Obama Chooses Wall Street Over Main Street

Maybe Ralph Nader was right in predicting that the same Wall Street hustlers would have a lock on our government no matter which major party won the election. I hate to admit it, since it wasn't that long ago that I heatedly challenged Nader in a debate on this very point.

But how else is one to respond to Barack Obama's picking the very folks who helped get us into this financial mess to now lead us out of it? Watching the president-elect's Monday introduction of his economic team, my brother-in-law Pete said, "You can see the feathers coming out of their mouths" as the foxes were once again put in charge of the henhouse. He didn't have time to expound on his point, having to get ready to go sort mail in his job at the post office, but he showed me a statement from Citigroup showing that the interest rate on Pete the Postal Worker's credit card was 28.9 percent, an amount that all major religions would justly condemn as usurious.

Moments earlier, Obama had put his seal of approval on the Citigroup bailout, which his new economic team, led by protégés of Citigroup Executive Committee Chairman Robert Rubin, enthusiastically endorsed. A bailout that brings to $45 billion the taxpayer money thrown at Citigroup and the guarantee of $306 billion for the bank's "toxic securities" that would have been illegal if not for changes in the law that Citigroup secured with the decisive help of Rubin and Lawrence Summers, the man who replaced him as Treasury secretary in the Clinton administration.

As Summers stayed on to ensure passage of deregulatory laws that enabled enormous banking greed, Rubin was rewarded with a $15 million-a-year executive position at Citigroup, a job that only got more lucrative as the bank went from one disaster, beginning with its involvement with Enron in which Rubin played an active role, to its huge role in the mortgage debacle. It is widely acknowledged that Citigroup fell victim to a merger mania, which Rubin and Summers made legal during their tenure at Treasury.

Yet despite that dismal record of dismantling sound regulation, Summers has been picked by Obama to be the top White House economic adviser and another Rubin disciple, Timothy Geithner, is the new Treasury secretary. Geithner, thanks in part to the strong recommendation of Rubin, had been appointed chairman of the New York Federal Reserve Bank after working for Rubin and Summers during the Clinton years. Once at the New York Fed, he was the main government official charged with regulating Citigroup, a task at which he obviously failed. Yet over the weekend, it was Geithner who hammered out the Citigroup bailout deal with Treasury Secretary Henry Paulson and a very actively involved Rubin.

As the Washington Post reported, Paulson had indicated last week that no further bailouts were planned before the new administration took office until "Rubin, an old colleague from Goldman Sachs, told Paulson in phone calls that the government had to act." Rubin conceded in an interview with the Post that he had played a key role in the politics of the bailout.

This outrageous conflict of interest in which Rubin gets to exploit his ties to both the outgoing and incoming administrations was best described by Washington Post writer Steven Pearlstein: "The ultimate irony, of course, is that just as Rubin and Co. at Citi were being bailed out by the Bush administration, President-elect Barack Obama was getting set to announce a new economic team drawn almost entirely from Rubin acolytes."

As opposed to the far tougher deal negotiated on the bailout of AIG, the arrangement with Citigroup leaves the executives, including Rubin, who brought Citigroup to the brink of ruin, still in charge. Nor is there any guarantee of the value of the mortgage bundles that taxpayers will be guaranteeing. That is because, as candidate Obama clearly stated in his major economics address back in March, the deregulation pushed though during the Clinton years ended transparency in banking.

Why then has he appointed the very people responsible for this disaster to now make it all better? Why not ask him? Heck, yes, it is time for the many of us who responded to his e-mails during the campaign to now challenge our e-mail buddy as to why he suddenly acts as if the interests of Wall Street and Main Street are one and the same.

Robert Scheer is the author of a new book, "The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America."

Comments

[JohnnyBoyyy]

Well, Mr. Scheer, you sure don't waste a reader's time!

I have to say that you know how to present the facts as precisely and cleanly as possible, then quickly state your thoughts on how the reader might respond to those facts. Obviously, your many talents and credentials and time "in the trenches" for humanity and passion for your work has honed your communication skills. I have none of your skills, Mr. Scheer, other than a passionate curiosity, so I hope you will allow me to offer you my praise for this article.

The HuffPost gave me a voice during the past months of the campaign. Like many people that comment here, I couldn't get enough of following the campaign and felt a little empty when the election was over. My chosen candidate, Senator Obama, brought me to moist eyes of pride many times this summer.

And now, you are the first writer to make me question one of his decisions. Rest assured that I will be very vocal in my questions and comments for Mr. Obama. Like you say, our email buddy would email me sometimes 2 or 3 times a day during the campaign - and that's OK. But now, it's my turn to challenge him via that same email contact. He's still my "dawwg", but we gotta talk!


