Obama's False Financial Reform
By William Greider
June 19, 2009

The most disturbing thing about Barack Obama's call for financial reform was the way in which the president falsified our predicament. He tried to make it sound as though everyone was implicated in the financial breakdown and therefore no one was really to blame. "A culture of irresponsibility took root from Wall Street to Washington to Main Street," Obama explained. "And a regulatory system basically crafted in the wake of a 20th century economic crisis--the Great Depression--was overwhelmed by the speed, scope and sophistication of a 21st century global economy."

That is not what happened, to put it charitably. Unlike some other presidents, Obama is much too intelligent not to know this.

The regulatory system was not overwhelmed

by historic forces. It was systematically

gutted and dismantled by the government

in Washington at the behest of the

banking interests. If Obama wants

details, he can consult his economic

advisors--Summers-Geithner--who

participated directly as accomplices in

unwinding the prudential rules and

regulations. Cheers were led by the

Federal Reserve with heavy lifting by both

political parties.

(This is your government, the very government that has no concern for the people who voted it in power)

The president's benign version of events reminds me of what compliant politicians and opinion leaders said after the war in Iraq they had endorsed turned disastrous. "Hey, we were all fooled." If Obama were to tell the truth now about what went wrong in the financial system, he would face a far larger political problem trying to clean up the mess. Instead, he has opted for smooth talk and some fuzzy reforms that effectively evade the nasty complexities of our situation. He might get away with this in the short run. Congress doesn't much want to face the music either. But Obama's so-called reform is literally "kicking the can down the road," as he likes to say about other problems. In the long run, it will haunt the country because it fails to confront the true nature of the disorders.

Giving more power to the Federal Reserve to be the uber-regulator of banking and finance is a terrible idea (I examine the dangers in a forthcoming Nation article). Asking the cloistered central bank to resolve all the explosive questions about the over-reaching power of financial institutions is like throwing the problem into a black box and closing the lid, so people will be unable to see what happens next. That is the idea, after all, the reason Wall Street's leading firms first proposed the Fed as super-cop, then sold it to George W. Bush and now Barack Obama. Give the mess to the Wizard of Oz, the guy behind the curtain. He can do miracles with money, but don't watch too closely. This constitutes the high politics of evasion. (learn more at )

Wall Street's False Armistice Comment

By William Greider
June 10, 2009

The best names in Wall Street banking have announced victory. Their crisis is over, back to business as usual. So why isn't the Obama White House celebrating this good news? Because this may not be a lasting peace for the president and his lieutenants. They are left standing in the mudhole of financial ruin, still surrounded by the failing economy and gradually losing their control over events. The leading bankers worked out a rare deal for themselves that essentially says to the government in Washington "heads we win, tails you lose."
If Jamie Dimon of JPMorgan Chase and Lloyd Blankfein of Goldman Sachs turn out to be correct about the financial crisis, their institutions emerge unscathed and restored to their old dominance over the US economy. Minus a few old rivals who went bust.
If the bankers are wrong, Barack Obama will be the big loser--compelled to rescue them again with still more public money. The big dogs of banking know this, so does the president. That's why he didn't throw his hat in the air when ten of the largest banks were allowed to pay back the emergency aid they received from the feds, some $68 billion. The financiers could thus declare themselves free and clear of the heavy hand of government meddling. Another triumph of free-market capitalism. A brilliant success for Goldman Sachs socialism. Barack Obama is holding the bag for what happens next.

( learn more at )