January 21, 2010

Obama - "Here's an idea. Since Brown won in Mass. let's destroy Wall Street"

The actual story is that today’s proposal is totally new, far more radical than anything Obama and his top officials, mainly chief economic adviser Larry Summers and Treasury Secretary Tim Geithner, have proposed in the past. Indeed, they’ve been actively avoiding it for the better part of their first year in office. The president was gracious enough today to credit the man responsible for it—“we’re calling it the Volcker rule after the tall guy behind me,” he said—but what Obama didn’t say was that, until now, former Federal Reserve Chairman Paul Volcker has been virtually ignored by his administration.


If adopted, along with another proposal to limit the consolidation of the financial sector into giant firms—essentially what’s happened over the past two decades—Obama’s new plan would dramatically change Wall Street as we know it. It would have an effect not unlike that of the Glass-Steagall law of 1933, which forced big banks like J.P. Morgan to spin off their investment-banking sides into new firms (in that case, Morgan Stanley).

Why did Obama decide to pursue this break-up-the-bank plan? According to the senior administration officials, he grew increasingly outraged by Wall Street’s brazenness in going back to business as usual in the year since the crisis. “As we have come out of the crisis and seen major financial institutions make significant profits on their proprietary trading and using the [federal] safety net to do that,” said one official, “it persuaded the president it was worth looking into this.”

What he didn’t say was that Obama’s been losing altitude in the polls fast, and one of his problems is a perceived softness on Wall Street in the face of public outrage.

I would guess that the other thing that wasn't said was a great big Fuck You to the GOP for having the temerity to contest a safe Dem seat and win. Even though it's false (look at contribution records) the perception is that Wall Street is in bed with the GOP, so here's a little bit of payback. I wouldn't be surprised if today's decision by the Supreme Court didn't figure into this a bit also. In any case it's a temper tantrum that is going to hurt us all.

Posted by: chad98036 at 04:00 PM | Comments (10) | Add Comment
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