Top economist on Bill Moyer: Financial crisis will come back with a vengenance

[debbierlus]

The Obama administration "refused" to take meaningful steps to reform the banking system in the wake of last year's financial crisis, and the opportunity to do so has now been missed, says a former chief economist for the International Monetary Fund.

Simon Johnson told PBS's Bill Moyers that he expects an even larger financial crisis to hit the United States in the coming years because the system was not fixed through reform, but rather through a massive injection of taxpayers' money into the failing banks.

"The short term opportunity was missed," Johnson said on Bill Moyers Journal Friday night. "There was an opportunity the Obama administration had. President Obama campaigned on a message of change. ... The time for change for the financial sector was absolutely upon us, this was abundantly apparent in January of this year."

Johnson continued: "Rahm Emanuel, the president's chief of staff, is known for saying 'Never let a good crisis go to waste.' The crisis for the big banks is substantially over. And it was completely wasted. The administration refused to break the power of the big banks when they had the opportunity earlier this year. And the regulatory reforms they are now pursuing ... will turn out to be essentially meaningless."

Johnson said that the bank bailout would not fix the long-term instability of the financial sector, and "when comes back, it will come back with a vengeance, and it will be I think even more devastating."

The government's policy towards the financial crisis amounts to "socialism for the big banks," US House Rep. Marcy Kaptur (D-OH) told Moyers and Johnson. "They've basically taken their mistakes and they've put it on the taxpayer ... that's socialism, that's not capitalism."

Kaptur has become something of a crusader for homeowners' rights in the wake of the housing crisis, as well as a major critic of US banks. Moyers played a clip of her giving a speech this past January in which she urged homeowners to ignore eviction notices and become "squatters in own homes" if they need to.

So why should any American citizen be kicked out of their homes in this cold weather? ... Don't leave your home. Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don't have that mortgage, and you are going to find they can't find the paper up there on Wall Street. So I say to the American people, you be squatters in your own homes. Don't you leave. In Ohio and Michigan and Indiana and Illinois and all these other places our people are being treated like chattel, and this Congress is stymied.

Kaptur recounted an anecdote about inviting representatives of investment bank JPMorganChase, the largest forecloser of homes in Kaptur's Ohio district, to a meeting, and then waiting around all day as no one from JPMorganChase showed up -- until nearly the end of the day.

More here with video:

http://rawstory.com/2009/10/top-economist-obama-missed-opportunity-to-reform-financial-system/

[Fumesucker]

1. The Money Quote...

"Don't leave your home. Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don't have that mortgage, and you are going to find they can't find the paper up there on Wall Street. So I say to the American people, you be squatters in your own homes. Don't you leave. In Ohio and Michigan and Indiana and Illinois and all these other places our people are being treated like chattel, and this Congress is stymied."

[asjr]

2. ". . .abundantly apparent in January of

this year". It is a shame Mr. Johnson didn't notify our future president when he said this. We could have been out of a big mess if he had told soon-to-be president Obama. I think probably Mr. Obama could have used his 2 or 3 days in January 2009 to take care of everything. Why didn't Mr. Johnson notify GWB about this? There have been a lot of people just waiting and waiting until Obama was sworn in to start blaming Obama for all our ills. We have become one stupid country.

[thunder rising]

4. Yep, he wasted all that time on the ceremony and parade. What was he thinking?

[Jakes Progress]

6. Read it again. Try to get the point.

[thunder rising]

10. 'spain it to me like a child.

[Jakes Progress]

18. I can't think of a snarky way to explain it

and it appears from your posts that that is what you like. Maybe someone else will help you here.

[Jakes Progress]

5. So you think everything is hunky dory now?

Giving the banks lots of our money so that they could make loans (which they aren't) and billions for wall street moguls so that jobs wouldn't go away (which the are) is the best you got? Had george done exactly what our current administration has done the pom pom set here on DU would be screaming bloody murder.

I voted for him too. I like what he can stand for. In this particular case, I like to think that he was just feeling a little out of his element with all the economy stuff and turned to the wrong people. I keep hoping that he will finally figure out that he is being ill served. Anyone making under $500K is being ill served.

Johnson is right. The signs were ignored. This isn't about blaming Obama for the economic fall, but for failing to do the right things to fix it. Blind cheering won't help Obama. We need as many people as possible to make our voices heard that he needs a different course of action on the economy. Notice that the RW is fairly happy with the way things turned out. The ones complaining are the progressives.

[asjr]

8. Obama is not the Oracle of Delphi as

some would wish. I get tired of seeing him blamed for everything that goes wrong. I may be mistaken and please pardon me if I am wrong but I think the "bailout" stuff first began on GWB's watch.

[madrchsod]

12. because it started under bush...

does`t absolve him of not understanding what was about to happen. it does`t absolve him of appointing the people who caused this disaster.

[Jakes Progress]

17. Not the point of the OP or my post.

The point, if you're not being touchy touchy over any slight slight to Obama, is that what was done was not enough. You want to blame bush for the bail-out? Okay. That means you believe that Obama is steadfastly and faithfully carrying out the bush economic program. Is that what you want to say?

Look. Obama can do better than he is doing. That is the point of the post.

[Lasher]

3. I agree.

Except that I cling to a sliver of hope that reforms will still be enacted. Obama said he wanted to stabilize the financial sector first, then enact reform. Johnson makes a good point about missing an opportunity earlier this year but we'll see if anything meaningful can still be done.

[Democrats_win]

7. They didn't mention the failure of congress to pass the "cram-down" legislation.

"Cram-down" legislation would have allowed judges to force the banks to lower the amount people owe on homes. That's why I won't be voting for the Colorado Democratic senator (Michael Bennet) who voted against Cram-down.

This excellent segment of NOW was very good and very frightening. The really sad thing is that our government could do something, but they won't. We replaced the extremist bush presidency with the most moderate chicken-sh*t cowards that we could find.

[Syrinx]

9. it is Moyers, not Moyer

[madrchsod]

11. no one would rehire the people who cooked the books of the company

he is being advised by the same criminals. they gave the banks everything with no strings attached. until obama decides who the real enemy of the american people are, we are never going to recover.

[debbierlus]

13. Here is the full transcript and video: Anyone who reflectively wants to defend Obama instead...

...of confronting the reality of the truth of this issue needs to read and watch this piece. Actually, EVERYONE should read and watch this piece...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6752158

[omega minimo]

14. Here's a thread that collects al the OPs like yours on this, dropping like stones, a handful of

replies and Recs -- reaching Greatest, which is great.... but how come there's about a dozen DUers who actually want to comment on this or elevate the issue on the board?




http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6750342&mesg_id=6750342

[Gin]

15. I voted for Obama....I expected some reforms of the financial system

by now....hiring the people who caused it does not make sense to me. I expected more on this front even though I know he inherited a mess.

[omega minimo]

16. agreed.

[applegrove]

19. The Canadian government of Jean Chretien (Paul Martin finance minister) refused

to deregulate Canadian banks very much because we had such a small number of banks in the country. And we don't have a banking crisis. Our economic crisis is based entirely on what the USA is going through right now. Our basics are sound. Reigning in big banks does work.