Obama and the Banksters

Oh look, the president made more remarks about the economy today, after meeting with a bunch of bank CEOs. Let's listen in!

I asked them to come to Washington today -- at the end of this difficult year for their industry, but also for the economy -- to discuss where we've been, what we expect of them going forward, and how we can work together to accelerate economic recovery. [...]

So my main message in today's meeting was very simple:  that America's banks received extraordinary assistance from American taxpayers to rebuild their industry -- and now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy. [...]

Now, no one wants banks making the kinds of risky loans that got us into this situation in the first place.  And it's true that regulators are requiring them to hold more of their capital as a hedge against the kind of problems that we saw last year.  But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again.

And I heard from these executives that they are engaging in various programs like "second look" programs, hiring more folks, raising their target goals in terms of lending -- all of which sounded positive, but we expect some results, because I'm getting too many letters from small businesses who explain that they are creditworthy and banks that they've had a long-term relationship with are still having problems giving them loans.  We think that's something that we can -- that can be fixed.  And so I urged these institutions here today to go back and take a third and fourth look about how they are operating when it comes to small business and medium-sized business lending.

We also discussed the need to pass meaningful financial reform that will protect American consumers from exploitation and American -- the American economy from another financial crisis of the kind which we just came out of.

So! No more risky loans, but a "fourth look" at the credit-unworthy. Boo to "exploitation" and "payday loans," yay for flowing credit and consumers having money. "We, we, we," all the way home, and of course the president's not here to tell private concerns how to run their business!

In the end, my interest isn't in vilifying any one person or institution or industry; it's not to dictate to them or micromanage their compensation practices to ensure that consumers and -- my job is to ensure that consumers and the larger economy are protected from risky speculation and predatory practices, that credit is flowing, that businesses can grow, and jobs are once again being created at the pace we need. [...]

Ultimately, in this country, we rise and fall together -- banks and small businesses, consumers and large corporations, and we have a shared interest in working together to ensure a lasting recovery that will benefit all of us and not just some of us.

For more unintentional definitions of the word "statism," read the whole thing.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Marc||

    In the end, my interest isn't in vilifying any one person or institution or industry

    So when you said "fat cats", you didn't actually mean anyone in particular.

    What a prevaricator.

  • ||

    I think what happened is that Obama or his wife or Rahm reads Rolling Stone and he's trying to distance himself from his pimp.

  • ||

    So let me get this right. Banks were evil because they pushed uncreditworthy people into bad loans, so evil that we had to bail them out on the public dime. Now, Obama is saying that they need to repay in kind ...by pushing more loans out to uncreditworthy people.

    As Frank Zappa might point out, this is somewhere between Mumbo Jumbo and Hokus Pokus; sort of a Mumbo Pokus.

  • ||

    Let's also acknowledge that what he is exhorting the banks to do is to engage in the moral hazard of continuing the very practice that led their sky high gains to be privatized while their losses were socialized. So Barack Obama is now the President of Moral Hazard.

  • ||

    Let's also have some knee-slapping laughs as we consider that the very Fat Cats that Obama attacks are the ones who gave him flipping great wads of cash during his campaign (2008 donations: Goldman-Sachs $994,795, Citigroup $701,290, JPMorgan $695,132, UBS AG $543,219, MorganStanley $514,881, and more). These are also the very same Fat Cats whom Obama helped in a variety of ways. I'm sure I can think of a few off the top of my head.

    Let's see, appointing Larry Summers, Tim Geithner, and re-nominating Benjamin Bernanke? Nothing about Fat Cat Bankers in that troika, no sir.

    Oh, how about having your Solicitor General defy a COURT ORDER for a FOIA on Federal Reserve workings? Nope, nothing helpful to bankers there. Oh, then there are AIG haircuts (whoops! I meant lack of haircuts).

    Then there is the slaving of the taxpayer to fund the banks, the hiring of a Citigroup cadre to help recruit other bankers into your administration at the same time as the Citigroup bailout. Yeah, nothing Fat Cat Bankster thereabouts.

    Barack, you're a fucking liar.

  • ||

    No, you're a fucking idiot.

    Obama took no money from Goldman or Morgan, etc.

    Those contributions you cite are from EMPLOYEES of those firms - which ran about 60-40 for Obama over McCain just like the demographics in New York City.

  • ||

    Yes, those are from the employees of those corporations. Ever been at work and had the boss lean on your department to contribute to a certain candidate? I've witnessed it. I didn't play ball, ended up leaving, but a lot of people play ball because they want to be on the manager's or the director's good side because they fear losing the house and the car and tv and the shit.

    As for the donations, yes, it's baldly obvious they are from the employees.

    This table lists the top donors to this candidate in the 2008 election cycle. The organizations themselves did not donate , rather the money came from the organization's PAC, its individual members or employees or owners, and those individuals' immediate families. Organization totals include subsidiaries and affiliates.

    Because of contribution limits, organizations that bundle together many individual contributions are often among the top donors to presidential candidates.

    And that's the whole point.

    Nice try with the fucking idiot thing though. It made my penis tingle for a moment.

