Galbraith: It was the banks, (Stupid).

[JDPriestly]

The original sin of Obama's presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

. . . .
Team Obama . . . announced "stress tests," plainly designed so as to obscure the banks' true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was "to get credit flowing again."

The banks threw a party. Reported profits soared, as did bonuses. With free funds, the banks could make money with no risk, by lending back to the Treasury. They could boom the stock market. They could make a mint on proprietary trading. Their losses on mortgages were concealed -- until the fact came out that they'd so neglected basic mortgage paperwork, as to be unable to foreclose in many cases, without the help of forged documents and perjured affidavits.

But new loans? The big banks had given up on that. They no longer did real underwriting. And anyway, who could qualify? Businesses mostly had no investment plans. And homeowners were, to an increasing degree, upside-down on their mortgages and therefore unqualified to refinance.

http://www.huffingtonpost.com/james-k-galbraith/obamas-probelm-simply-def_b_779711.html

Galbraith elegantly says what we on DU have known all along. Obama needs to get rid of Geithner and Bernanke along with the rest of them.

[elleng]

1. Interesting. Thanks

[glitch]

2. He needs to get rid of his neoliberal ideology on economics.

And if he doesn't hold that ideology he needs to research it and then reconsider his administration's economic team.

But I think he holds it or at best (for his sake) feels that it is the only economic ideology he is at liberty to pursue.