Democrats, Republicans, Obama, and Wall Street: The Inextricable Knot
I’ve been told by a few readers that my blog posts demonstrate an unabashed defense of everything Democrat and MSNBC and a disdain for everything Republican and Fox News. In fact, dour curmudgeon that I am, I disdain both Democrat and Republican, MSNBC and FoxNews. (I should mention that I’m only ignoring CNN because everyone else seems to ignore them, too.)
Of course, there’s often more for even a moderately sapient viewer to appreciate on MSNBC than on FoxNews, but there are also plenty of ways in which MSNBC disappoints, and not just in the aesthetic quality of their on-air talent. The recent addition of Krystal Ball and S.E. Cupp to regular hosting capacities on MSNBC aside, FoxNews still earns its “Fox” title through it endless parade of fashion model turned news anchor coterie of women. And not to sell the aforementioned Ball and Cupp (There’s a show title for you!) short, MSNBC also boasts the hotness of Alex Wagner and stone cold cougar Mika Brzezinski, and what with FoxNews’s Greta Van Susteren disproportionately impacting FoxNews’s Harris Faulkner hotness quotient, the network comes out nearly equal to MSNBC even when one factors in Rachael Maddow.
The point: my foregoing satirical frat-boy misogyny is only a meager attempt to satirize the measure by which America seems to judge the quality of its news programming. The truth is that whether Fox(y)News’s anchors resemble the hiring practices of a Mad Men-era secretarial pool or MSNBC the hipster section of a community college cafeteria, both networks contribute to the echo chamber of their target audience, who tune in for confirmation of their predetermined beliefs. And this is the fault inherent in both networks’ broadcasts.
Because just as FoxNews deserves criticism for its undeviating lust for everything Republican and social conservative, so too does MSNBC deserve criticism for its own unmitigated obsession with everything Democratic and neo-liberal. Simply because a majority of Democrats understand the truth of evolution and climate change while a majority of Republicans believe that a white man with a beard created the world some 6,000 years ago, that doesn’t mean that a majority of Democratic legistlators aren’t bought by the same lobbyists, funded by the same Wall Street interests, and engaged in the same closed-door legislative negotiations that ultimately benefit corporate interests at the expense of the voting taxpayer.
Consider first that the Democrats’ vaunted healthcare bill does almost nothing to fix a broken healthcare system but instead forces taxpayers to purchase a product that overwhelmingly serves the interests of the pharmaceutical and health insurance industries. The new legislation may preclude insurers from turning away customers based upon pre-existing conditions and it may also require that parents be allowed to keep their children on their plan until the age of 26 (an absolute necessity today, considering that 70% of college graduates are forced to move back home due to a lack of job opportunities), but these minimal reforms do little to overhaul a healthcare system that according to the World Health Organization ranks #1 in cost but number #37 in quality of care compared with 191 countries.
The reason this health care bill so favors pharmaceutical companies and healthcare insurers is because these industries essentially helped to write the legislation. Any cautious reader should be put on the defensive by the use of the word “essentially,” but in my defense consider that Liz Fowler, former head lobbyist for the health insurance company WellPoint, was appointed by Democratic Senator Max Baucus to write the government report on which the final healthcare overhaul legislation was based. The healthcare and pharmaceutical industry spent a combined $397 billion on direct lobbying in the first six months of 2009 alone. The resulting Supreme Court approved healthcare overhaul, which includes some beneficial fixes, thus overlooks the most fundamental dysfunctions in the system. Obama’s vaunted legislation instead forces U.S. citizens to purchase a grossly inefficient private employer-based healthcare product as a result of those lobbying influences.
And Wall Street reform has fared no better. While Obama and Democrats may tout the passage of the Dodd-Frank reform bill, the fact is that most of its provisions have been delayed, rendered impotent, or both. Wall Street lobbying is no less effective than that of Big Pharma and America’s health insurance companies, especially when one considers that 2,500 registered lobbyists successfully lobbied against many of the Dodd-Frank bill’s core features before the bill was even passed. Yet even after this decimating influence, the final bill still held some promise of providing some important reforms and enforcing much needed regulations. But since the bill’s passage two years ago, its most important features like restoring Glass-Steagall, establishing a system for shutting down failing banks, requiring derivatives to be traded and cleared through regulated exchanges, have all been decimated by that same voracious Wall Street lobbying effort.
