<http://doughenwood.wordpress.com/2009/02/10/obama-to-coddle-bankers/>
Obama to coddle bankers
Emily Dickinson once advised: “Tell all the Truth but tell it slant.”
Evidently the New York Times’ headline writers are taking advice from
the enigmatic poet. The headline on the story on how the Obama
administration will be going easy on banks and bankers getting bailout
money blamed it all on the Treasury Secretary: “Geithner Said to Have
Prevailed on the Bailout.” In internal administration battles,
Geithner “successfully fought against” stricter rules on executive
pay, and beat back the attempts to replace top maangement.
Of course, to say that Geithner won these battles is to say that Obama
agreed with him. Once again, the embodiment of hope and change went
with the status quo when he didn’t really have to. There would have
been little political price to pay for putting the screws to the
banksters.
And it looks like the Treasury and the Fed will pump up some $250-500
billion to help hedge funds buy bad assets - with the FDIC
guaranteeing the buyers against losses.
At this point, the only thing that makes any sense is to nationalize
the weakest banks, kick out management, wipe out the shareholders,
clear the decks, and start over with a tightly regulated system. This
isn’t even all that radical a position anymore - and it may be
inevitable, if these sick and devious “public-private partnership”
schemes don’t work out, which seems likely. There is a radical
nationalization position - take the banks over and convert them to
public institutions - but I know that’s completely out of the question
with this gang. But they’re doing absolutely everything they can to
avoid even an orthodox nationalization. This is looking more and more
like Japan’s disastrous indulgence of their “zombie banks” in the
1990s than Sweden’s successful bailout, the model for the “nationalize
them and clear the decks” approach. Instead of a few rough years,
we’re likely to get a miserable decade.
They’ve botched the stimulus, and they’re botching the financial
rescue. They’re worse than I expected, and I wasn’t expecting much in
the first place (see: Obamamania, a febrile disease)._______________________________________________
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