White House Should Stop Protecting Banks

Simon Johnson writes in the web site, the Baseline Scenario, about the Obama Administration’s protection of banks and failure to hold the mega financial institutions to standard of law and justice.

From the article –

The premise – and central mistake – of the Obama administration in 2009-10 can be summed up in what the president said to leading bankers on that fateful day, March 27, 2009: “My administration is the only thing between you and the pitchforks”.

The organizing notion then, provided by Larry Summers and presumably Tim Geithner, was that the “responsible” administration would protect global megabanks from “dangerous” populists, in return for cooperation and better behavior.  This kid gloves strategy turned out to be a very bad bet – not only is it far from best practice with regard to handling failed financial systems (there must be consequences for executives and shareholders, at the very least), but it also allowed banks and their close allies to bounce back to profitability and use that cash (underwritten by the taxpayer) to oppose the administration on financial reform and, according to credible public reports, to funnel large amounts of money into various “populist” anti-administration midterm campaigns.

The article calls for White House support for Elizabeth Warren and the new agency to protect consumers from the depredations of financial predators. I strongly support that.

I want you to understand that I come to criticize the Obama Administration reluctantly but their actions make a mockery of ethics, of doing the right thing, and of carrying out their obligations to the law.

James Pilant

Treasury Makes A Mistake – Claiming They Are Not Blocking Elizabeth Warren (via The Baseline Scenario)

President Obama faces a choice and this choice will tell us a lot about the administration. Does this administration intend serious oversight of the finance industry. The choices are simple, Elizabeth Warren, a long time defender of the public interest or someone acceptable to Geithner and the Department of the Treasury. Who counts in this country, the millions of individuals who suffer from the fees and often the cruelty of these institutions or the institutions and their political muscle? We’ll know soon. In the meantime, read this fine analysis from Simon Johnson!

By Simon Johnson It’s one thing to block Elizabeth Warren from heading the new Consumer Financial Protection Bureau. It’s quite another thing to deny in public, for the record, that any such blocking is going on (e.g., see this report; Michael Barr apparently said something quite similar today). There is a strong groundswell of opinion on this issue from the left – see the BoldProgressives petition.  But the center also feels strongly that, given … Read More

via The Baseline Scenario

This is one of Elizabeth Warren’s appearances before Congress: