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Tilting at Windmills

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December 14, 2009

WHITE HOUSE SIGNALS ANGER WITH WALL STREET.... The heads of Citigroup, Goldman Sachs, and 10 other big banks will stop by the White House today for what's being billed as a "serious talk." By all accounts, President Obama intends to pressure the executives on everything from increasing loan opportunities to salaries and bonuses.

The president offered a big hint on "60 Minutes" as to what he might tell the bankers. "I did not run for office to be helping out a bunch of, you know, fat cat bankers on Wall Street," Obama said. "Nothing has been more frustrating to me this year than having to salvage a financial system at great expense to taxpayers that was precipitated, that was caused in part by completely irresponsible actions on Wall Street. And I've spoken out repeatedly about this."

The president added, in describing bankers, "They don't get it. They're still puzzled why is it that people are mad at the banks. Well, let's see. You guys are drawing down ten million, twenty million dollar bonuses after America went through the worst economic year that it's gone through in decades, and you guys caused the problem. And we've got ten percent unemployment. Why do you think people might be a little frustrated?"

Also note, it's not just the president expressing these concerns. Lawrence Summers, the chief White House economic adviser, said yesterday that bankers "need to recognize that they've got obligations to the country after all that's been done for them, and there is a lot more they can do."

This morning, David Axelrod, a leading Obama aide, added that Obama will tell the executives today, "You guys were part of the problem. You helped create an economic crisis ... but now you have to be part of the solution and you have to accelerate lending to credible small businesses."

Steve Benen 10:05 AM Permalink | Trackbacks | Comments (28)

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Good luck with that. In my fever dreams, he tells them "This is why we haven't closed Guantanamo yet", because it seems nothing short of that kind of shock will get through to the Masters of the Universe.

Posted by: Paul on December 14, 2009 at 10:11 AM | PERMALINK

Nothing is going to happen. Bankers are no different than republicans - flat earthers - who me? we did nothing, not our problem, you figure it out. Arrogant assholes to the end.

Posted by: cbelldbx on December 14, 2009 at 10:11 AM | PERMALINK

Shut up and regulate the suckers. No more fake "financial products" that will cause another economic collapse.

Posted by: david in ny on December 14, 2009 at 10:13 AM | PERMALINK

I think its the President, "conservative" Democrats and Republicans that don't get it. Replace Bernanke with Elizabeth Warren or someone else who's on the side of the middle class. Reinstate Glass-Steagall. Pass legislation to immediately begin the process of ripping apart all TBTF companies and to actively regulate derivatives. And stop acting surprised that wall street cares only about making money. It's insulting to me and every other voting American. I didn't vote for hand-wringing.

Posted by: Pat on December 14, 2009 at 10:15 AM | PERMALINK

Maybe he'll send them a sternly worded letter...

Posted by: DougMN on December 14, 2009 at 10:15 AM | PERMALINK

oooohh... That's going to leave a mark.....

NOT!!!!

Posted by: Paul Dirks on December 14, 2009 at 10:17 AM | PERMALINK

I think banks "get it." I think it's Obama who doesn't "get it." Banks aren't lending to small business because small businesses are bad credit risks. Samll businesses are bad credit risks because people are not buying the goods and services of small businesses. People are not buying those goods and services because they have no money. People have no money because they have no jobs. People have no jobs because businesses aren't hiring them.

Yes, it's a circle, but making banks lend money is not the way to break it. What are businesses going to do with borrowed money that they can't pay back?

Posted by: Bill H on December 14, 2009 at 10:20 AM | PERMALINK

By all accounts, President Obama intends to pressure the executives on everything from increasing loan opportunities to salaries and bonuses.

Because bank executives are such sensitive and civic-minded people, who always cave when they're reminded of their social responsibilities. Naturally.

Posted by: Balakirev on December 14, 2009 at 10:24 AM | PERMALINK

Look, I'm a fan of O, but he's failed the nation on this subject. Nobody is buying this tough-talk bullshit. For as poorly as average Americans understand our financial system, practically everyone can figure out that Obama is as limp as a wet noodle when it comes to changing the financial sector. It's just noise at this point.

Obama's drowning, and his Democrats in Congress are allowing it to happen.

Posted by: Run Up The Score on December 14, 2009 at 10:24 AM | PERMALINK

I dunno. Without some real trust busting and legislative reform, this is really like saying, you either get your act together or I won't stop holding my breath.

Sometimes you need more than a bully-pulpit.

Posted by: leo on December 14, 2009 at 10:25 AM | PERMALINK

Banks can make more money and limit their risk by gaming the stock market, trading derivatives and fleecing credit card holders so that's what they're doing.

Posted by: Pat on December 14, 2009 at 10:26 AM | PERMALINK

If you believe this, you are also probably fooled by the old "detachable thumb" routine by an old-timer at a family gathering.

Posted by: norbizness on December 14, 2009 at 10:28 AM | PERMALINK

And Summers! I haven't heard rhetoric that rousing since the Ambassador for the Neutral Planet in Futurama uttered "all I know is my gut says maybe."

Posted by: norbizness on December 14, 2009 at 10:30 AM | PERMALINK

The multi-million dollar salaries and bonuses for the people who drove the economy to the edge of the precipice are disgusting, but also more symbolic than anything.

What's most important is the opposition of Wall Street (and their Republican puppets) to any reform whatsoever.

Before Reagan, Wall Street was a tool (instead of being run by tools). If you needed more money than you could get from a regular bank for a large project, like an interstate or a billion-dollar corporate merger, then Wall Street provided the funds. After Reagan, instead of being a means to an end, Wall Street has become and end in itself.

