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Ear to the Ground

Obama’s Financial Plan Fails to Impress

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Posted on Jun 18, 2009
White House / Pete Souza

President Obama compares his “sweeping overhaul of the financial regulatory system” to FDR’s crackdown on Wall Street, but New York Times business columnist Joe Nocera isn’t buying it. “Everywhere you look in the plan, you see the same thing,” he writes. “Additional regulation on the margin, but nothing that amounts to a true overhaul.”

The problem, according to Nocera, is that Obama is unwilling to anger the bankers, and that just doesn’t make for very effective regulation.

Joe Nocera in The New York Times:

The plan places enormous trust in the judgment of the Federal Reserve — trust that critics say has not really been borne out by its actions during the Internet and housing bubbles. Firms will have to put up a little more capital, and deal with a little more oversight, but once the financial crisis is over, it will, in all likelihood, be back to business as usual.

The regulatory structure erected by Roosevelt during the Great Depression — including the creation of the Securities and Exchange Commission, the establishment of serious banking oversight, the guaranteeing of bank deposits and the passage of the Glass-Steagall Act, which separated banking from investment banking — lasted six decades before they started to crumble in the 1990s. In retrospect, it would be hard to envision even the best-constructed regulation lasting more than that. If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad.

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By boggs, June 19 at 11:59 am #

OBAMA, We’re waiting for some of that change.

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By Cathy, June 18 at 9:42 pm #

Anarcissie, I’m not believing it for one minute either.  I stick to my original thoughts when I started seeing how things were going.  This is the way it’s going to be and we have our fight cut out for us—not just the Republicans now, but the Blue Dog Dems and the President, and, of course, their willing servants, the MSM.

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By NYCartist, June 18 at 6:00 pm #

Dan Froomkin’s been fired by WaPo (source:Glenn Greenwald’s column on http://www.Salon.com)  Since Froomkin was writing on this topic today, I am putting the news here.

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By Anarcissie, June 18 at 5:44 pm #

Cathy:
’... This guy thinks that Obama is just moving like a stealth bomber and we will all be surprised. ...’

I think we’ve all heard the Secret Radical theory before.  It’s regularly proposed of Democratic presidential candidates, nominees, and incumbents.  However, if Mr. O were going to push radical or even liberal politics, his best strategy would have been to push it at the very beginning of his term, when his popularity was at its peak and his opponents were most discredited.  Instead of change, though, we’ve seen just more of the same, or more of the same but worse.  The government’s financial and economic moves have been the same as those of Bush, and the war in the Middle East, instead of being wound down, is being moved to Afghanistan and Pakistan.  We still have a lot of prisoners of war where the war is completely undefined.  Mr. O has not reversed the trashing of the 4th Amendment carried out by Bush.  He has copped out on Single Payer and Gay Marriage, both of which he said he supported.  We are going to get an apparent middle-of-the-roader on the Supreme Court instead of another right-wing religious fanatic, but otherwise I don’t see much.  But of course if Mr. O is a Secret Radical I wouldn’t; I’m not part of the Secred Radical Cabal.

Change we can believe in?  No, we can’t, not at the moment.

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By Cathy, June 18 at 1:39 pm #

I had somebody hammer me last night when I complained about Obama and treading too lightly, and being a disappointment.  I got hammered that I don’t know how government works, that it is Congress that passes the laws.  No kidding!  I thought every idiot knew that.  But the fact is, FDR was able to get bold legislation passed, so was LBJ with Medicare and Medicaid.  It’s called bold leadership. 

This guy thinks that Obama is just moving like a stealth bomber and we will all be surprised.  He’s just building consensus.  He said the problem with us liberals is that we want everything yesterday and we want a perfect world.  Well, unfortunately Obama is pushing for all of these things right now, right away, in the first year, and allowing the American people virtually no input—which is what I thought his bold, new change was about, putting government back into the hands of the people. 

We have waited 70 years for single-payer health care.  I would say that’s pretty darn patient.  We have a system where, as one New Jersey doctor put it, that is ready to collapse in on itself any day now.  He’s for single-payer.

Remember the bankruptcy reform law which Obama remained mum on at the last minute, after having supported the cramdown provision? 

I’m not looking for a perfect world, just a more fair world.

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By Jon, June 18 at 1:21 pm #
(Unregistered commenter)

With Geithner and Summers at the helm, we won’t see any actual ‘with teeth’ regulation, only a return to the same with only ‘supervisory/advisory’ roles for regulators.  We need to return to Glass-Stegall, not to continue to abandon it. I’m afraid that Obama is just acting like a ‘suit’ in all this.  FDR was vastly superior and so was his team.  We’re just prolonging the arrival of the day of reckoning.

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By bcc, June 18 at 12:39 pm #
(Unregistered commenter)

Obama is no FDR.

He certainly will need to get rid of “Change You Can Believe In” slogan for the 2012 campaign. I would recommend Bush’s “I’m a Uniter not a Divider”.

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By herewegoagain, June 18 at 12:04 pm #
(Unregistered commenter)

Just don’t really know what to make of Obama at this point. It’s not one or two issues he’s backtracking on, it’s just about every issue. The huge disparity in his campaign promises and how he is actually “leading” is nothing short of mindblowing.

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By boggs, June 18 at 11:24 am #

Obama thinks he can continue to fool the people with soothing talk and promises. Lots of promises of how things are going to be better.
I think his delivery needs to come really soon or he can kiss a rerun goodbye.
The people are beginning to feel duped. At least with GWB those who voted for him knew what they were getting. A moron!

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By artie, June 18 at 11:09 am #
(Unregistered commenter)

On The Independent Institute website, read Higgs’ article on this proposal- witty and accurate. More snake oil from the power elite for the gullible, ignorant, apathetic, infantile masses.

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By Orley Allen, June 18 at 10:56 am #
(Unregistered commenter)

California Governor Grey Davis was recalled and replaced for way less than President Obama caving in to Wall Street.

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By RdV, June 18 at 9:01 am #

Big Wes—

  Everyone talks now about how much Obama received from the banking industry, but then it was all about how he shattered records with contributions from small donors. The many small donors who constitute the base are long forgotten. It is like they paid for the privilige of voting for Obama and he isn’t obligated to them at all—like he is to the good ol boys.

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By Big Wes, June 18 at 8:35 am #

Obama received more contributions from the banking industry than John McCain; Joe Biden is known as “The Senator from MBNA.”  It should be clear that the Obama administration is in no hurry to bite the hands that feeds it.  The difference in the handling of the auto industry bailout (cutting the throats of the workers, forcing the companies into bankruptcy, and a heavier handed oversight board) versus that of the financial industry (multi-million dollar retention bonuses for the execs who caused the mess and pretty much business as usual) is a clear cut illustration of the preferential treatment Wall Street expects and receives.

I’ll admit that I got somewhat caught up in “Obamamania,” but in my heart, I knew he was making bigger promises than he could deliver.  I hope that Obama thought he could deliver on the promises he was making, but once he actually got into office, the “powers that be” (the rich oligarchy) stopped him.  However, my gut tells me that Obama really just mixes everything with hope and makes the world feel good…

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By RdV, June 18 at 8:13 am #

The legacy of the Obama presidency in less than 6 months in:

Disappointment, betrayal and squandered opportunity.

Already his numbers are tanking. Seems that the only constiuency that Obama doesn’t mind angering is the people while he serves the corrupt geedy elites.

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By wanked, June 18 at 7:57 am #
(Unregistered commenter)

Obama is the master of talking alot, and saying nothing. He is vague and wishy washy, and most of what he says has little or no substance. He is clearly beholden to his corporate masters.

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