The most recent jobs report data, released July 6, 2012, shows an unemployment rate stagnating at 8.1% (though economists will more often refer to the ‘real unemployment rate’ which is more like 18-20%). In response to this jobs report, Kathy Bostjancic, director of macroeconomic analysis for the Conference Board, said “This economy has no forward momentum and little help from monetary or fiscal policy.” And it was MSNBC idol Barack Obama who presided over the past four years of fumbling and ultimately failed attempts to implement the meaningful change that would have provided that sound monetary and fiscal policy to which Kathy Bostjancic referred. No matter how many times networks like MSNBC may assiduously defend every action taken by the President and bemoan an intractable Republican opposition, it doesn’t change the fact that Obama’s attempts to regulate and reform the financial industry repeatedly deferred to its most staunch and ardent defenders over more incisive critics like Paul Volker, Joseph Stiglitz, Elizabeth Warren, and Sheila Blair. And while it’s true that Obama may have once intimated a desire to impose punitive measures on Wall Street banks and structurally reform their operations in such as way as to bring them further under the control of federal regulations, his failure to do so is reflective of his deference to the advice of those who would see Wall Street institutions protected rather than reformed.
In March of 2008, when then candidate Obama formally addressed Wall Street’s power brokers in a speech at Cooper Union in Manhattan just blocks from Wall Street’s shuddering epicenter, the attending audience of Wall Street power brokers listened intently to how Obama might approach the issue of financial regulatory reform if elected president. Obama made some bold and appealing statements for anyone interested in reform because inasmuch as he may have been directly addressing Wall Street, Obama was well aware that he was also indirectly addressing a voting constituency frustrated with Wall Street’s excesses.
In this speech Obama said that the U.S. needed to “keep markets competitive and fair,” adding that in order to facilitate such competitive fairness, “Old institutions cannot adequately oversee new practices.” To this end he noted that throughout the 80s and 90s, “instead of establishing a 21st century regulatory framework, we simply dismantled the old one … encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.” Obama argued for a series of actions that should be taken to curb the economic crisis and restore faith in Wall Street. Among these actions, candidate Obama asserted that institutions that borrowed from the federal government should be subject to governmental oversight, that financial institutions should be held to greater capital requirements, and that ratings agencies should be more transparent in an effort to prevent the conflicts of interests that resulted in AAA rated CDOs littered with sub-prime mortgages. Clearly the mark of his then pro-reform economic advisors like Paul Volker, Joseph Stiglitz, and Robert Reich, these statements did not garner him a tremendous degree of affection from Wall Street attendees wary of anyone infringing on their member’s only money party.
Somewhat alarmingly, the President did signal what appears in retrospect to have foreshadowed his future steps when he said, “I do not believe the government should stand in the way of innovation or turn back the clock on an older era of regulation.” Because of course, why would anyone want to ‘turn back the clock’ to an era of capital requirements, a distinction between commercial banking and proprietary lending, class mobility, and a period of comparatively egalitarian national prosperity?
Furthermore Obama also noted that “The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns,” adding that “the hand of industry lobbyists the playing field in Washington.” Yet during his first term as President, congress has become more, not less influenced by, in the President’s own words from the same speech, “a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight.”
Even as a 2008 presidential candidate, this was a curious statement for Obama to make. As the Center for Responsive Politics has pointed out, over the past two decades Wall Street has evenly split its donations among both Democrats and Republicans. Some refer to this as hedging a bet, so that whichever side wins, Wall Street can be assured that its interests will be represented in a well-funded candidate. And yet this parity wasn’t quite as distinct in 2008, when Obama ran against McCain. In that election, Wall Street’s contributions were disproportionately in favor of one candidate—a candidate who they must have thought would better represent their interests if elected. This is why Obama received $16 million in contributions to McCain’s comparatively paltry $9 million. This election cycle Obama is having trouble meeting that expectation, and Romney has received a disproportionately greater amount of contributions from Wall Street. This is perhaps due in part to Obama’s attempt (emphasize ‘attempt’) to regulate Wall Street through the Consumer Financial Protection Bureau, the passage of Dodd-Frank, and a battle over those Bush-era tax cuts and the Buffet rule.
But to better understand how over the past four years the President has instead acted on behalf of Wall Street’s interests rather than against them and how a president elected on the wings of ‘hope and change’ turned instead into the President fettered by ‘despair and constancy,’ we need look to his post-election economic advisors, principally Timothy Geithner, appointed the U.S. Secretary of the Treasury, and Larry Summers, Obama’s director of the President’s National Economic Council. Those names are familiar not just because they populate Obama’s presidential world but because they also populated Bill Clinton’s. And while most people today remember with fondness the prosperity of the Bill Clinton years, that nostalgia perpetuates a delusional misunderstanding of the reality that Bill Clinton’s presidency helped to spawn the economic collapse of recent years. Because if we find ourselves frustrated not just with the present post ‘housing bubble bust’ economy but also the country’s divergent wealth disparity, we have much to thank of Bill Clinton’s roaring 90’s economic team.
