Arianna Huffington: Why Obama Won't Be Able to Reform Wall Street

[seafan]

And, sadly, she is right.


Why Obama Won't Be Able to Reform Wall Street

Arianna Huffington
September 14, 2009 06:05 PM

Listening to President Obama's heartfelt, well-intentioned, but ultimately naïve speech on financial reform today, my mind kept flashing on a story I heard the last time Washington, in the wake of the Enron scandal, promised to reform Wall Street.
The story came from a friend who took a family trip on a cruise ship. Her 10-year-old son kept pestering the crew, begging for a chance to drive the massive ocean liner. The captain finally invited the family up to the bridge, whereupon the boy grabbed hold of the wheel and began vigorously turning it. My friend panicked -- until the captain leaned over and told her not to worry, that the ship was on autopilot, and that her son's maneuvers would have no effect.

And that's the way it is with our leaders. They stand on the bridge making theatrical gestures they claim will steer us in a new direction while, down in the control room, the autopilot, programmed by politicians in the pocket of special interests, continues to guide the ship of state along its predetermined course.
Standing on the deck at historic Federal Hall, the president said all the right things, eloquently pointing out how American taxpayers had "shouldered the burden of the bailout" and are "still bearing the burden of the fallout -- in lost jobs, lost homes, and lost opportunities."

And I don't dispute for a minute that his heart is in the right place, and that he means it when he says "the old ways that led to this crisis cannot stand" and touts "the need for change and change now."
But we've been hearing similarly great sentiments for months now -- and they've had the same impact as my friend's ten year-old yanking on the cruise ship wheel. None. President Obama won't be able to change the course our financial system is on unless he goes down into the boiler room and disengages the autopilot -- which means taking on the bankers and their hordes of lobbyists who continue to dictate policy in DC.

To do that, the president will have to do more than deliver great speeches. He'll need to stand firm when the lobbyists, working behind the scenes, work to gut real reform, leaving only the appearance of reform in its place.
This is exactly what he failed to do when the banking lobbying killed cramdown legislation back in April.
But instead of telling the Wall Street power players watching him today that he was going to insist on making cramdown a part of his financial reform package, he tried to appeal to their better angels, reminding them that they didn't have to wait for Congress to pass new laws... they could just start acting better on their own.

It was shockingly naïve. Wall Street has been spending hundreds of millions of dollars, doing everything in its power to kill things like cramdown legislation, derivatives regulation, and the proposed Consumer Financial Protection Agency, and the president is asking them to be nicer people. That's like tossing a wounded seal into the middle of a school of Great White sharks and hoping the beasts will nurse it back to health.

.....

About the only thing left in the arsenal to get the attention of these corporate predators is a nationwide work strike.

[Deja Q]

1. Why?

People aren't buying anything, so Bushie's government (continued by Obama too) handed out lots of taxpayer money to the same folks.

A nationwide strike? Piffle! They'll just get more money, at our* expense, again.


* except for Rush Limbaugh, whose liposuction took his brains out too.

[waiting for hope]

2. With cabinet appointments such as Geithner -

Wall Street's BFF, how can anyone trust the process of reform not to be tainted?

[msongs]

3. corrupt businesses must be allowed to fail nt

[Telly Savalas]

4. That's right. Our leaders our completely impotent. Nothing can be done.

We're totally fucking doomed.

However, despite the fact that everyone is completely helpless to do anything about it, it is very important for us to read every word Ariana Huffington has to say about it.

[closeupready]

5. Are we reading the same article where she advises him to take on the banks and their lobbyists?

Far cry from 'we're doomed' - that's why I ask, can you please tell us what you were reading?

[seafan]

6. 'Lehman’s failure may mark a victory ..of the gov't interventionists over laissez-faire capitalists'

In the current issue of the New Yorker, article by James B. Stewart, September 14, 2009


Eight Days That Shook the World (subscription required)


Abstract of the article:

In the current issue of the magazine, James B. Stewart gives a behind-the-scenes account of “the most important week in American financial history since the Great Depression”—the eight days in September, 2008, when the financial system, and the world economy, nearly came to a stop. Stewart interviewed Federal Reserve Chairman Ben Bernanke, then New York Fed President Timothy Geithner, then Secretary of the Treasury Hank Paulson, and many others involved.

Stewart reported that the Federal Reserve lent Lehman Brothers money after it went under (government officials said they didn’t have the authority to save the firm); a still-simmering dispute between British and American authorities about why Lehman fell; Hank Paulson’s discovery that A.I.G. was in trouble three days before the Federal Reserve&8217; bailout; the shotgun merger between Bank of America and Merrill Lynch; and Paulson’s decision to ask Congress for seven hundred billion dollars—a somewhat arbitrary number that he came up because “it was big enough to make a difference.”

Officials were aware of the populist rage against Wall Street, Stewart notes, but felt they had no choice but to step in:

Geithner told me, “It seems unjust. But look what happened to the global economy after Lehman failed. Unemployment in the U.S. went to 9.5 per cent. It’s not Wall Street that suffers when you ‘teach people a lesson.’ The tragedy of financial populism is that you do terrible things to innocent people.”

Barney Frank used the analogy of de-Baathification, pointing out that U.S. efforts to purge Iraq of supporters of Saddam Hussein were a disaster. “You can’t go out and shoot the bankers,” he said. “You can’t have an economy without a functioning credit system. People are angry. They’re furious. But you have no option but to live with these people.”

More broadly, the events of that week are likely to redefine the debate over the role of markets in a democracy, and even the nature of capitalism. At least since the Reagan revolution of the early nineteen-eighties, free-market ideology has been ascendant, with even Democratic Administrations following its precepts of market discipline, limited regulation, and unfettered rewards. George W. Bush was only its latest exponent, governing on a platform of economic growth and lower taxes. Yet it was Bush, and his Republican appointees Paulson and Bernanke, who orchestrated the virtual nationalization of the U.S. financial system. Although a vocal minority continues to argue that the system should have been left to the forces of creative destruction, the overwhelming consensus is that free-market principles failed to address a global financial panic. In an intellectual debate that has been going on since the Depression, Lehman’s failure may mark a victory of John Maynard Keynes over Adam Smith—the government interventionists over laissez-faire capitalists.

These people will neither relinquish their power willingly, nor any time soon, for changing the consensus will require considerable time, although we may be seeing the beginnings.


What we need now is courage.

[undeterred]

7. So why didn't Arianna run for president?

She seems to know everyone and everything.

[closeupready]

8. She's not eligible.

But she's certainly smart enough.

[Cleita]

10. She ran for Governor of California and lost to Schwarzenegger. n/t

[Nikki Stone1]

9. Obama's speech on financial reform

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6549323

[Mari333]

11. shes right. appealing to their better selves wont work

they need to be grabbed by the testes and twisted. lobbyists, special interests, and corrupt politicians. Maybe Obama is too nice. stop being so nice. These guys are gangsters. treat them as such.