President Obama is now, finally, getting tough on Wall Street. Today he's giving his support to two measures critically important for making sure the Street doesn't relapse into another financial crisis: (1) separating the functions of investment banking from commercial banking (basically, resurrecting the Depression-era Glass-Steagall Act) so investment banks can't gamble with insured commercial deposits, and (2) giving regulatory authorities power to limit the size of big banks so they don't become "too big to fail," as antitrust laws do with every other capitalist entity. A few days ago the White House demanded that the biggest banks repay the $120 billion or so still owed the government from the bailout.
All good, all correct, all important. The president deserves at least two cheers. Why not three? It took him over a year to finally get here. The House has already completed its work on financial reform and may be reluctant to start over. The Senate is in disarray since Chris Dodd, chair of the Banking Committee, announced recently he wouldn't seek reelection, and is poised to compromise with Wall Street on a number of big issues. Neither chamber has shown any interest whatsoever in resurrecting Glass-Steagall or limiting the size and risk of big banks. In other words, much of the game is over.
It's possible, of course, that Congress could go along with Obama's new proposals. A populist backlash against the big banks is growing among Americans who can't understand why Wall Street is back to its old ways even though most Americans are worried about losing their jobs and homes as a result of Wall Street's massive implosion in 2008. And they've never been able to understand why taxpayers bailed out Wall Street while Main Street still languishes.
A cynic might conclude that Obama's born-again populism is for the cameras. Scott Brown's upset victory in Massachusetts revealed the strength of I'm-mad-as-hell populism in the electorate right now. Add in the $150 billion of bonuses the Street is about to bestow on itself and the outrage meter could blow. With sky-high unemployment and surly voters, Democrats have to show they're on the side of the people, not the powerful, as Al Gore put it in the last days of the 2000 election (too late to help himself).
For almost a year now, Democratic pollsters have been pointing out how much the public hates the bank bailout and despises Wall Street. But there was no reason for Democratic leaders in Congress or the White House to pay much attention. After all, it was a Republican president and a Republican Congress that came up with the bank bailout plan to begin with. Some stalwart Republicans had grumbled about it, of course, but Republicans have always been on the side of Wall Street and big business and weren't likely to call for strong measures to prevent the Street from getting into trouble again.
Larry Summers and Tim Geithner scuttled Paul Volcker's plan to separate the banks' commercial and investment functions, and didn't want to limit the size of banks or the risks they could take on. Summers and Geithner have wanted to get the banks back to profitability as soon as possible. And Democrats in Congress have had no stomach to take on Wall Street, a major source of campaign funding.
But suddenly the winds are blowing in a different direction over the Potomac. The 2010 midterms are getting closer, and the Democrats are scared. Their polls are plummeting. The upsurge in mad-as-hell populism requires that Democrats become indignant on behalf of Americans, and indignation is meaningless without a target. They can't target big government because Republicans do that one better, especially when they're out of power. So what's the alternative? Wall Street.
Perhaps I'm being too cynical. Maybe the Obama and congressional Democrats are now ready to give up Wall Street trickle-down economics and focus on Main Street trickle-up. "There are two ideas of government," said William Jennings Bryan at the Democratic National Convention in Chicago in 1896. "There are those who believe that you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it." He couldn't have said it better.
Cross-posted from RobertReich.org.
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"Larry Summers and Tim Geithner scuttled..
LOST confidence on them months ago...
and they are still there... could Obama face WS with them?
Those from WS and supported WS that took us - financial meltdown..
I wonder why?
That will explain... Small Business is a small potatoes for them...
Although, history proves Small Business is one of the core key to recovery..
- Real health care reform is all but dead, the Senate bill many are now pushing is little more than a huge government giveaway to the industries largest corporatio
- Some of the financial 'gurus' who helped to oversee the financial meltdown are among the President'
- Wall Street fat cats are fatter than ever with record profits and I read today that they will pay over $135,000,0
- The President'
- We're still in Iraq, Guantanamo is open, 'Don't ask don't tell' is rarely mentioned, and we are surging in Afghanista
- The Supreme Court decision Friday means that corporate political power will continue to grow like a malignant tumor.
- Inside the beltway tone deafness is more rampant than ever.
Is this administra
Please, Mr. President, it's time for some Chutzpah. Not only the midterm elections but the well being of our nation, your reelection
Obama's Speeches are taking on Wall Street.
Obama, the president, will ultimately do NO such thing.
The first thing President Obama needs to TAKE ON is his economic and financial advisers who partly caused this catastroph
So, damned if he does, damned if he doesn't? No wonder we can't get anything done.
Ultimately
I'd like to blame Obama but I can't help but wonder if Americans need to really examine their life, lifestyles and priorities right now. GOP always goes off about debt belonging to our next generation
Please America... let's examine whats wrong and get together and solve this mess.... we're better than that.
Tell me why I shouldn't be cynical. He abandoned health care to congress to die an awful death, he's already given Wall Street hundreds of billions, he's escalated an un-winnabl
Meet George W. Bush with an intact vocabulary and better acting skills.
Only a damned fool is not a cynic at this point. His "taking on Wall Street" is nothing but a dog and pony show before the mid-terms. Obama's a TOOL, a place-hold
DUH.
Everyone has taken a deep breath since the Massachuse