Headed by Alan Greenspan and flanked by Robert Rubin and Larry Summers (as in the somewhat iconic Time Magazine cover from February 15, 1999), one need only descend one rung down Clinton’s economic team’s ladder to find Timothy Geithner doing his best to learn the fundamentals of how to undermine governmental oversight and regulation as Robert Rubin’s deputy secretary. Timothy Geithner would later become President of the New York Fed, where he would only coincidentally ensure that his former boss’s institution, CitiGroup, for which Rubin served as senior counselor from 1999-2009, would suffer no penalty in the form of revenue losses during the collapse and ensuing aftermath of the fall of 2008.
We should have no shortage of questions as to why Barack Obama, so professed a bastion of change, would appoint Timothy Geithner and Larry Summers to such positions of power over more venerable candidates like Paul Volker and Joseph Stiglitz. As Joseph Stieglitz himself said in reference to the appointment and influence of Timothy Geithner and Larry Summers, it’s “not a surprise that [if] a majority of your advisers come from financial markets, you see things through the perspective of the financial markets.”
So in March of 2009, in a private meeting with the CEO’s of the nation’s top banks, Obama openly stated that he would neither push for any commitments from the banks nor mandate that the banks fundamentally restructure their operations or refinance the millions of underwater home mortgages held by the banks. In other words, the banks would emerge unscathed from the crisis, free to continue the same dubious practices that had resulted in the 2008 meltdown. And when Obama returned to Wall Street in September of 2009 to deliver another speech extolling the need for financial reform, most of those Wall Street powerbrokers who had so attentively listened to candidate Obama’s speech a year and a half earlier didn’t even bother to show up. This wasn’t so much an act of disrespect as it was one of indifference. The President was no longer a threat, he had exculpated their industry and its practices and had been comically defanged because he’d extracted the fangs himself—sort of like Bruce Willis in 12 Monkeys just before he beats up that pimp. Except that Obama doesn’t seem ready to beat up the likes of Lloyd Blankfein or Ken Lewis, who are just a couple of the pimps who’ve made us all their bitches.
As Stephen Metcalf of Slate Magazine’s Audio Book Club podcast noted during a discussion of the crisis, Wall Street “has learned that they can now laugh openly in the public’s faces and no one has enough social capital anymore to reprimand them or punish them in a real way.” While it would be nice to punish them in a real way that wasn’t merely vindictive but punitive because it would restore America’s financial system to one that wasn’t beholden to the interests of an elite, gilded corporate few, the best opportunity seems to have passed. And given Washington, D.C.’s enormous lobbying apparatus, it’s not like the President is solely to blame. But while Obama may be worthy of praise for having once appeared intent on reforming a broken system, he may likewise be rebuked for having listened to advisors sewn from the very cloth that cloaks Wall Street in a mantle of impervious entitlement.
Because despite arguments to the contrary, this is exactly how the financial industry may now be regarded: an entitlement system. What may have at one time been the product of industrious effort is now wholly an entitlement culture not of the 99% occupiers outside their door, but of Wall Street’s obstinate refusal to submit to stricter rules governing how they and their institutions make their money. For it stands to reason that were the majority of Wall Street bankers to have truly earned this money, were they truly the hard working recipients of their disproportionate wealth, then they wouldn’t have any problem accepting regulations that would ensure greater commercial productivity, an equality of opportunity, and a financial sector devoted to investment in marketplace innovations by way of investment in American companies. Which is to say, a financial industry not devoted to innovations in complex financial instruments that create and inflate wealth simply by moving that wealth around within markets in a complex shell game that is rigged to distort the perceptions of regulators, onlookers and players alike—a Three-Card Monte act that succeeds through misdirection and extortion.
We might just as well perceive Wall Street’s stubborn refusal to submit to stricter regulations as having more to do with preserving a game rigged in their favor more than a belief in the game’s inherent legitimacy.
So what is left of the Obama of “hope and change” today? Has Washington left him dispirited, or has his record forsaken him so that now all he can do is point to Romney and say, “At least I’m better than that guy, right?” And his equally dispirited supporters can only apathetically shrug because apart from a better taste in women, music, and dress, it’s not so clear at all that Obama the Democrat is much better than Romney the Republican when Obama’s performance begins to look so indistinguishable from the latter’s.