News & Politics

Obama Administration Has Many Ties to Big Banks--And Protesters Occupying Wall Street Know It

The president has been left behind by a fast-growing movement that considers the Democratic Party closer to the banks than to the 99 percent.

Let’s face it: the Obama administration is in trouble.

It did not foresee Occupy Wall Street and its brothers and sisters across the nation or the radical demand they represent to liberate Democratic politics from domination by corporate wealth. It did not know that the political pressure welling up in the fall of 2011, three years after the collapse of the financial sector, would be one of fervent opposition to corporatism that cannot be bought off with empty podium-pounding about “fat cats.” It thought it could play the liberal game (upholding the corporatist system while making overtures of support and sympathy for its victims) without suffering any political consequences.

So now that the protesters in the streets are demanding more than just the publication of a birth certificate or the legislative codification of Islamophobia, now that the protesters are actually getting to the meat of American misery, now that the protestors have set their sights on undoing the corrupt system Obama has spent his first term fortifying, all the president can offer is the kind of on-the-one-hand-but-on-the-other rhetoric that pisses off everyone and energizes no one. Bummer for him.

His empathy moment: “I think it expresses the frustrations the American people feel, that we had the biggest financial crisis since the Great Depression, huge collateral damage all throughout the country ... and yet you're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the first place."

Kind words like these ring hollow from the Obama administration. It’s just too obviously in bed with Wall Street to be credible on this issue.

First, there are the Wall Street folks Obama hired to craft and implement his financial and economic policies. Fresh off the financial disaster of three years ago, even before his inauguration, Obama brought Timothy Geithner and Lawrence Summers on board.

According to the New York Times' Michiko Kakutani, “one top banker quoted in these pages refers to [Geithner] as ‘our man in Washington ‘for helping avert more systemic changes affecting Wall Street.”

Geithner’s devotion to deregulation and closeness to bankers made him just what the soon-to-be-president was looking for to clean up a financial sector positively bubbling over with fraudulence and mendacity. How’s that working out? As for Summers, his major career achievement in the 1990’s was preserving the lawlessness of the financial derivatives market that demolished the American economy. After this feat, he began accepting exorbitant speaking fees from the most ruthless Wall Street firms, including $135,000 for a one-day engagement at Goldman Sachs, in April 2008 (when he was basically a shoo-in for a Washington job) and $45,000 for a similar event at Merrill Lynch, after Obama was already elected. (Gene Sperling, Summers’ successor, was also one of the Goldman boys.)

Anyone who thinks that Washington will compel Wall Street crooks to make restitution to the American people should consider that Obama’s chief-of-staff, the primary mover of the White House’s legislative agenda, is former JPMorgan Chase & Co. executive Bill Daley. Chase was one of the primary recipients of TARP bailout cash, and Daley a major public opponent of the Consumer Financial Protection Bureau. (Daley replaced Rahm Emanuel, who worked for Goldman as a liaison with the 1992 Clinton campaign.)

But the metaphor is of a revolving door, not a one-way street.

Business Week reports that Jim Milstein, “the U.S. Treasury Department’s former chief restructuring officer who helped oversee the bailouts of [AIG] and Citigroup Inc.” is taking his privileged knowledge of Treasury’s secretive bailout procedures and starting a private turnaround advisory firm. Milstein is just the latest in a long line of Obama folks who have tried out the whole “public service” gig and then decided that they’d rather get fabulously rich in the private sector with the connections they made in Washington.

Remember, less than a year ago, Obama’s high-profile budget director, Peter Orszag, cashed out by moving to Citi. James Fallows of the Atlantic wrote at the time:

“The idea that someone would help plan, advocate, and carry out an economic policy that played such a crucial role in the survival of a financial institution -- and then, less than two years after his administration took office, would take a job that (a) exemplifies the growing disparities the administration says it's trying to correct and (b) unavoidably will call on knowledge and contacts Orszag developed while in recent public service -- this says something bad about what is taken for granted in American public life.”

Before that, Greg Craig, Obama's White House counsel, fled for the greener pastures of Goldman Sachs. This was just days after the SEC charged Goldman with securities fraud, alleging it snuck in a crooked subprime mortgage scheme before the collapse of the housing market. Everyone can be reasonably certain that it was useful having a lawyer well connected with the White House, despite Goldman’s insistence, credible to no one, that he was hired merely for his competence as a lawyer.

The first time around, Obama dominated in the field of raising Wall Street cash, his haul from Goldman eventually totaling some ten times what Enron contributed to Bush. It appears that the bankers will be heading back to the Republican side this time around, Mitt Romney having raised more than twice the Wall Street cash Obama has. But don’t let the fundraising situation fool you: President Obama’s personnel and legislative priorities have shown very clearly what side he is on, and it isn’t with the 99 percent.

The president is good at producing nice words, but don’t expect (as right-wing pundits Tim Carney and David Freddoso do) the occupiers of Wall Street to get in line with the Obama 2012 campaign. Even the unions that have declared solidarity with the Liberty Plaza Park campers appear ready to treat the Democratic Party as an entity hostile to the needs of the 99 percent.

Obama sowed rotten seeds on this one early on. If he reaps a rotten political crop later on, he’ll have no one to blame but himself.

J.A. Myerson is the executive editor of The Busy Signal and a frequent contributor to Foreign Policy in Focus.
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