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The Men We Trusted to Lead Us

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Posted on Sep 28, 2011
AP / J. Scott Applewhite

Fed Chair Ben Bernanke in 2009 delivers a report on the economy to Congress.

By Robert Scheer

Now he tells us. On Wednesday Federal Reserve Chairman Ben Bernanke referred to the nation’s unemployment rate as a “national crisis,” an obvious if depressing fact of life to the 25 million Americans who have been unsuccessfully attempting to find full-time employment.

But to finally hear those words from the man George W. Bush and Barack Obama both appointed to lead us out of the great recession is a bracing reminder of how markedly the policies of both those presidents have failed: “We’ve had close to 10 percent unemployment now for a number of years, and of the people who are unemployed, about 45 percent have been unemployed for six months or more,” Bernanke said. “This is unheard of.”

But why is Bernanke just now discovering this after having overseen the Fed’s purchase of trillions in toxic mortgage-backed securities from the too-big-to-fail banks that sacrificed people’s homes in a giant Ponzi scheme? Why did he throw all of that money at the banks without getting anything back in the way of relief for the people the bankers swindled? 

The housing meltdown, which has robbed Americans of a considerable portion of their net worth, has led to the continued depressed consumer confidence that is the prime cause of crisis-level unemployment. In another of his too-late-to-matter moments, Bernanke acknowledged that “strong housing policies to help the market recover” would “clearly be very useful,” but he failed to suggest any. 

Bernanke, along with then-New York Fed President Timothy Geithner, helped implement the Bush strategy of saving the banks in the hope that their rising tide would lift our little boats. That remained the strategy when President Obama rewarded Geithner for having saved AIG and Citigroup by naming him treasury secretary in the incoming government. 

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With the Geithner appointment, and the even more disturbing selection of Lawrence Summers to be his top economic adviser, Obama sealed his own fate as president. By turning to those disciples of Clinton-era Treasury Secretary Robert Rubin, a prime enabler of Wall Street greed, the new president fatally betrayed his promise of hope.

If you still need confirmation of just how decisive a betrayal those appointments were, check out Ron Suskind’s new book, “Confidence Men,” a devastating insider account of the Obama White House that clearly identifies as the source of this president’s failure “Rubin’s B-Team,” Summers and Geithner, “two men whose actions had contributed to the very financial disaster they were hired to solve.” Suskind quotes then-Sen. Byron Dorgan, D-N.D., one of the few who dared stand up to the Wall Street lobbyists, as telling Obama, “I don’t understand how you could do this; you’ve picked the wrong people!” 

Of course the Democrats from the Clinton era don’t bear all of the responsibility for the radical deregulation of the financial industry that ended the sensible restraints on greed installed by Franklin Roosevelt in response to the Great Depression. Indeed, the inspiration came from Republicans led by Phil Gramm, the then-senator from Texas who as head of the Banking Committee authored the legislation that Wall Street lobbyists had long pushed unsuccessfully.

The mayhem they wrought and the subsequent big-money rewards to Rubin and Gramm do not seem to have shocked this president or the leading contenders for the Republican presidential nomination. Rubin became chairman of Citigroup and was rewarded with $120 million while he guided the bank to the edge of bankruptcy. Gramm went to a leading position at the Swiss-based UBS, the continually troubled institution now in the midst of its latest scandal, involving fraudulent trading. In addition to a $45 billion direct TARP bailout, Citigroup got $99.5 billion, and Gramm’s UBS $77.2 billion from a $1.2 trillion secret Fed loan fund.

Gramm and Rubin were partners in what should be considered the crime of the century, speaking in moral and not legal terms since, as regards the financial world, the bad guys get to write the laws. Thanks to their efforts, which allowed the creation of the “too-big-to-fail banks” and a totally unregulated derivatives market in toxic home mortgage securities, we entered the Great Recession, but neither of its authors has ever been held seriously accountable for the enormous suffering he caused.

On the contrary, Gramm and Rubin’s “just free Wall Street to do its thing” ideology still dominates the economic policies of both major political parties. Rubin’s acolytes have controlled the Obama administration’s economic strategy of saving Wall Street by betraying Main Street, and Gramm, who recently endorsed his former student at Texas A&M, Rick Perry, for president, remains the free-market-mayhem guru for Republicans. On Election Day, whoever wins, we lose.

Click here to check out Robert Scheer’s new book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.

Click here to check out Robert Scheer’s book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.



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EmileZ's avatar

By EmileZ, September 29, 2011 at 12:15 am Link to this comment

Related links:

An explosive new book that draws a searing portrait of the Obama administration’s failings, and early management of the economic crisis, has been met with sharp objections from officials within and outside of the White House. We speak with veteran journalist Ron Suskind, author of “Confidence Men: Wall Street, Washington, and the Education of a President.” He writes that U.S. Treasury Secretary Tim Geithner ignored an order from President Obama to consider dissolving the debt-ridden banking giant Citigroup as part of a reconstruction of major banks in March 2009. Suskind argues that Citigroup was one of several incidents where President Obama’s authority was “systematically undermined or hedged by his seasoned advisers.” In the book based on interviews with more than 200 people, including former and current members of the Obama administration, as well as the President himself, Suskind also says the White House is a hostile workplace for women. [includes rush transcript]

http://www.democracynow.org/2011/9/23/confidence_men
_author_ron_suskind_responds

In part two of our interview with veteran journalist Ron Suskind about his explosive new book, “Confidence Men: Wall Street, Washington, and the Education of a President,” Suskind discusses the challenges faced by President Obama and his evolution as a leader. “You see the president grappling… to try to get his arms around what is often an untenable situation,” says Suskind. “He has a team around him with long Washington experience, and long histories with one another. The president meanwhile is ramping up at mock speed on very difficult and often very complex international issues, economic issues, for which there is no recent precedent.” According to Suskind, Obama muses he has “policy wonk disease” and now aims to be more dynamic in telling the American people “who we are and where we’re going.”

http://www.democracynow.org/blog/2011/9/23/author_ron_suskind_
on_obamas_evolution_amidst_unprecedented_economic_and_international_challenges

“who we are and where we’re going”.... “policy wonk disease”....

Doesn’t sound very encouraging.

Then again, maybe everything will be all right if we just “stop grumbling”, as President Obama suggested to the Black Congressional Caucus.

Perhaps if we believe the magic will be real. It may influence the “animal spirits” of the market and lead us into a new era of prosperity.

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