How and why President Obama and Congress caved in to Wall Street protests and demands.

[Better Believe It]

Out of Lehman's Ashes Wall Street Gets Most of What It Wants
By Christine Harper
December 27, 2010

The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery.

Wall Street’s army of lobbyists and its history of contributions to politicians weren’t the only keys to success, lawmakers, academics and industry executives said. The financial system’s complexity gave bankers an advantage in controlling the narrative and dismissing the ideas of would-be reformers as infeasible or dangerous. A revolving door between government and banking offices contributed to a mind-set that what’s good for Wall Street is good for Main Street.

While Obama vowed to change the system, he filled his economic team with people who helped create it.

Timothy F. Geithner, 49, who had been responsible for overseeing banks including Citigroup while president of the Federal Reserve Bank of New York, became Treasury secretary and named a former Goldman Sachs lobbyist as his chief of staff. Lawrence H. Summers, 56, who is stepping down as Obama’s National Economic Council director, opposed derivatives regulation and supported the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial and investment banking, when he served as deputy Treasury secretary and Treasury secretary in President Bill Clinton’s administration.

“It was very clear by February 2009 that the banks were going to get a free pass,” said Simon Johnson, a former chief economist for the International Monetary Fund who is now a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “You could see from the hiring of Tim Geithner and from the messages that he and his team were putting out that this was going to go very badly.”

Read the full article on exactly how Wall Street blocked effective government regulation of its operations at:

http://www.bloomberg.com/news/2010-12-28/out-of-lehman-s-ashes-wall-street-gets-what-it-wants-as-government-obliges.html

[Better Believe It]

1. In Money-Changers We Trust

In Money-Changers We Trust
By Robert Scheer
December 28, 2010

The failure to provide serious regulation of the financial industry to avoid future downturns is documented in devastating detail in that Dec. 28 Bloomberg report, written by Christine Harper: “The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives.”

The reason for that failure is obvious from the president’s choice of advisers featuring Rubin acolytes from the Clinton years. Harper writes: “While Obama vowed to change the system, he filled his economic team with people who helped create it,” referring to, among others, Timothy F. Geithner, who had gone from the Clinton Treasury Department to head the New York Fed, where he presided over the salvaging of Citigroup and AIG. As Obama’s treasury secretary he was quick to appoint a Goldman Sachs lobbyist as his chief of staff. Geithner’s subservience to Wall Street was reinforced by White House top economic adviser Lawrence Summers, Rubin’s deputy and then replacement in the Clinton administration who pushed through the repeal of Glass-Steagall and fought against the regulation of derivatives.

And with the decisive assistance from both a Republican and Democratic president, all has worked out just as planned for the banks. Harper reports: “The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc., and Morgan Stanley, according to data compiled by Bloomberg.”

It’s all wonderfully bipartisan. Recently it was announced that Carlos Gutierrez, commerce secretary under George W. Bush, had been named to a high position at Citigroup. For President Obama, there’s no cause for worry about the loss of indispensable talent from his administration. Orszag’s replacement as head of the Office of Management and Budget, Jacob J. Lew, was both a member of Rubin’s Hamilton Project and a former Citigroup executive—thus ensuring that government of the banks, by the banks, for the banks shall not perish from the Earth.

Read the full article at:

http://www.truthdig.com/report/item/in_money-changers_we_trust_20101228/

[xchrom]

2. recommend

[FiveGoodMen]

3. Huh. It's OUR fault!!!

Dorgan, 68, who offered an amendment to the Dodd-Frank bill that would have banned such swaps and who wrote a 1994 article for Washington Monthly warning about the dangers posed by over-the-counter derivatives, said supporters in Congress backed down because they didn’t get pressure from their constituents.

We didn't make them do it.

FUCK!

(Just in case it wasn't obvious... :sarcasm:)

[Better Believe It]

4. How does one build a mass movement demanding regulation of over-the-counter derivatives?

I suppose a slogan that would have easily won mass support could have been "ban over-the-counter derivative sales now!"

Catchy.

And does Senator Dorgan believe the Obama admininstration would have welcomed such activities by the "professional left"?

They just needed a little push to take on Wall Street. Right!

[earthside]

5. Really ... our fault?

Let's see, I have one vote and maybe a $50 contribution to make to a U.S. Senate candidate.

Goldman Sachs has hundreds of thousands or millions of dollars available for contributions and a compliant mainstream media with which to persuade folks how to vote.

It is not 'our' fault for not making Congresspersons do what they are supposed to do -- it is our rotten, greedy, corrupt plutocracy that is calling the shots.

And that is the plain, simple truth.

And that is also why there will be another crash and another bailout and the middle class will decline into a low-wage peasant class within a generation.

[FiveGoodMen]

6. I agree with you.

I've added the sarcasm tag to my post since I can see where it might be misconstrued.

[sendero]

7. Something like 99% of contacts.

... to congress opposed the main bailouts and they did it anyway. The idea that they give a crap what we think or want is ludicrous.

[FiveGoodMen]

8. Agreed. We really DO need to make them do the right thing.

But we can't.