O: Now that I’ve propped up Big Banks & made ‘em bigger, we should really do something about this
President Obama couldn’t make it up to New York City last week for the 9/11 anniversary, but he’s up there today to mark the collapse of Lehman Brothers with a speech on financial reform and a new push for more regulatory agencies and government authority to be handed to botched bailout architects and enablers like Tim Geithner.
Shorter Obama: Now that I’ve propped up Big Banks with billions upon billions of taxpayer dollars & made ‘em bigger than ever, we should really do something about this!
And trademark finger-wagging: Stop engaging in all that “reckless behavior” that we rewarded with massive, publicly-funded rescue plans that simply provide greater incentives for you to engage in more reckless behavior.
Here’s Joseph Stiglitz’s diagnosis, which can be summed up in one word: FAIL.
Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.
“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”
Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.”
A year after the demise of Lehman forced the Treasury Department to spend billions to shore up the financial system, Bank of America Corp.’s assets have grown and Citigroup Inc. remains intact. In the U.K., Lloyds Banking Group Plc, 43 percent owned by the government, has taken over the activities of HBOS Plc, and in France BNP Paribas SA now owns the Belgian and Luxembourg banking assets of insurer Fortis.
While Obama wants to name some banks as “systemically important” and subject them to stricter oversight, his plan wouldn’t force them to shrink or simplify their structure.
And yes, even the NYTimes is getting exasperated:
…while Mr. Obama has offered two basic ideas to address it, his economic team has yet to offer anything close to a concrete plan.
The nation’s four biggest banks now control 60 percent of all bank deposits in the country, higher than two years ago. The handful of banking winners, like JPMorgan Chase and Wells Fargo, have acquired giant failing competitors. The ranks of bulge-bracket Wall Street investment banks have been cut back by the loss of Lehman Brothers and Bear Stearns. The remaining survivors, like Goldman Sachs and Morgan Stanley, have been recruiting top producers from their crippled rivals.
Mr. Obama’s regulatory overhaul plan would tackle the problem in two ways.
The first is to have Congress give the government stronger powers to shut down big insolvent institutions in an orderly way — what policy wonks call “resolution authority.” The Federal Deposit Insurance Corporation already has the power to seize troubled banks, and it has taken over more than 145 banks in the last year. Normally, the F.D.I.C. arranges to sell the bad bank’s assets to a healthier institution and absorbs the losses that are left, after paying off customers’ insured deposits.
Mr. Obama’s plan would expand the government’s power to cover bank holding companies as well as non-bank financial institutions — investment banks, insurance companies, industrial loan companies and possibly even private equity firms.
But Mr. Obama would do well to put some meat on the bones of that plan. When would the government decide to intervene, as opposed to letting the normal bankruptcy process unfold? Since “resolutions” always cost money, how would the program be financed? (Banks currently pay insurance premiums to the F.D.I.C.’s insurance fund. Would Met Life pay insurance premiums toa federal agency in advance?)
Obama’s paragons of financial oversight, Grabby Hands Barney Frank and corruptocrat Chris Dodd, can’t wait to get started.
***
Obama said, “I want everybody to hear my words.” Even the NYTimes notes that his words did not include any actual policy proposals.
***
From the Pen notes Robert Gibbs’ odd choice of words in “celebrating” the financial meltdown.
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You’re in good hands with the all State people!
That would be detrimental to the “Fight Obesity” initiative.
I have been wondering about something that seems related to Osama Obama’s shameless power grab of the financial system:
In each story about the Feds closing a bank (which presumably happens the day before the story is published) it is invariably announced that some other bank or investment group has acquired assets of the failed bank.
How are these takeovers arranged so quickly? Why is there no open bidding process. Is the government rewarding its pals by letting them snatch up the assets of the loser banks?
I’m afraid the last question is rhetorical.
If there’s someone hip to the ways of this business, I’d love to know how it works. I have suspicions, but prefer answers.
Obama: “You say that, like it’s a bad thing.”
If only he can find a way to prop up big boobs, perhaps he could pay off the debt!
Hey! I thought you were staying away from the “bodice ripping” rhetoric?!
This is an after thought for BO. He wants ObamaCare, Cap and Trade, and other social justice fixes. His agenda does not fit the needs of America. Who knew?
His entire administration is filled with big boobs he’s propping up. Where else could they find such high paying jobs?
He is so far over his head, you will need a submarine to retrieve him.
If Obama wrote a book, “How to Make America Better,” it would consist on one page that read, “Let the government come in and solve the problem.”
My dog shows more creativity with her play toys than Obama does in addressing issues related to finance and the economy.
That is in fact the right choice of words — from the point of view of this Administration. Recall the mantra about letting no crisis go to waste? It was a crisis that happened and the current administration enabled by the boneheads of the prior administration made good use of it. Now the Obaman is looking forward to making even better use of the next one. Celebrate indeed.