  • ||

    OK, you're not an idiot. You merely misrepresented the truth. Obama took in $600 million in individual contributions so I doubt a 100k or so delta in I-Bank contributions over McCain means anything now.

    The BETTER question is why ZERO House Republicans voted for Bank Reform last Friday.

    Even old Ron Paul, perennially twisting the tits of the Fed for an "audit", voted against his own fucking bill.

    Talk about protecting the banksters?

    Thy name is GOP - eternal nutmunch to the bank gang.

  • ||

    "Even old Ron Paul, perennially twisting the tits of the Fed for an "audit", voted against his own fucking bill."

    Actually, the audit the Fed portion was only a small part of a larger bill, the balance of which Ron Paul would not in his judgment vote for.

    Here's a relevant quote from Paul:

    Did you consider voting for the broader bill to support your amendment?

    Paul: For some people who work in a conventional way, it would be, but not for me. People have asked me, and I say I’ll just do what I usually do. I’ll look at the whole bill, and try to make the bill as good as possible but if it’s still something I can’t endorse, then I’ll vote against final passage. But I always try to support all the amendments that I think will improve it, but I treated my amendment like I treat every other amendment.

    I think what you just did, dear shrike, was to--how did you put it? Oh yeah: "You merely misrepresented the truth."

  • ||

    Paul voted against his own "bring down the Fed" Bill in order to protect the ability of banks to hide derivatives, run roughshod over their capital ratios, and generally ignore supervisory limits set by the OCC, Fed, OTC, SEC, FDIC or whatever.

    That is precisely the reason pure Libertarianism (market fundamentalism) is bullshit.

    Even Greenspan admits it now.

    Should we send the next $700 billion bailout bill to Reason or Cato?

    100 million depositors want to know.

  • anonymous||

    Wait, can you just send us libertarians the next bailout's money instead of the bill? Starve the Wall Street beast and all that.

  • hank||

    First of all, the word "reform" in that bill is erroneous. Second, most of the GOPers in Congress are sacks of shit just like their Democratic counterparts. That doesn't mean they shouldn't be applauded for voting no on a shitty bill. Just like the 27 Dems who voted against.

  • hank||

    Yeah, employees of financial firms don't have anything to do with the firm. Most of the employess at those firms probably don't even know they work for financial firms that heavily lobby Washington. Wtf? Or, all of the money from Fannie and Freddie (employees) Obama got when in the Senate. And McCain got some too, so that nullifies and donations Obama got. Dodd, too. So there, that'll teach you a lesson. That's fucking reasonable.

  • ||

    Ummm, no, Manhatten went 85-14 for Obama, similar to the rest of NYC except Staten Island.

    http://elections.nytimes.com/2.....-york.html

    60-40 for Obama is what passes for conservative in NYC.

  • MattXIV||

    Direct contributions from corporations are illegal, so by your standard no federal politician takes any money from any corporation. All the contributions either need to be direct from employees or from shareholders or employees via a PAC.

  • Ted S.||

    Do you mean exhorting, or extorting? :-|

  • Johnny Longtorso||

    So when you said "fat cats", you didn't actually mean anyone in particular.

    He meant to say "wreckers".

  • ||

    I thought it was "kulaks". Then again, his administration tends to have a hard time with Russian.

  • ||

    It's pretty clear at this point that Obama isn't concerned with consistency, integrity, or the good of the country. He's concerned with making any unpopular thing that can't be blamed on someone else disappear, at least until he's out of office. And if the banks have to be pushed into making bad loans and bailed out again, so be it.

  • ||

    See, the trouble with Obama is that he's never actually *governed* he's campaigned a lot, and won lots of elections, but not actually done anything besides winning elections for their own sake.

    That's why he's an empty vessel. Even mroe of a figurehead than bush was. He was a BRAND the Democrats put on their machine so they could do what they wanted once he was in office. Obama exists solely so that the Democratic party can win elections. That's all. His sole mission is to stay popular and win elections on behalf of the party.

  • ||

    Obama has eleven months of "governing" in - if you are expansive enough in your definition to count the Presidency.

    What has he done?

    Cut taxes ($288 billion), stabilized the markets (S&P up 20% after the 8 years of Bush-fucking), put Jones and Gates in charge of security, restored the FOIA, put stem cells back on a fast track, ended torture, etc.

    Don't let me piss on your gumball machine though. I bet you actually liked Bush the Incompetent.

  • ||

    I could take issue with you list of successes, but that would detract from the main point.

    Obana "did" none of those things. Especially on the tax cuts and the bailouts, he let others set the agenda. He let Nancy Pelosi and Harry Reid run the stimulus, and he's letting the Treasury (Geithner/Summers/Benanke) run the bailouts.
    He's also leaving the Congressional Democrats to fester in their own health care morass.

    Guantanamo is not closed. And won't be by January.

    On Afghanistan, he's rubber stamping a compromise between the generals and the pollsters.

    Gates is a holdover from Bush.

    You honestly see real leadership in any of this shit?
    Ya know, leadership, pretty much by definition means bucking either the polls or internal party politics. He's not doing either.

  • ||

    Health care IS a morass. Other than that you are wrong on all counts.

