"I do want to point out, when you get in your car, when you go forward, what do you do? You put it in 'D.' When you want to go back, what do you do? You put it in 'R.' We don't want to go into reverse back in the ditch."Effectively, the strategy is to run against George W. Bush.
"Blame Bush" is hardly a new strategy. One might even say it's a worn-out dogma that has, for far too long, strangled our politics. It's like President Obama's mind is stuck in reverse. And it's because of this brand of childishness that the president's once-soaring popularity has declined, by the way.
Far worse, however, is that it's dishonest. The groundwork for the financial crisis was laid before George W. Bush took office. In the last month of his presidency, President Bill Clinton signed the Commodity Futures Modernization Act, which exempted the toxic mortgage-backed securities from government regulation. And before that Clinton signed the Financial Services Modernization Act which allowed the creation of the mega-banks, the banks that were "too big to fail".
So by the time President Bush (43) took office big banks were getting bigger and had been equipped with the financial instruments that Warren Buffett described as "weapons of financial mass destruction". The car was already in overdrive when George W. Bush first sat in the driver's seat.
But blaming President Clinton is overly simplistic; it's the sort of thing the Democrats would do, and I most certainly will not stoop to their level. The global financial crisis was a complex occurrence, and the guilty parties are many. (Besides, the former president has had the decency to admit his error in creating the climate for the collapse.) However, when doling out blame, there are some very guilty people who mustn't escape notice: former Clinton advisers who now, coincidentally, are Obama's advisers.
As it turns out, we can't put the car in reverse because we've already gone backward.
Liberal columnist Paul Krugman asserts, dejectedly, that all of Obama's economic advisers are "proteges of [Clinton Treasury Secretary] Robert Rubin, the apostle of financial deregulation". And Krugman is right to do so. Beyond being mere proteges, Obama's economic advisers were in the room with Rubin as he pushed for the Financial Services Modernization Act before bailing government service for a $15-million-a-year job at Citigroup. (Citigroup itself having been created in a merger made legal by the Financial Services Modernization Act--it's dealings like that which earned Rubin a spot on Market Watch's 10 most unethical people in business.)
Let's take a look at the Rubin proteges who shape Obama's thinking:
- Larry Summers, Rubin's Deputy Treasury Secretary and successor, is now Obama's Director of the National Economic Council. Summers pushed Congress to deregulate the derivatives market on the basis that financial institutions are "eminently capable of protecting themselves from fraud and counterparty insolvencies"--financial speak for "they can police themselves". As it turns out, they couldn't.
- Timothy Geithner was Under Secretary of the Treasury for International Affairs in the Clinton Treasury Department and is now Obama's Secretary of the Treasury. According to a Wall Street Journal bio, Geithner "learned from Treasury Secretaries Robert Rubin and Lawrence Summers". As previously reported in this blog, Geithner was in the room with Lehman Brothers as they engaged in fraud, knew it, and failed to take commensurate action. What a stand-up guy.
- Gary Gensler's official biography as Obama's Chairman of the Commodity Futures Trading Commission states that, as Under Secretary of the Treasury, "Chairman Gensler was the principal advisor to Treasury Secretary Robert Rubin and later to Secretary Lawrence Summers on all aspects of domestic finance." Ah, so he was Rubin's Rubin. According to The New York Times, Gensler also played a "significant role in shepherding through Congress deregulation measures that led to the explosive growth of the over-the-counter derivatives market."
President Obama has oft-repeated a line about Republicans driving the country into a ditch. He ought to level with us and mention that the car had faulty steering and brake lines, and that they were installed by his own economic team. That doesn't make for a very rousing stump speech, however.
Sadly, our local trial lawyer won't press our case and demand restitution from the negligent technicians who put us here. Apparently, the Democratic cause has already paid her a hefty retainer for her services.
We can take heart that the tow truck is coming this November.
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