Frank Rich: Has a (Obama's) 'Katrina moment' arrived?

brentspeak

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Sat Mar-21-09 10:34 PM
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Frank Rich: Has a (Obama's) 'Katrina moment' arrived?

Edited on Sat Mar-21-09 10:43 PM by brentspeak

http://www.nytimes.com/2009/03/22/opinion/22rich.html

By FRANK RICH
Published: March 21, 2009
A CHARMING visit with Jay Leno won�t fix it. A 90 percent tax on bankers� bonuses won�t fix it. Firing Timothy Geithner won�t fix it. Unless and until Barack Obama addresses the full depth of Americans� anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: �President Obama may not realize it yet, but his Katrina moment has arrived.�

Six weeks ago I wrote in this space that the country�s surge of populist rage could devour the president�s best-laid plans, including the essential Act II of the bank rescue, if he didn�t get in front of it. The occasion then was the Tom Daschle firestorm. The White House seemed utterly blindsided by the public�s revulsion at the moneyed insiders� culture illuminated by Daschle�s post-Senate career. Yet last week�s events suggest that the administration learned nothing from that brush with disaster.

Otherwise it never would have used Lawrence Summers, the chief economic adviser, as a messenger just as the A.I.G. rage was reaching a full boil last weekend. Summers is so tone-deaf that he makes Geithner seem like Bobby Kennedy.

Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: �Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?� What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn�t worry about it.

Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers� money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Soci�t� G�n�rale and Deutsche Bank abroad...

...To get ahead of the anger, Obama must do what he has repeatedly promised but not always done: make everything about his economic policies transparent and hold every player accountable. His administration must start actually answering the questions that officials like Geithner and Summers routinely duck.

Inquiring Americans have the right to know why it took six months for us to learn (some of) what A.I.G. did with our money. We need to understand why some of that money was used to bail out foreign banks. And why Goldman, which declared that its potential losses with A.I.G. were �immaterial,� nonetheless got the largest-known A.I.G. handout of taxpayers� cash ($12.9 billion) while also receiving a TARP bailout. We need to be told why retention bonuses went to some 50 bankers who not only were in the toxic A.I.G. unit but who left despite the �retention� jackpots. We must be told why taxpayers have so little control of the bailed-out financial institutions that we now own some or most of. And where are the M.R.I.�s from those �stress tests� the Treasury Department is giving those banks?

...

...As the nation�s anger rose last week, the president took responsibility for what�s happening on his watch � more than he needed to, given the disaster he inherited. But in the credit mess, action must match words. To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and, by extension, the country to fail. With all due deference to Ponzi schemers from Madoff to A.I.G., this would be the biggest outrage of them all.