This morning's best read is Obama and the Coming Battle with the Big Banks by Michael Blim.
I will not present here again how they have brought the American economy down, such that we now fear with reason another great depression. Nor will I present arguments about why the new Geithner plan is unlikely to help us out of the ever-deepening economic hole into which we are falling. The list of outstanding economists who think it will be a failure grows daily. You can read the detailed criticism of the plan on the net by Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, Willem Buiter, and Simon Johnson, among others.
Rather the issue I raise here is one of power, and finally politics. President Obama may have two wars to fight abroad, but he also has one at home. The banks, though wounded, have begun to push back. Theirs is an undeclared war for the right to do as they please, and they find comfort in the fact that neither the Federal Reserve nor the Administration will let them fail.
A complaisant Congress and 3000 lobbyists acting as invisible weavers of phantom regulatory laws will be more than a match for a President who refuses to declare war and fight. Even as Secretary Geithner calls for tougher regulation, the United States in London at the G20 summit resisted new binding international rules on banking and finance.
And the President prattled on once again (see my last column for other instance) at his April 3 press conference about the virtues of the rich:
“We – I strongly belief in a free market system, and as I – as I think people understand in America, at least; people don’t resent the rich; they want to be rich. And that’s good. But we want to make sure there’s a mechanism in place that holds people accountable and produces results. Okay?”
No, not okay, Mr. President. America’s bankers are the custodians of the riches of America’s wealthiest families. After a quarter century of financial conquest, the bankers themselves form a large faction of America’s wealthiest, and in a way are also now the brains of the rich.
But remember this: Though really, really wealthy Americans count for no more than about 3 million people, they owned in 2001 half of the stock market and 64% of the bond market. Even the bankers and financial managers who do not count themselves among the rich work for them. So, Mr. President, as the bankers claw back the lost capital their follies have cost them, you are in danger of facilitating the greatest transfer of the national wealth back into the hands of the wealthy since the Reagan “revolution.”
Michael Blim teaches anthropology at the Graduate Center of the City University of New York. He writes about equality and global justice and is the author of Economy and Equality: The Global Challenge (2005).Email: mblim [at] gc.cuny.edu