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Obama Chooses Wall Street Over Main Street
Posted on Nov 25, 2008
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 editor in chief of Truthdig and the author of a new book, “The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.”
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