Now that President Obama's views on gay marriage have "evolved," it's time for his views on Wall Street to likewise "evolve" and for Obama to forcefully campaign to break the stranglehold of Too Big To Fail banks on the economy.
For its part, Wall Street's view of Obama has certainly "evolved" since 2008 when Wall Street bankers seemed to have fallen in love with Obama.
As New York Times reporter Nicholas Confessore recently wrote:
"By the beginning of the year, it had... become obvious to many on Wall Street that Obama's campaign was going to take a populist turn. Some bankers believed that the administration's strategy was to talk tough in public and play damage control in private, and they were sick of playing along... One former supporter, [hedge fund manager] Dan Loeb, compared Obama to Nero... Stephen A. Schwarzman, a founder of [private equity firm] Blackstone, said that an Obama proposal to raise taxes on "carried interest" [which taxes hedge fund and private equity managers like Schwarzman and Mitt Romney at 15% instead of 35%]... reminded him of 'when Hitler invaded Poland in 1939.'
'I think it's an unfixable relationship,' one Democrat involved in planning the March 1 [New York Obama] fundraisers told me this spring. 'They hate him. They really, really do.'"
Having contributed more money to candidate Obama in 2008 than to John McCain or Hillary Clinton -- and having been rewarded by a President Obama who largely protected their interests -- Wall Street banks and hedge funds now seem determined to throw Obama under the bus and contribute the overwhelming majority of their massive campaign funds to one of their own, former Bain Capital Chairman Mitt Romney and Republican super PACS run by the likes of Karl Rove.
It's not enough for Wall Street that President Obama appointed a pro-Wall Street economic team led by Tim Geithner and Larry Summers. It's not enough that Geithner successfully lobbied Sen. Chris Dodd to remove a provision from the 2009 stimulus bill banning bonuses to bank executives whose financial institutions were bailed out by the Federal government. It's not enough that the Obama administration insured that the Dodd Frank financial reform bill was relatively weak -- the Obama administration lobbied Democrats in Congress to vote down amendments that would have limited the size of Too Big to Fail banks or that would have reinstituted the Glass-Steagall Act, which for half a century separated federally insured commercial banks from investment banks that could gamble trillions of dollars in the global financial casino. It's not enough that in 2010 Obama allowed all of the Bush-era tax cuts -- including those for the richest Americans -- to be extended. It's not enough that the Obama administration allowed bank lobbyist to delay the implementation, and water down the regulations, in the already weak Dodd Frank bill. It's not enough that in the past 3 years under Obama's presidency, the Dow is up over 60% and corporate profits have soared, increasing the wealth of the top 1% while the income of the rest of America stagnates.
No. Wall Street has already gotten what it wanted from Obama -- a president who, in the wake of the financial meltdown of 2008, would deflect the pitchforks of angry Americans. Now Wall Street is treating Obama like a cheap hooker. They paid their money, got their services, and they're ready to send him back out on the streets.
In its infinite greed, the moderate, centrist Barack Obama who saved their butts is no longer enough for most of Wall Street. It believes it can use its wealth -- further unleashed by the Citizens United decision allowing unlimited contributions to super PACS -- to install one of its own, private equity multi-millionaire Mitt Romney, in the White House, someone who promises to repeal even the modest regulations of Dodd Frank and to insure that millionaires and billionaires won't pay a single dime more in taxes from their untold fortunes.
So Obama has a choice. He can continue to talk like a bit of a populist in public and send emissaries to Wall Street in private to assure the bankers and hedge fund managers that they have nothing to fear from him, in the hope that Wall Street will continue to send campaign cash his way as insurance in case he gets reelected.
Or Obama can take a cue from FDR's landslide 1936 reelection campaign, in which FDR proclaimed,
"We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me -- and I welcome their hatred."
He can then propose a program to make the big banks Small Enough to Fail, without their failure so threatening the economy that the taxpayers will again have no choice but to bail them out when the next financial bubble bursts. This includes:
• Call all his top regulators -- the Treasury Secretary, the Fed Chairman, the Comptroller of the Currency, the head of the SEC, the head of the Securities Futures Trading Commission, the head of the FDIC -- into the Oval Office and make it clear that he expects regulators to promptly promulgate regulations that strongly enforce the letter and spirit of the Dodd-Frank act, including the strongest possible version of the Volker Rule closing loopholes that might allow federally insured banks to engage in anything that looks or smells like proprietary trading.
• Call for the passage of a new Glass-Steagall Act which will cleanly separate federally insured commercial banks from risky investment banks. As JPMorgan Chase's massive trading losses on recent hedges (which may not have violated the Volker Rule) shows, Wall Street banks will inevitably find loopholes in something as complex as the Volker Rule, whose proposed regulations run thousands of pages. KISS = Keep It Simple Stupid. If you want to gamble in the global financial casino, you can't take federally insured deposits, and vice versa.
• Break up Too Big To Fail banks. Call for the passage of the Brown-Kaufman Amendment (which the Obama administration previously opposed) that would limit the size of any single bank to 10% of the total insured deposits in the banking system.
• Call for real principal relief for underwater homeowners and use all of the tools already at the disposal of the executive branch to bring this about.
• Unleash the Justice Department and SEC to civilly and criminally prosecute bankers who gamed the system and caused the 2008 financial crash.
• Place a 0.1% tax on all financial transactions. This would, as former Clinton Labor Secretary Robert Reich points, out, bring in more than $250 billion over 10 years while slowing speculators and reducing the wild gyrations of financial markets.
There's nothing really radical about this kind of program. It's in the clear tradition of the New Deal which saved capitalism from its own worst excesses. The Dallas Fed, one of the most conservative branches of the Fed, recently called for breaking up the biggest banks in order to make capitalism safer, a call which was joined this week by the President of the St. Louis Fed.
Wall Street would of course freak out and pour even more millions into Romney's campaign and super PACS. But with Wall Street already hating him, Obama can't win the money war with Wall Street, anyway.
What he can win is the popular war for the hearts and minds of the American people. Americans hate Wall Street and they hate the bankers who were bailed out by taxpayers and put the money in their pockets in continue multi-million dollar bonuses. Obama can make clear in his campaign that he stands with the American people and not with Wall Street who is funding Mitt "Mr 1%" Romney's campaign to put one of their own in the White House.
Either Obama can continue to privately suck up to Wall Street behind the scenes in the hope of competing for their campaign cash, acting like a battered housewife who keeps doing her husband's bidding in the futile hope that he'll stop beating her. Or he can become the actual populist reformer that Wall Street fears him secretly to be. He can channel his inner FDR and welcome the hatred of organized money in the name of standing up for the American people.
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