    Bucking? Do you know how mad the left is at Obama? They are livid for him escalating Afghanistan, not leading on "single-payer" HCR, renominating the brilliant Bernanke (its like Bush knew he was Hoover II), not pinning Congress down on energy reform, etc.

    Obama is a centrist without the Big Gov inclinations of Bush the Lesser.

    Let the Medicare Pharma Welfare Unpaid Entitlement Bill of 2003 be a reminder of how Big Gov the GOP really is.

  • ||

    Do you know how mad the left is at Obama? They are livid for him escalating Afghanistan, not leading on "single-payer" HCR, renominating the brilliant Bernanke (its like Bush knew he was Hoover II), not pinning Congress down on energy reform, etc.

    So, you're saying that Obama's amazing awesome leadership skill lies in his not leading on all the issues that his party base cares about, and doing lots of safe, uncontroversial centrist things.

    I see. You've SO proven me wrong.

  • MattXIV||

    And it matters politically not one bit that they are, because they're a) not very numerous and b) will reliably line up behind him in '12 anyway. It's politically expedient for him to ignore them.

    The Afghanistan non-plan is a perfect example of his governance - an incoherent "compromise" that doesn't work as either a counterinsurgency plan or a withdrawl plan, but doesn't contain any commitments strong enough to rile anybody up.

  • ||

    my job is to ensure that consumers and the larger economy are protected from risky speculation and predatory practices, that credit is flowing, that businesses can grow, and jobs are once again being created at the pace we need.

    I'd like to file a FOIA request to get a copy of Obama's Article II of the Constitution. My copy seems to have some redactions.

  • ||

    Threadmaster.

  • Neu Mejican||

    =/;^)

  • ||

    His approval rating has apparently reached a new low. Time for a major speech, perhaps? Or was that supposed to be it?

  • Marc||

    The speeches make it worse. It gets harder and harder to ignore the fact that he speaks and stands for everything and nothing. He is a thousand-faced liar.

  • ||

    Clearly the banks 1st priority has been to repay TARP money. This pushed new lending down the list, as it would make meeting "stress tests" harder. Surely Congress & the President understood this would happen when they started regulating bonuses of companies that owed the government TARP money? ... Oh ... they didn't understand this! Ah.

  • ||

    Another aspect is the looming carnage in early 2010. Amendments that require banks to be much more forthcoming about their losses go into effect on 1 January 2010. As the American Bar Association puts it:

    Generally, the approved standards will be effective as of the beginning of 2010 and will apply to existing entities, including existing qualifying special purpose entities. However, the amendments on how to account for transfers of financial assets will apply prospectively to transfers occurring on or after the effective date.

    The problem being of course that most of the big banks have left much of their toxicity off their balance sheets, instead sitting on the money trying to ride it out.

    As the FED's own Senior Loan Survey of November demonstrates, less than 20 percent of the big banks have tightened loan standards, but half of them report a steep drop in demand for loans from them. There just aren't that many creditworthy businesses or people who are looking for loans.

    So between all of that and the whole 'pay czar' thing you bring up, yeah I wouldn't be loaning much either, and I'd be sitting on cash as much as I could to weather the near term. Risk is high.

  • ||

    Now, no one wants banks making the kinds of risky loans that got us into this situation in the first place. And it's true that regulators are requiring them to hold more of their capital as a hedge against the kind of problems that we saw last year. But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again.

    In other words, lend more money (to stimulate the economy), and lend less money (so you don't get overleveraged) at the SAME TIME.

  • ||

    Nah, they just have to make "smarter" loans. What do those look like? Dunno. But the bankers will figure it out.

  • ||

    Lend more money to the right people, and less money to the wrong ones.

  • ||

    There - see, Obama has it all figured out. He's soooo smart.

  • ||

    I'm getting too many letters from small businesses who explain that they are creditworthy and banks that they've had a long-term relationship with are still having problems giving them loans.

    "giving them loans"

    "giving them loans"

    This is the root of the problem; a basic lack of understanding of how businesses work.

    The purpose of "the banks" is not to GIVE anybody a loan; it is to provide loans which will be repaid with interest.

    The purpose of "employers" is not to manufacture jobs; it is to (profitably) provide goods and services to consumers at a price they will willingly pay.

  • MJ||

    And when the banks fail to deliver on these contradictory government directives it will be due to the banker's greed and stupidity, not the government's demands.

    I am not what bother's me more, that Obama think he can blame tight credit on the bankers after spending a year telling them their cupidity caused the recession and they must be more risk adverse, or that Obama might not actually understand that loose credit is inherently risky.

  • ||

    The banks' lack of lending is currently the only thing staving off the inflation in the currency supply that the government has been engaged in with it's bailout bonanza, and the subsequient higher interest rates the Fed will have to charge to fight the inflation.

    As banks begin lending again, inflation is going to be felt through higher prices on everything. Combined with higher interest rates, the still fragile economic recovery is doomed.

  • Abdul||

    If Bush's biggest fault was that he thought America could shoot its way out of any problem, Obama's biggest fault is that he thinks we can spend our way out.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement