Ikhwanweb :: The Muslim Brotherhood Official English Website

Tue109 2018

Last update19:14 PM GMT

Back to Homepage
Font Size : 12 point 14 point 16 point 18 point
:: Issues > Activites
The Crisis That Could Bring Down Obama
The Crisis That Could Bring Down Obama
Goldman Sachs reports better-than-expected profits this quarter. Wells Fargo cleared record profits last week. The President, understandably, points to signs of hope and encourages Americans to be optimistic about the economy. But when do we move from healthy confidence to a confidence game? The banks are reporting profits thanks to massive infusions of taxpayer bailout funds. It’s simply silly to be lulled by cheery-sounding reports when the institutions are actually insolvent. At som
Thursday, April 16,2009 19:58
by Ruth Conniff information clearing house

Goldman Sachs reports better-than-expected profits this quarter. Wells Fargo cleared record profits last week. The President, understandably, points to signs of hope and encourages Americans to be optimistic about the economy. But when do we move from healthy confidence to a confidence game? The banks are reporting profits thanks to massive infusions of taxpayer bailout funds. It"s simply silly to be lulled by cheery-sounding reports when the institutions are actually insolvent. At some point we have to take a clear-eyed look at the massive failure of our financial system. Ignoring it won"t make it go away.

That"s more or less what Elizabeth Warren, the distinguished chair of the Congressional Oversight Panel, says in her panel"s six-month report on the bank bailout. Warren, the government"s watchdog, concedes that there are differences of opinion on her panel, which probably accounts for her very carefully couched discussion of the crisis. Although she told The Observer that it is "preposterous" that the government hasn"t fired the bank managers who are responsible for the derivatives disaster, her panel"s report is cautious, with a scholarly explanation of the crisis in her video introduction. Nonetheless, the underlying criticism is obvious.

In a financial crisis like the current one, Warren explains, the government has three choices: 1. Liquidate failed banks. (That"s what happened in the S&L crisis. The government took over institutions, fired the managers, wiped out investors, but protected depositors. A lot of savings and loans simply went out of business.) 2. Put them in receivership. (That"s what Sweden did in the 1990s: failed managers were fired and replaced, depositors were protected, and the banks were returned to private hands under new management with healthier balance sheets.) or 3. Subsidize the banks. This last option is what led Japan to its "lost decade"--the real value of bank assets are obscured, as the government funnels tax money into insolvent banks, propping them up indefinitely. This last is the approach the United States is now taking.

If you want to hear someone absolutely destroy that approach to the current crisis, check out a round of recent interviews with William Black, the professor of economics and law at the University of Missouri who was deputy director of the Federal Savings and Loan Insurance Corp. during the S&L crisis in the 1980s. Black, who liquidated a few banks in his time and earned the eternal enmity of Charles Keating, minces no words in describing the massive fraud by bankers and the regulators, including Treasury Secretary Tim Geithner, whom he describes as abetting them.

"This whole bank scandal makes Teapot Dome look like some kind of kids" doll set," Black told the investors" journal Barron"s in an interview published in the print edition on April 13. (The interview appeared online on April 9, but you need a paid subscription to access the site). He covers the same points in a highly watchable interview on Bill Moyer"s Journal..

"We have lost the ability to be blunt," Black tells Barrons. He is talking about the person he describes to Bill Moyers as a "failed regulator," Geithner. "Now we have a situation where Treasury Secretary Tim Geithner can speak of a $2 trillion hole in the banking system, at the same time all the major banks report they are well capitalized. And you have seen no regulatory action against what amounts to a $2 trillion accounting fraud. The reason we don"t see it--aren"t told about it--is that if they were honest, prompt corrective action would kick in, and then they would have to deal with the problem banks."

In other words, the banks are insolvent. That"s why they must rely on the Troubled Assets Relief Program. But at the same time, they are claiming to be healthy. Both things can"t be true.

So we get smiley-face reports about how Goldman and Wells Fargo are posting record profits. Investors and citizens are supposed to be excited to see those profit numbers--comprised of their own tax dollars plus the banks refusing to accurately value their toxic assets.

This is more than an unfortunate downturn, Black says. It is the result of massive, pervasive fraud, and a deregulatory culture that has nurtured criminal behavior by very highly paid bank executives.

The whole culture is rotten. And the regulators come right out of that corrupt, Wall Street culture.

"No one has to tell someone to stretch the numbers," Black says of the way corruption trickles down through these institutions. "It is all around them. It is in the rank-or-yank performance and retention systems advocated by top business executives. Here, the top 20 percent get the bulk of the benefits and the bottom 10 percent get fired. You don"t directly tell your employees to lie or cheat. You set up an atmosphere of results at any cost."

Yet we live in a broader culture so enamored of the money-making magicians of Wall Street that a front-page story in the Sunday New York Times is still lamenting the "brain drain" on Wall Street. The lead anecdote features former UBS employee (whose firm"s  major screw-ups turned it into a prime TARP welfare recipient). He is so disturbed by shrinking bonuses and a climate of gloom in his old gig that he has moved to the high-rolling Aladdin Capital. That"s the real name. As in Poof! There goes your money!

It"s time for real regulation to stop all this, says Black. Geithner must go.

"Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama"s presidency," he predicts.

The beauty part: real regulators will have no trouble getting through Congress, Black tells Moyers, because they pay their taxes.

Ruth Conniff covers national politics for The Progressive and is a voice of The Progressive on many TV and radio programs. Conniff was a regular on CNN’s Sunday Capital Gang and is now a regular on PBS’s To the Contrary. She also has appeared frequently on C-SPAN’s Washington Journal and on NPR and Pacifica.

 

The Source


Posted in Activites , Obama , Other Issues  
Add Comment Send to Friend Print
Related Articles
Obama’s speech at Turkish parliament
Morsy: Obama’s Message to the Muslim World a Talk about Unknown Future
Obama’s on-target message to Muslims
Debating Democracy in the Obama Era
More Reactions to Obama’s Ankara Speech
Obama is right for an opening to Muslims
Obama Strengthening Ties with The Muslim World
In Turkey, Obama Addresses the Muslim World
Obama’s G20 and Turkey’s Trip
Obama & Muslim World: Changing Course
Assessing Obama’s Policy Toward the Muslim World
Obama, Israel and Palestine
Will the Real Obama Middle East Strategy Please Stand Up?
Hamas: Obama will be judged through his deeds
Obama’s Arab and Muslim Strategy
Muslim Scholar Unwelcome: Obama Lawyer
Can Obama talk to the Brotherhood?
Will Obama go beyond the superficial?
Mishaal: Obama using new language towards Middle East
Nunu: Haneyya asked Obama to turn his words into deeds
Obama’s Middle East moment of truth
Obama takes a cue from Clinton era
Scholars Urge Obama to Push for Democracy in Middle East
Obama starts well with Muslims but must do more
Obama’s No Socialist. I Should Know.
Mr. Obama: Don’t let Israel destroy America
Obama backs off on Israel, again
Open Letter to President Obama about Democracy Promotion in the Middle East and the Muslim World
Memo to Obama: don’t abandon Arab democrats
Expert: Obama’s Administration Prioritises settlement of Arab-Israeli Conflict
Bi-Partisan Group of Prominent Scholars and Experts Urge President Obama to Make Democracy
Iraqi MB: Obama’s Decision to Withdraw a Step in the Right Direction
Take Action on President Obama’s FY2010 Budget Request for Military Aid to Israel
Obama: faith should unite, not divide
Pointers for the Obama Administration in the Middle East: Avoiding Myths and Vain Hopes
Welcome to Obama’s “New Era of Peace”
Why the Muslim World Can’t Hear Obama ?
Report: Obama will deal with the Palestinian cause in the interest of Israel
Thoughts on Obama’s Outreach to the Arab World
Obama allows CIA kidnappings worldwide as first job