This Is OUR Time - This Is OUR Moment

Barack Hussein Obama II
President-Elect
United States of America

[northicus]

Shouldn't all these greed muggers be put in jail? The cream of the cash crowd that destroyed Wall Street and the faith of the middle-class are now going to work for the incoming administration. This decision amounts to a Slap on the face to all who voted for Change. I'm thinking its not what the new president decides but the moneyed elites who will decide the direction of Government. The election was a necessary action to keep us all thinking that we matter. The truth is somewhere hidden behind the curtains of deceit.

[toypiano]

I think he picked his econ team members for strategic reasons, mainly to keep markets relatively calm in the sense that new people in charge might spook the herd and cause the markets to skitter even more out of control.

That said, I think his actual plans are still being developed and he's playing his cards close to the vest. To my thinking, the peeps on his team are like tools for getting the job done. Many of them have already failed us miserably by getting us into this mess, but there's no denying they're highly educated and have a lot of experience playing with other people's money. And now they will have a new boss. At my most optimistic, I like to think that Obama will utilize these same tools to do the job differently, with different goals. Kind of like how you can use the same hammer to help build something useful or to tear something down. He's picked his hammers and we'll have to see how he uses them. So far, with his support of the endless bailouts (yet jumping on the bandwagon to apply a double standard for the auto industry), I'm not too impressed.

Trying to keep the faith, nonetheless. It's still early in the game.

[robertny49]

Phil Gramm led the charge for deregulation, not Robert Rubin, Paul Volker or Tim Geithner. He does have some new blood coming in from his economic councel, including Christina Rommer from UC Berkeley who offers excellent historic economic perspective as well as many other attributes she will offer (her husband is also an expert and they work as a team - 2 for the price of 1).
Obama wants to hit the ground running and feels he needs people already plugged into and experienced in the ways of Washington to impliment his policy decisions. I believe Mr. Sheer ought to give Obama and his group a chance before lobbing heavy criticism on them.

[abt]

Scheer is being hysterical today. And the main left blogosphere disagrees:
Here is Josh Marshall:
"Though I might have chosen differently in one or two cases, overall, I'd say I'm very pleased with the announced or prospective nominees so far from Barack Obama. But for those who are more critical, I try to keep focusing everyone's attention back on the salient point. With a strong president, appointees, particularly cabinet appointees execute policy. They work for the president. They execute his policies. I think we have a strong president. And unless and until I see policies that don't square with the platform he ran on (which I don't expect) I see no reason to revise that judgment."
And Paul Krugman:
"A thought I've had: there have been some complaints from movement progressives about the centrism/orthodoxy of Obama's economics appointments. To some extent this was unavoidable, I think: someone like the Treasury secretary has to be an experienced hand who can deal with Wall Street, and I haven't heard anyone proposing particular individuals with clearer progressive credentials to hold that position."
And Markos Moulitsas:
"Yeah, Obama's agenda is quite progressive. Whether he delivers on that agenda remains to be seen, of course, but I can't be all that worked up over his cabinet appointments if those appointee's jobs are to deliver on the agenda."

[quantumspin]

I agree with Sheer.

Note this from Sheer's post here:

"Yet over the weekend, it was Geithner who hammered out the Citigroup bailout deal with Treasury Secretary Henry Paulson and a very actively involved Rubin."

If these two--Geithner and Rubin are Obama-shaped, then we see that they apparently had Obama's permission to set up this Citigroup bailout, and NOTHING FOR MAIN STREET (caps my emphasis).

So this is what we will get from an Obama WH: continued handing huge sums to banks and WS, while Main Street goes dark, and starves.

Obama got almost twice as much WS money in his campaign as McCain did---so you know where he owes favors. Note that he's forgotten the ordinary people who gave to him---what have his economic team done for us 'over the weekend.' Nada. But somehow, in a weekend meeting Citicorp was bailed--funny, Rubin was its CEO for a while, but I guess there's no connection.

Rubin and Geithner are indeed the new financial foxes that will continue the financial looting of America and eventual disappearance of 'the ordinary working American.' We're just not worth it.

Feh.

[Oldbuck]

I can assure you of one thing things could be a hell a lot worse if McCain had been elected and one thing about all of these people they serve at the pleasure of the President if they do not carry out the plans of Obama all he has to do is ask for their resignation.

[HHW]

It's been politically-incorrect to point fingers at the other group of people who "got us into this mess" - the American people, who taking the cue from their government, decided they wanted to spend 2 dollars for every dollar that they earned, including on houses and apartments they couldn't afford. This all started with subprime loan issuance and securitization, which was basically political correctness at work in lending - sending loans out to people who had no hope of repayment without a constant bull market on house prices. While Citi and the like were certainly sloppy about their capital reserves, they are only part of the problem - and unfortunately, they have to be part of the solution because without debt, the U.S. will end up in a very long period of radical de-leveraging and recession as we grow accustomed to a world without credit cards, mortages and auto loans.

