Obama getting high marks for his banking reforms

sabrina 1

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Thu Jan-21-10 05:36 PM
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Obama getting high marks for his banking reforms

Are the winds of change really beginning to blow through the White House at last? According to several reports on President Obama's Banking Reforms, they are.

Three Cheers for Obama's Banking Reforms

http://blogs.reuters.com/felix-salmon/2010/01/21/three-cheers-for-obamas-banking-reforms/

Barack Obama is coming out swinging today, and good for him for doing so.

WASHINGTON, DC- President Obama joined Paul Volcker, former chairman of the Federal Reserve; Bill Donaldson, former chairman of the Securities and Exchange Commission; Congressman Barney Frank, House Financial Services Chairman; Senator Chris Dodd, Chairman of the Banking Committee and the President’s economic team to call for new restrictions on the size and scope of banks and other financial institutions to rein in excessive risk taking and to protect taxpayers.

Note here how Geithner and Summers just become part of “the President’s economic team”, while Volcker gets top billing. This is, as Simon Johnson says, an important change of course — and it’s one which is being supported by both Dodd and Frank, so there’s a good chance it can pass.

And from Huffington Post:

Banking Reform Optics: Volcker Up, Big Banks Down

http://www.huffingtonpost.com/2010/01/21/banking-reform-optics-vol_n_431582.html

Former Fed Chairman Paul Volcker is off the bench and the "too big to fail" banks are in the crosshairs.

As economist Simon Johnson noted here early this morning, Volcker has won "an important round."

Obama's new proposal calls for limits on the size and risk taken by the country's biggest banks, and -- in dramatic contrast to the pish-poshing we were hearing from his economic team up until very recently -- embraces the previously outcast Volcker's proposal to restore the spirit of post-Great Depression rules that prevented commercial banks from making risky trades. It also stops big bank mergers going forward.

As Johnson put it, "This is an important change of course that, while still far from complete, represents a major victory for Volcker -- who has been pushing firmly for exactly this."

Excerpt from Obama's speech taken from HuffPo link

OBAMA: My message to leaders of the financial industry is to work with us and not against us on needed reforms. I welcome constructive input from folks in the financial sector. But what we've seen so far in recent weeks is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people. So, if these folks want a fight, it's a fight I'm ready to have. And my resolve is only strengthened when I see a return to old practices as some of the very firms fighting reform. When I see soaring profits and obscene bonuses of some of the firms claiming they can't lend more to small businesses, they can't keep credit card rates low, they can't pay a fee to refund taxpayers for the bailout without passing on the cost of shareholders or customers -- that's the claims they're making. It's exactly this kind of irresponsibility that makes clear reform is necessary.

Yesss!!! This is change we can believe in. The fact that Paul Volcker whose practical views have all been but dismissed up to now, is right next to the president while his 'economic team' of Geithner and Summers are nowhere to be seen, they who gave the exact opposite advice to that offered by Paul Volcker, is a sign of change in itself.

Here is an interview Paul Volcker, Chairman of the Federal Reserve under Jimmy Carter, btw, now in his eighties but a very respected economist and proponent of the post depression-type bank regulations such as the Glass Steagall Act, gave to Charlie Rose while he was on the outside of Obama's economic team:

Paul Volcker: The Lion Lets Loose

http://www.businessweek.com/magazine/content/10_02/b4162011026995.htm

There has been chatter in recent months about Paul Volcker, the chairman of President Barack Obama's Economic Advisory Board, being muffled by the Administration—especially when it comes to his views on bank regulation. But that hasn't stopped Volcker from taking his argument for separating commercial and investment banking on the road, scolding bankers in Britain in early December and telling politicians in Germany that "this is no time for a return to business as usual." The former Fed chairman has also been hard at work leading a panel that will report back to the President early next year with proposals for tax reform. And at 82, he recently got engaged. We talked at Volcker's Manhattan apartment on Dec. 29. ....

Are they finally getting the message? If so it will have been worth the temporary loss of the Mass. Senate seat imo. Every cloud has a silver lining and maybe this is it:

Obama Turns To Populist Pitch To Reclaim Anti-Establishment Mantle

http://www.huffingtonpost.com/2010/01/21/obama-turns-to-populist-p_n_431272.html

In a sharp turnaround, the administration on Thursday announced a new proposal to place limits on the size of banks and prohibitions on their commercial activities. It's an idea that one senior White House official said President Obama began considering "a couple of months ago." But the timing of the rollout, coming one day after what the White acknowledged was a "wake up call" wasn't a coincidence.

The reality of angry voters turning against them, as embodied by the election of Republic Scott Brown to the Senate seat in Massachusetts, is having a profound effect on Democratic leaders. Officials now recognize that the party appears far too aligned with financial industry bailouts and special-interest dealmaking, and that if the electoral bloodletting is to end, more distance is needed from Wall Street.

And more good news in the article:

The wheels are very much in motion. On Wednesday, just hours after Brown declared victory, White House senior advisers David Axelrod and Valerie Jarrett met with Elizabeth Warren, the congressionally-appointed bailout watchdog and a long-standing champion of consumer protection. Discussions touched on various aspects of financial regulatory reform including Warren's central project, a Consumer Financial Protection Agency (CFPA). White House Press Secretary Robert Gibbs on Wednesday also reaffirmed Obama's directive that any piece of legislation had "to include a consumer protection agency."

Elizabeth Warren ~ if you saw Micael Moore's 'Capitalism, A Love Story' you will remember her when MM asked 'what happened to all the money?' Her response was priceless. 'I don't know' ~ I am very happy to see that they are meeting with her also.

And comments from two good Democratic Congressmen:

"I think the American people are looking for someone to punch in the nose and whether we think that is right or wrong on the substance I think it is an undeniable political force right now," said Rep. Anthony Weiner, in an interview with the Huffington Post. "It is natural, keeping with what our brand should be and used to be... but we even kind of muddied that deal up a bit too. The president seems though to be getting his sense of this with his railing that we are going to get our money back."

"We should have done this a while ago," said Rep. Raul Grijalva (D-Ariz.). "We could have been tough initially. If we were, we would not be dealing with the consequences of looking weak right now."

You got that right, Anthony. And Raul, I couldn't agree more. They can't say we didn't try to tell them.

After the bad news on the Supreme Court decision today, which Obama has also spoken out strongly against, this seems like good news. Definitely the kind of change people voted for.