THE PRESIDENT IS TALKING THE TALK, BUT CAN HE REALLY KEEP WALL STREET IN CHECK?

by Robert Sheer
for HUSTLER MAGAZINE – JANUARY 2010

Are you kidding? Barack Obama wants Wall Street to make nice to Main Street because it’s the right thing to do? Yeah, that’ll work. “The fact is, many of the firms that are now returning to prosperity owe a debt to the American people,” President Obama told banking heavyweights in a September 2009 address on their turf. “It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system and a more broadly shared prosperity.”

Oh, but they will; they will. Who doubts it? The laws haven’t changed, the same passive or overmatched regulators are still on patrol, and short-term profit is still the overriding goal of every trader, stockholder and executive on watch at the even bigger and more dominant financial firms that survived the crash. Now, to be fair, Obama wants to pass some new laws and change the regulatory structure. The questions that remain, of course, are how sincere is he, and what can he get passed through Congress in the face of a blizzard of cash flying down from Wall Street to K Street?

“The reforms I’ve laid out will pass, and these changes will become law,” said Obama, talking tough to the polite-yet-unenthusiastic zillionaires assembled at the historic Federal Hall— the same crew that recklessly destroyed the world economy and then cheerfully let the U.S. government rescue them. “I want everybody here to hear my words: We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

“I can’t tell you how many young people have come up to me in these years and said, ‘I went to Wall Street because of that movie,’” echoed Stone, now making a sequel. Obama, however, is consistent in forever trying to seize the high ground. Thus, he entered the den of wolves to try out moral suasion in a place that has no use for anything but the pursuit of profit. Giving him the benefit of the doubt, he must be agenda-setting rather than hoping the assembled CEOs would rise out of their seats, shaking, to have evangelical conversions—since any American with a bank account, mortgage or credit card already knows from bitter experience how these corporations will screw them at every turn if they are not constantly vigilant.

In fact, the myth of corporate self-regulation is the key to understanding how we got here. Since President Clinton, Congress has been systematically erasing the post-Great Depression financial services laws, like the Glass-Steagall Act, that for seven decades successfully protected American capitalism from its worst excesses. However, after the stunning collapse of several of the world’s biggest banks, and the subsequent unprecedented bailout of these greed centers by the American taxpayer, Obama and Congress have no choice but to save face by passing some kind of financial reforms.

The day of his speech, an Associated Press poll showed that “seven out of ten Americans lack confidence the federal government has taken safeguards to prevent another financial industry meltdown.” Public opinion demands something be done; the devil, of course, will be in the details.

One devilish detail is enforcement. Passing regulatory laws only works if somebody makes sure they are followed. Before the collapse, the few regulators actually sounding alarm bells—such as Brooksley Born—were crushed by more politically powerful players like Democratic Party darling Robert Rubin. Others, from the Federal Reserve to the Securities and Exchange Commission, simply did not do their job, whether out of fear, incompetence, ideological blinkers or corruption.

“Senior regulators who stood idly by for years as financial firms built their houses of cards have been rewarded with even bigger jobs or are jockeying for increased responsibilities,” wrote veteran New York Times finance reporter and former stockbroker Gretchen Morgenson in a September 13, 2009, column. “Those in the public sector ask us to believe that regulators who snoozed during the credit bubble will be alert to emerging problems on their beats when the next mania begins. That’s asking a lot, isn’t it?”

Indeed, it is. Yet denial of the depth of the problems this crushing economic debacle has exposed is fueled by gushing pipelines of cash that run straight from New York City to Washington, D.C. Until we can reclaim our democracy from the legal corruption of corporate campaign donations, it is unlikely that any systematic reforms can succeed.

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The HUSTLER January 2010 Issue  can be purchased with free shipping at HustlerMagazine.com. 

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

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