OT:
On Topic:
All part of the national socialist agenda…
another power grab of another profitable enterprise in the u.s. they tried to take the banking industry, which rebelled and paid them back, so now they will regulate them into subservience. then they grabbed 2/3 of the american auto industry. then they go to grab the energy industry. now they seek to grab the healthcare industry. they are making noise of taxing big hamburger, big booze, big soda, and big frenchfries. they already owned big labor and big fairies.
Short version is Obama’s backers caused this and the housing market crash to get him elected.
Slightly OT,
I was in a meeting at a law firm whose Conference room overlooks the North Lawn of the White House. I got to see Marine One take off with the Prez, presumably up to NYC for this speech. Pretty cool.
And on the Metro, I met a very nice couple who were here over the weekend for the protests and needed help getting to Union Station. I made sure to send them in the opposite direction. Heh. (just kidding, if that wasn’t obvious.) They were from Nashville area. I also saw two very crunchy granola looking couples who also had protest buttons on. I did not think Birkenstocks and Tea Partiers went together.
It’s never been about the economy or health care – it’s only about power and control.
I heard part of Obambi’s most recent “major” speech. He’s averaging about one a day now.
Here is my summary of what he said:
Obambi: I, I, I, I, me, me me, I, I, me, me, me, me, I, I, me, I, Me, I, I, I, me, me, I, me, I.
Gotta hand it to MM here. Great post. All true.
Who knew??
Like a lot of my friends, I never expected anything at this day and age to be this much of a mess. Like a lot of other people, both hands point at both parties for this. Having plans, after retirement, to just flyfish the Madison till I croak went up in smoke. Everyone is scared and uncertain. my wife still has her berkies after 30 years lol.
(choke! cough! cough!) Thanks a lot RSS, I just swallowed my last piece of gum!
er, a comfortable way to prop up big boobs.
If/when the GOP takes back the Congress. couldn’t we just go anti-trust on these banks and break them up -into “Non Monopolies”? Worth a shot if we get a chance.
Yes; because, like Axelrod, I really care what you think.
ChicagoRobb,
It’s a great point, but there is an intrinsic issue here: Republicans are *rarely* anti-trust. Only TR busted trusts. Republicans are famous for being in bed with big business, and rightly so.
Demoncrats, otoh, are famous for being in bed with big business AND big labor, then lying about it – even while they try to take it all over.
See the problems here?
Our small town start-up bank had TARP $$$ forced upon them (to hear its president tell it.) A small state bank where a daughter lives – 600 miles away – also was targeted and accepted TARP $$$. The stockholders are losing money and clout to the government. This problem is not limited to big banks. They were just the tip of the iceberg.
How many times do you have to be told that it’s not just Republicans who are concerned about the on-going power grabs by President Obama and his cronies? At least you don’t accuse us of racism in opposing President Obama’s policies like most of the other leftists.
ECS
Obama’s solution boils down to this: banks are no longer too big to fail even though they are bigger than before the Lehman failure. The new rules he is proposing will create a resolution trust facility to isolate any business segments that may get in trouble inf the future (think wasted $$tax money$$ again). Meanwhile the new big banks will be regulated much more closely (wink,wink).
A simple statement declaring that the major provisions of Glass-Steagall (to once again keep investment banks separate from commercial banks separate from insurance companies) will be re-instated and that the Sherman Ant-Trust Act would be enforced would have sent the right signal to investors. Now the problem is worse than ever.
Conclusion? The biggest rottenest bankers win again.
I never said it was JUST Republicans that oppose the health care bill, but lets be honest…the ones that care enough to spend a lovely weekend flying to DC to protest it probably are.
Racist.
In a nutshell, I have no clue what the problem in, but the Government can make it worse than try to solve it.
“The nation’s four biggest banks now control 60 percent of all bank deposits in the country…”
Cicerokid is no economist, but that cannot possibly be good.
Repeat after me: enact the reforms first and only produce bailout money in conjunction with policing the crooks. The relationships between Wall Street, banking and the government is on the level of incest. Arrrgh!
What lessons have we learned from history?
If Chauncey were president in 1941 we wouldn’t have declared war on the Japanese. Instead, we would have moved all of our remaining ships – including the ones in the Atlantic – to Pearl Harbor. We would have then declared April 1, 1942 as “community service day” and had our military painting murals at Community Organizer locations all over Hawaii.
If Chauncey were president in 2009 he’d start printing money, then flush huge quantities of bonds into the open market, increasing our deficit by approximately 800% in one year. Once that was started, he’d start a trade war with our largest creditor, China.
What’s that? Gadzooks!
Never mind… go back to your soup. You don’t want to know.
Spacey is this chapter two in your new Harlequin book?
I would dispute this.
I’ve met plenty of intelligent Democrats in my life.
Why exactly they vote for a-holes like Obama I still haven’t figured out, but that’s another story.
It’s not hard at all to see the foolishness in what Obama and the Donks are trying to do. America is right to stand in their way.
RWR
http://www.rightwingrocker.com
We will never see all the (OUR) money that has been given out to the big crooks – I ment banks. Can I write off the loss on my income tax?