Economy  
comments_image Comments

Wall Street's 10 Greatest Lies of 2009

Lies that justify screwing over Main Street.

Continued from previous page

 
 
Share
 
 
 

5) Big banks will help small businesses.

On October 24, because a whole year had passed without this happening, Obama declared, “It's time for our banks to stand by creditworthy small businesses and make the loans they need to open their doors, grow their operations and create new jobs."

Small businesses, which employ half of all private sector employees, had received less than $400 million in new loans under government programs, and were granted access to just one program that buys up to $15 billion in securities tied to small business loans. According to the Small Business Administration (SBA) the number of approved loans shrunk from 124,360 in 2007 to 69,764 in 2009 (it was 93,541 in 2008).

Two months later, since that didn’t work, Obama reiterated, “given the difficulty business people are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again." He asked the big bank chiefs to take "extraordinary" steps to revive lending for small businesses and homeowners.

Too bad banks don’t gear their business strategy to expectations and suggestions. Still, as a gesture of good faith, Bank of America promised to kick in an extra $5 billion more to small- and medium-sized businesses next year. JP Morgan Chase promised to increase lending by $4 billion. Goldman had already decided to go the pledge route a few weeks earlier, putting up half a billion dollars in small business “charity" to help its deservedly negative image.

To make up for what the banks aren’t doing, the Obama administration is setting aside $30 billion from the financial bailout fund to stimulate lending to small businesses.

6) The Fed values transparency.

On February 10, Bernanke told the Committee on Financial Services that he "firmly believes that central banks should be as transparent as possible. Likewise, the Federal Reserve is committed to keeping the Congress and the public informed about its lending programs and balance sheet."

Yet, on March 5, the Fed refused to comply with a Freedom of Information Act request and lawsuit filed by Bloomberg News to disclose the details of its 11 lending facilities. In front of the Senate Budget Committee, and in response to a question from Senator Bernie Sanders, I-VT, about naming the firms that got money from those facilities, Bernanke said "No" -- such disclosure would be "counterproductive" and risk “stigmatizing banks."

Undaunted by this irony, on May 5, before the Joint Economic Committee, Bernanke reiterated, “The Federal Reserve remains committed to transparency and openness and, in particular, to keeping the Congress and the public informed about its lending programs and balance sheet.” He told PBS NewsHour on July 28 that “We are completely open to providing any information Congress wants.”

To date, the Fed has not disclosed the recipients of its cheap loans for toxic collateral.

7) History will not repeat itself.

In the beginning of the year, Obama said of Wall Street firms, “There will be time for them to make profits, and there will be time for them to get bonuses. Now is not that time.”

He also said that "part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility.”

Yeah. Wall Street’s really into restraint....

Nine month later, as banks were racking up record profits and bonuses, Obama said the same thing, in different words, in his September 14 Federal Hall speech. “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses… the old ways that led to this crisis cannot stand...History cannot be allowed to repeat itself.”

 
See more stories tagged with: