Washington Post - The Money-Changers By Harold Meyerson
Riaz K Tayob
As Barack Obama looks back to Franklin Roosevelt's first inaugural
address -- the only other such address that came smack in the middle of
an economic meltdown -- I hope he pays special heed to Roosevelt's words
on America's bankers, who then as now had plunged the nation into an
economic abyss.
"The money-changers have fled from their high seats in the temple of our
civilization," Roosevelt proclaimed. "We may now restore that temple to
ancient truths."
The quote, of course, is an allusion to Matthew's story of Jesus driving
the money-changers from the temple. But "money-changing" is also a
pretty fair description of what Wall Street has been about for the past
several decades. As the real income of Americans stagnated and their
debt mounted, the wizards of Wall Street grew rich by collecting
commissions on derivatives of derivatives of derivatives. By 2007, when
Wall Street's profits amounted to an astonishing 40 percent of all
American profits, the business of American finance was no longer
American business -- providing loans for domestic production,
technological innovation, that sort of thing -- but swapping bets and
hedges on bets and hedges, all for hefty commissions.
Save for devising more ways for Americans to go into debt, Wall Street
had basically decoupled itself from the economy in which Americans live
and work. While the nattering nitwits of CNBC hailed the stock market
increases of the first seven years of George W. Bush's presidency as
evidence that the U.S. economy had never done better, every other
economic index made clear that the economy was in dismal shape. As Neil
Irwin and Dan Eggen documented in Monday's Post, the rate of job
creation and GDP growth during Bush's tenure is the lowest of any
president of the post-World War II period. Somehow, our financial
geniuses managed to miss this and built a vast financial edifice on the
backs of consumers who eventually could consume no more.
Yet even after their recklessness propelled their nation into an
economic crisis, America's bankers remain the coddled children of
Bush-Paulson economic policy and might just remain so under the Obama
administration. Last Friday, the panel that Congress appointed to
oversee the Treasury's Troubled Assets Relief Program (TARP), which
administers the $350 billion bailout to banks, reported that the
Treasury has not monitored what the banks have done with the funds they
received and that despite the language in the bailout legislation "to
maximize assistance for homeowners" none of the bailout has been put to
that purpose.
Indeed, if the Treasury had set out to design a system to demonstrate
once and for all that trickle-down economics doesn't work, it could not
have done better than TARP. Treasury Secretary Henry Paulson has thrown
money at the banks, which resolutely refuse to lend it to businesses and
homeowners, no matter how creditworthy they may be.
That's why a bill that Barney Frank is promoting in the House, which
would direct banks that choose to take bailout funds to start lending to
creditworthy borrowers and designate no less than $40 billion for
mortgage relief, is necessary if Congress is to authorize the Treasury
to spend another $350 billion on TARP. Over in the Senate, the Democrats
seem inclined to think that the need for such legislation is obviated by
President-elect Obama's promise to administer the TARP in the ways that
Frank's bill would mandate.
If Obama's appointees inspired sufficient trust that they would be
willing to take on the banks, such legislation would be unnecessary.
Unfortunately, they don't.
Obama's appointee to head the Securities and Exchange Commission, Mary
Schapiro, led the finance industry's own regulatory body, which,
unsurprisingly, did nothing to rein in Wall Street's speculative orgy.
Obama's appointee to head the Commodity Futures Trading Commission, Gary
Gensler, drafted the legislation in 2000 that exempted derivatives,
including credit-default swaps, from regulation.
These appointments are notable in the ways they deviate from Obama's
other appointments. The people he appointed, say, to environmental
positions have clear records of championing the environment. His CIA
pick, Leon Panetta, has spoken forcefully against the agency's use of
torture. But to regulate banks, Obama has chosen people who have sided
with banks against the public interest. They may be exemplary public
servants once in office, but for now, they need to be viewed with the
same wariness we'd extend to environmental appointees who voted against
stricter fuel-economy standards or intelligence appointees who
championed torture. That's why Frank's bill must be enacted.
"The rulers of the exchange of mankind's goods," FDR said in his
inaugural address, "have failed, through their own stubbornness and
their own incompetence, have admitted their failure and abdicated."
Today, those rulers' failures are no less obvious, but far from
abdicating, they're receiving our tax dollars and doing nothing with
them. It's time, Mr. President-elect, to hurl them from the temple. ©
2009 The Washington Post Company
This email was cleaned by emailStripper, available for free from
http://www.papercut.biz/emailStripper.htm