It’s the bankers, stupid!
President Obama, fresh from a stinging defeat in Massachusetts, came out swinging Thursday against the banks, promising a return to the spirit of Glass-Steagall.
The rhetoric was strong but the details were a little vague. It sounds like he’s suggesting limiting the size of banks as well as their ability to gamble with taxpayer backing. You can be sure the finance lobby will fight to block whatever new initiative the president offers.
Obama’s rhetoric is a year late but does provide opportunity nonetheless. The key thing is that Obama and the Democrats’ problems put real financial reform back on the table.
The debate over breaking up the banks has been fraught with fear-mongering and propaganda: supporters of the big banks argue business won’t have the resources to make big deals. Even smart people say dumb things in the debate, as Dean Baker points out. Broken-up banks will still be huge by any standard, just not quite so capable of taking the entire economy with them when they crash.
The obstacles to reform remain the same as they have been:
1.) a financial industry with unlimited resources for the fight
2.) politicians squeamish to take on their contributors in that industry, and only too willing to let bankers squiggle out of regulation in the legislative fine print
But Obama and other Democratic leaders have felt the sharp prick of the pitchforks in their rear ends.
They know that the public is aware of their clueless response to the financial crisis, shoveling billions to the titans of finance while failing to stem rising unemployment and foreclosures.
One step Obama didn’t take this morning was to scrap his entire financial team, the engineers of his too-comfy relationship to Wall Street and timid response to the crisis that has afflicted Main Street.
Except for 80-year-old Paul Volcker, the former Fed chief who has been born again as a reformer, they should all be fired.
On Thursday, Obama insisted he wasn’t afraid of a fight with the bankers. Certainly none of his team except Volcker have shown any inclination for doing or saying anything that would upset the bankers, let alone a brawl.
The current Fed chief, Ben Bernanke, is also feeling the chill from Massachusetts. Roll Call is reporting that his confirmation for another term may be in peril, while The Hill reports that Senate Majority Harry Reid has “serious concerns” about how Bernanke, who has strong backing from Obama, plans to deal with the economy.
Now is the time to hold the president to his word. By all means contact Obama and applaud his tough speech Thursday. Contact your congressperson and senator and remind them that you’re paying attention to the reform battle and aren’t about to be fooled. Check out my open letters to Sens. Boxer and Feinstein for my bottom line on real reform.
We need to tell the president and Congress that we won’t settle for phony reform that lacks transparency or a piddling tax on banks that represents just a fraction of their revenues. We need to tell them that we won’t settle for legislation alone – we need an antitrust crackdown to break the power of the big banks.
If you need ammunition for your phone calls and emails, here’s a study that shows how the financial industry has managed to thwart meaningful reform so far: it spent $344 million lobbying Congress – just in the first three quarters of 2009!
Meanwhile, Goldman-Sachs announced record profits last year, while it doled a mere $16.2 billion for bonuses.
Time will tell whether Obama is capable of delivering the fight he promised to back up his newfound populist punch. But let’s not give the president, or Congress, any excuse to back off or get distracted. Only relentless jabs from you and others will keep them from getting cozy again with their financial industry cronies.
The question right now is not whether Obama is up for the fight. The question is: can we turn our anger and frustration into a political force?