There is an old (and slightly racist) joke that tells how two Hindus stranded on a deserted island become millionaires by trading coconuts back and forth. That's now Wall Street, except that Wall Street doesn't trade in anything a substantial as coconuts. Even a game of Monopoly has more substance, trading fake money and little cards back and forth. All Wall Street trades is entries in computers. Our entire economy is based on a new computer game -- The World of WallStreet.

I've heard estimates that as much a $17 trillion dollars was lost is the most recent crash. Then where's the wreckage? Shouldn't we be able to point to piles of rubble and say, "That's what Wall Street did."

Those trillions of dollars vanished like a soap bubble because they never had any more substance than a soap bubble.

Once we put Wall Street in its place -- as a tool to help expand the economy, rather than being considered the entire economy -- the salaries and bonuses will take care of themselves.


Posted by: SteveT on December 14, 2009 at 10:32 AM | PERMALINK

Norbizness above......beautiful stuff!

Posted by: Little Dick on December 14, 2009 at 10:34 AM | PERMALINK

Perhaps Obama and Co could have attached a few strings to the Bank Bailout giveaway from the start? Perhaps a little accountability and auditing of what the money is used for? Just a thought.

Posted by: Bobo Teh Clown on December 14, 2009 at 10:36 AM | PERMALINK

The time has long passed when salaries should be regulated (there should limits on salaries and bonuses by law) to two or three million a year. Stock options should be included as compensation. A formula based on the salaries of the lowest 90% of workers employed by the corporation should be an equitable method of limiting compensation.

Posted by: Capatalist Pig on December 14, 2009 at 10:39 AM | PERMALINK
People are not buying those goods and services because they have no money. People have no money because they have no jobs. People have no jobs because businesses aren't hiring them ...

Businesses aren't hiring them because they have no money to invest. Businesses have no investment money because the banks won't lend it to them. You failed to complete the circle.

The circle needs money somewhere to break it. Lowering taxes anywhere other than on the lowest brackets isn't going to solve this one - the businesses have no profits to tax, the rich/middle will put the money in savings (not stocks). And giving it to the poor will be filibustered from the get go.

Giving the businesses money (i.e another stimulus) requires political will to sign off on. So the only other place to beat this, is the banks loaning the money (like we did for them).

Posted by: royalblue_tom on December 14, 2009 at 10:41 AM | PERMALINK

Your country has become, by the evil design of your Corporations, nothing more than an indentured society. In essence, what a country of self appointed ZARATHUSTRAS who are superior and expect to be served by the masses. The root of this is of course your evil capitalism that has turned your 'economy' into a giant PONZI SCHEME, a casino economy. And it's all 'aided and abetted' by the CORPORATE MEDIA WHO CREATES THE PROPAGANDA AND STORY LINES that the general stupidity of your citizens 'believes', facts not withstanding. So the 'common good' becomes reduced to the simplistic jingo of 'socialism' even as the stupidity of your citizens has no clue to what actual socialism is which is simple to in fact promote the common good in which the 'system' is equitable for all. Your country is in a death spiral because of this. The stench of your country is a disgrace to the rest of the planet.

Posted by: blue on December 14, 2009 at 10:42 AM | PERMALINK

All:

I agree with the prior poster with the comment that the banks have no incentive to lend to businesses that can't pay it back anyway. It doesn't take an economist to figure that out. Just someone, like a small business owner nowadays, who sees the realities of life on the ground.

Another reason why the banks won't lend is this is a step closer to admitting insolvency. With the mortgage crisis in full swing, they're hiding the true devastation of their balance sheets by way of allowing rent-free homeowners to stay in their pre-foreclosure homes. Not to mention an even larger problem of the commercial real estate debacle that's just beginning to unfold.

Obama can prod and bribe, but it ain't gonna happen. (And the thing that's most galling to me are the banks' lack of compunction for paying the big bonuses. Unbelievable. But I guess that's capitalism at its finest.)

Pauline

Posted by: Pauline May on December 14, 2009 at 10:44 AM | PERMALINK

well, it's a tad late to get worked up now -- the whores, er, congress has already been paid off and the legislation to reward their puppetmasters is ready to go.

Posted by: bkny on December 14, 2009 at 10:47 AM | PERMALINK

Have to wonder how much of the administration's outrage is genuine and how much is just PR to placate the rubes. The Obama economic team features a lot of folks considered to be friendly to Wall Street.

Posted by: demisod on December 14, 2009 at 11:09 AM | PERMALINK

Oh boy, more tough talk!

Meanwhile, back on the ranch...Congress voted against mortgage cramdown (again) and passed a toothless reform bill written by lobbyists.

Posted by: John S. on December 14, 2009 at 11:10 AM | PERMALINK

You want to pressure the financial institutions?

Start aggresively incorporating the word "usury" (and all of its derivations) in your speechs.

Posted by: bdop4 on December 14, 2009 at 11:20 AM | PERMALINK

Perhaps Obama and Co could have attached a few strings to the Bank Bailout giveaway from the start?
IIRC it was Pres Bush that pushed that "bailout giveaway", not Pres. Obama.

Posted by: G.Kerby on December 14, 2009 at 11:41 AM | PERMALINK

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway:

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/

Posted by: Rolling Stone on December 14, 2009 at 12:36 PM | PERMALINK

It's worth noting that Obama was a Constitutional Law professor @ the University of Chicago. Look up 'University of Chicago' and 'economics,' on Google, and you'll find references to Milton Friedman et al. Extreme capitalism, a la shock therapy.

In other words, we shouldn't be surprised that Obama's not taking the kinds of strong regulatory steps- or even weak regulatory steps- which are clearly needed.

-Z

Posted by: Zorro on December 14, 2009 at 1:28 PM | PERMALINK

How has the real estate market's fluctuations impacted your business?

Posted by: Roswell GA Homes for Sale on October 20, 2010 at 4:17 PM | PERMALINK
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