If the Banks Own the Senate, Why Don’t We Own the Banks?
In his presser Wednesday night, President Obama missed another opportunity to use the "bully pulpit" to advance key parts of his economic agenda. While demonstrating his detailed grasp of a wide range of issues, he remains strangely reluctant to use his considerable popularity and economic leverage to challenge the banking industry and neutralize its perverse lobbying influence.
In responding to the New York Times’ four silliest questions by a major reporter, Obama noted he could not order the Senate or the banks to do what he wanted, and that’s literally true. But the remark followed Dick Durbin’s lament that the banks "own the Senate."
What are nationally televised Presidential pressers for if not to advance the agenda, including enacting significant reforms of banking practices?
HuffPo’s Ryan Grim reported that Harry Reid has once again failed to gather enough support on major legislation, so that we may not get mortgage "cramdown" in a bill whose principal purpose was to get mortgage cramdown for homeowners facing bankruptcy. Cramdown would be the hammer to induce lenders to enter the administration’s voluntary mortgage restructuring programs announced last month, thus helping to keep struggling homeowners out of foreclosure and bankruptcy. But without that inducement, the refinancing scheme is less likely to be effective.
Others stories have noted that the banking industry is using a massive lobbying effort to weaken upcoming bills on reforming bank consumer credit practices. The major banks are at war with America’s consumers, and when our elected officials cave, we have few weapons to fight back.
Are we really that helpless against an industry that has tanked the US economy, and whose largest members are de facto wards of the state?
Excuse me, but if the amount of bailout funds, for which we received preferred shares, already provided the largest banks were converted to the equivalent amount of voting stock, the US would virtually own the major banks. Moreover, if the US government reversed or reduced its policy of guaranteeing bank loans, or stopped bailing them out through pass-throughs from AIG, the major banks would face serious problems instead of crowing about how they don’t need federal bailouts.
I understand that Summers and Geithner are locked into the world view that thinks we cannot use this leverage without risking "systemic" effects — i.e., discomforting their friends — but under the circumstances, shouldn’t the President be getting a range of second opinions when the banking industry is telling America things that can’t be said on television?
For some unexplained reason, Obama feels he must assure the Wall Street Journal that he doesn’t want to intervene in the banking industry, even though the industry has put millions of people out of work, destroyed their economic security and is now crippling efforts to reform them. But grownup Americans get it even if the Republican crazies can’t or won’t, so just stop apologizing and get on with what needs to be done.
We need a champion, Mr. President. You have leverage and you have a bully pulpit, and the public is rightfully furious at the banks. These are weapons. Use them.
Update: John Anderson is starting a series at FDL on the Pecora Committee. Also see, Thomas Frank, Why Congress won’t Investigate Wall Street. And Glenn Greenwald has more.