after they leave office. Remember when Bob Packwood was forced to resign? He became a lobbyist right away. The 2 have become interchangeable. And it doesn't matter much about the political designations. Democrat and Republican, they both do it. That part of the Constitution that says the people have a right to petition Congress for the redress of grievances has been stolen away and used as a tool for publicly-elected officials to enrich themselves, family and friends. That's why I believe that appealing to the same people in office for change is useless. This isn't true of all political figures but it's true for enough of them that it's tearing up the country with greed.
Had Obama not promised, during his campaign, to take on the lobbyists, I might be more understanding. Now, as he courts them, it all seems to be coming from the same playbook ...
Our elected rulers represent a different American from the American of FDR. A full third of Americans are on some form of public dole. Many others are on social security and pension and preparing to pass from the scene. Many millions more find themselves unemployed or mired in menial jobs insufficient to support a family or future. They have lost their self-confidence, self-esteem and inner balance as autonomous individuals willing to challenge adversity.
FDR's America had a full 30 percent of Americans still on the farm. Another 30 percent were small business owners and employees. They were mostly poor but self sufficient and knew that self government was part of their heritage and could still theirs for the sacrifice and effort. They recognized competent leaders. They supported policies that seemed fair, equitable and applicable to the massive unemployment and poverty.
Now the various groups benefiting from government largess FIGHT change. And the vanishing middle American is left out in the raw weather to feign for himself. And our weak, fearful President sides with power for security and strength. The Middle American be damned.
The US really needs to get the Wall Street bankers under some kind of control. The alternative is losing your position as the beacon of world economy. The rest of the world is trying very hard to get tighter regulation, but US reluctance is blocking the real effects that might have. Laissez faire-capitalism has its limits and clearly these guys are not capable of rational or effective self-regulation. When excessive risk taking is rewarded and there are very little consequences for failing, the system is very unstable and the risk of the next collapse remains very real. We can not have the global economy depending on the next collective failure of these professional gamblers.
Wall Street bankers do not really regard themselves as "free market" risk takers, of course, Arianna. All that's just happy smoke to blow in the faces of the rubes they fleece.
They regard themselves as the ruling class. All the billions in bailouts and bonuses are the tribute due to them from the taxpayers, whom they regard as their bootlicking serfs.
And unfortunately, it seems they are right.
Must see film:
Clive Owen in "The International"
"They control your money. They control your government. They control your life. And everybody pays."
President Obama fully realizes that reforming Wall Street is beyond his 'powers'? Sadly, this could only be his explanation realizing that his speech will be listened to for clarity and disssected for its veracity.
We all have all heard the anedote.. ''can fool some of the people some of the time, but not all of the people all of the time." Probably, this post will share with the president that we know nothing has changed at Wall Street and he may need to re-visit the issue given we are all tuned in. That said, is there a strategy being played out here? Showing them a carrot... then eventually wielding a heavy , big stick if the situation continues? Arianna-- trying to figure this out. Great post, indeed! http://www.vernasmith.com
Anyone who is under the illusion that Obama is not bought and paid for by Wall Street should tkae another look at the PPIP program. This is the program where private investors pya a small amount of money to buy mortgage and other toxic assets from banks. They get most of the upside and almost no downside. The taxpayers, on the other hand get a small amount of the upsdie and almost all the downside. The taxpayers of this country continue to subsidize private investors. As long as the stock market keeps climbing, Obama will not do anything to reign in the banks.
http://rortybomb.wordpress.com/2009/09/18/ppip-debut/
I think it's past time to admit that the number one reason that Obama "won't be able to reform Wall Street" is pretty much the same reason he "won't be able to reform health care" and he "won't be able to reform civil rights" and he "won't be able to reform the agencies involved in war crimes". And that is Obama doesn't WANT to reform any of these things. His first and as far as I can tell only real concern is protecting wealth and maintaining the status quo. Since it was the taking care of the wealthy and powerful above all else that got us INTO this mess Obama can't get us out of it without fundamentally rejecting his core values.
Sorry folks, we're stuck in this for at least another 3.5 years before we can even START to recover.
Too many of the democratic senators and congressmen have been bought out by Wall Street, the "now its our turn" mentality, for him to have any real chance. And as others have pointed out, obama was never in the Senate long enough to learn how politics worked inside the democratic party.
Don't blame Congress. It is Obama that talks loudly and carries a small stick.
Americans must come to the realization: Wall St. is not reformable. The monetary financial derivative debt based global economic system is the killing machine which can not be fixed. Usury and speculation in every transaction impacts production, our survival, is unsustainable. Only Lyndon LaRouche has called for the International Monetary Financiers' system to be terminated completely; Speculation and usury is a dishonest devise that redistributes the gains of production and labor, ultimately contracting production. We must go back to the American credit system. If the United States does not implement economy formation measures, the U.S. economy will stop functioning. Put the Fed into bankruptcy protection, get the trillions back, banks that qualify will join the U.S. National Bank, Credits and currency will be issued into the population's physical economy: "the perpetuation and the improvement of the productive facilities on which the conditions of life depend, shall enjoy the absolute priority."
www.larouchepac.com
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