Obama's Economic Reforms Should Re-structure the System -- Not Just Reform It

By Danny Schechter, AlterNet. Posted June 22, 2009.

o Can President Obama finally talk about the much broader breakdown of corporate governance in this country, with boards of directors serving no discernible purpose in terms of limiting the excesses of corporate executives in the financial sector but also more broadly? Surely, without a reform package that includes measures to address this core issue, we will get exactly nowhere."

Perhaps "exactly nowhere" is the real destination" in the sense that the real goal of the Geithner-Summers-Obama "reform" package seems to be to restore the old financial order, not restructure it, or heavens forbid, bring it under public control and accountability. New Rules and regulations are great, but do they add up to real reform?

Have the banks really acknowledged their role in the demolition derby that wrecked the economy? Not really, even as Llloyd Blankfein of Goldman Sachs admits, "We know that we have an explicit contract with our shareholders to be responsible stewards of their capital . . . we regret that we participated in the market euphoria and failed to raise a responsible voice."

Ist that all they are copping to? A few weeks back. Goldman paid $60 million to Massachusetts to settle a complaint that they funded mortgages "designed to fail." They admitted no wrong-doing, in a practice so common when Wall Street gets its fingers caught in the cookie jar of criminality.

Tell that to the millions losing their homes.

After helping to fund the subcrime market, Goldman was hailed as a visionary for turning against it. "it made $4bn profit from betting against the sub-prime mortgage market, and because - bar the fourth quarter of 2008 - it has continued to make a profit throughout."

Clearly the profiteers are far more secure than their victims. Here are the thoughts of some knowledgeable people who want progressive change and who are in the know:

Former Investment Banker Nomi Prins: "The plan makes no mention of reconstructing the financial system."

Marshall Auerback sees an opportunity for real reform squandered.

"As with so much of the Obama administration, great-sounding words, but nothing in the way of substantive change. Particularly disturbing are the moves on derivatives, notably "credit default swaps". Excuse us for not liking a market that is rigged in favor of the sellers, the monopoly dealers, who even today refuse to allow open price discovery in credit default swaps among and between other dealers. True to their Wall Street ethos, Summers and Geithner have capitulated on the most important aspect of derivatives, by refusing to place these instruments on a regulated exchange, where transparency and standardization would be far more operative.

A New Way Forward: "It's not enough to try to patch up the current system. We demand serious reform that fixes the root problems in our political and economic system: excessive influence of banks, dangerous compensation systems, and massive consolidation. And we demand that the reform happen in an open and transparent manner."

"You go to war," the not missed Mr. Rumsfeld once said "with the army you have." Unfortunately in the case of Financial Reform, we are being led by Generals at the top but there are no troops or people's army below to hold them accountable, much less push them to emulate a more aggressive approach a la FDR.

Organizing put this president in office. Only organizing can push him to do what must be done. Can we get the Congress to toughen up these uneven and timid proposals?

See more stories tagged with: economy, obama, financial, banks, money, depression, recession, bailout, economic bailout, summers, geithner

Danny Schechter writes the News Dissector blog for MediaChannel.org. His latest book is PLUNDER: Investigating Our Economic Calamity (Cosimo Books).

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