Blame Rubin by the way, but don't blame Geithner just because he worked under Rubin: Geithner was the one who argued that we shouldn't have dumped Lehman's assets into the world's financial markets. He is a lifetime government employee who hasn't made millions, and advocated a strong interventionist approach that probably would have cost taxpayers less. Obama is doing the best he can under the circumstances - these are the best economic managers that America has right now.

[Citizen-Jane]

Calm down Robert.  Talk about not spoiling the whole bunch.  Wait until he gets a chance to run his adminstration to see if there will be change.  Also you may not agree with everything that he decides but hey its better than "the economy is fundamentally sound"  guy John McCain.   And hey in a little more than of month Bush will be on his way back to Texas. Be especially grateful that Sarah Palin isn't a heart beat away from beholding the office of the presidency.

And we can always make a bumper too. Don't blame me I voted for Obama because the other choice was John McCain and SARAH PALIN! Country first.

By the way did John McCain receive any hero medal? You know the Navy Cross. The silver cross Medal of Honor for actually being a hero?

And what was his record on the SnL scandal?

[VOICEOFKNOWING]

I FIND IT A SAD VERY SAD DAY FOR THOSE OF YOU WHO KNOWINGLY VOTED THIS MAN, WITH NO REAL EXPERIENCE INTO THE HIGHEST OFFICE IN THE WORLD TO RUN OUR COUNTRY. YOU ALL WANTED 'CHANGE' SO MUCH THAT YOU ALLOWED YOURSELVES TO DRINK THE COOLAID THAT EVERYONE ELSE AROUND YOU WAS DRINKING TOO. YOU HAVE CHOSEN THE WRONG PERSON TO LEAD OUR COUNTRY. AT LEAST MCCAIN HAD A RECORD YOU COULD ACTUALLY LOOK UP AND WAS A TRUE AMERICAN WARRIOR. I HAVE TO GO NOW TO GET MY 'DONT BLAME ME... I VOTED FOR MCCAIN' BUMPER STICKER!!

[MFS001]

The difference between the President-Elect's careful, well-thought-out steps this past week versus McCain's previous, erratic behavior -- such as "suspending" his campaign -- makes me very glad Obama will be our president.
See: I was able to say that without using caps or referring to any warriors.

[sufi66]

Nader is right, but only if Obama fails to have oversight here. Time will tell.

[HHW]

McCain had a group of economic advisors who have no idea of how to address an economic crisis, much less one originating out of credit and credit-linked derivatives. Fiorina came from a sales background, Whitman out of technology/sales and Holtz-Eakin out of the right wing "supply side" crew that thinks lowering tax rates boosts tax revenues (if so, lower tax rates to zero and see if revenues go to infinity). McCain certainly understands how to fight a war (his support for the surge was gutsy and smart), but he has little interest in understanding how to fight a recession and his economics team is fine for running a technology firm but way out of their depth in trying to run a complex national economy.

Btw, I supported for McCain in the primaries and switched to Obama in the general for the above reasons amongst others.

[anachoret]

It's "The Grand Galactic Inquisitor," from "The Venture Brothers."

"IGNORE ME!"

http://www.youtube.com/watch?v=uywgp-XXwgE

[go]

If Obama wishes to do something about the present predicament in the America, he will, unfortunately, only be able to do it under the cover of the same idiots that got us into this mess. If he were to offer any choices at this point that were outside the acceptable box he would be nailed for being a radical. It is going to take a subtle shift in perceptions of the masses, change comes from the bottom up. I believe these old tools will be utilized to do what needs to be done. "A tool is a weapon if you hold it right." The same screwdriver you use to put a screw in seems like a pretty good tool to take a screw out. A hammer is the method of last resort.

[drgrph]

C'mon, it's all nothing more than change you can believe in!

Thankfully I didn't fall for the rhetoric, I actually looked at his record of accomplishments. Boiled down pretty much to nothing. This was all too predictable to those of us not blinded by Bush-hatred. Do not misunderstand this as McCain-love, for it is not! This was truly a hold your nose, pick the lesser of 2 evils kind of election.

Question: Will Clinton's 3rd term be better than W's might have been? If so, why? (This is actually a serious question from me that could be interesting to discuss)

[markinaz]

Fewer people will die.

[Osprey3]

You seem to be overlooking who will be in charge, and what his policies will be. I didn't notice a Rubin nomination for any post. Obama is NO George Bush, and he's NO Clinton either. Why don't you give him a chance to govern, before condemning him. He hasn't even been sworn in yet, for God's sake!

[rintincop]

Two thirds of Obama's selections are former Clinton people. I am not complaining after eight years of Bush people.

[ColinGallagher]

Scheer has a good point, even though Obama hasn't been sworn in yet. Why were Rubin and the other Citigroup directors not fired when the Tresury bailed out Citi? Since joining Citi's Board in 199, Rubin has collected roughly $150 million in compensation from Citi. Since the taxpayers are being made to pay for Rubin's failure to exercise any oversight of Citi, shouldn't he be giving back at least some of that compensation?