Obama and the Financial Criminals
At least CBS's 60 Minutes is on to the national fury at the fact that the criminals who brought down the American economy have not been identified personally and brought before the bar of justice. But a week after a broadcast that bored in on the issue, interviewer Steve Croft let Barack Obama off the hook when the president disingenuously stated that the financial shenanigans by Fannie Mae, Freddie Mac, and banking firms were legal -- that his administration was instrumental in passing new regulations encompassed in the Dodd-Frank legislation to prevent it happening again.
Wait a minute. It is now known that Fannie and Freddie, the government-connected mortgage-packaging giants, threw out the qualifications to allow home-ownership for all, an idealistic social goal pushed by Democrats -- from Jimmy Carter via the Community Reinvestment Act of 1977 to Bill Clinton in the 1990s, who enlisted ACORN to badger banks to make bad loans to minorities, and then to Rep. Barney Frank and his fellow travelers in the 2000s, who put the full weight of the Congress behind the creation of bad mortgage loans.
The large investment and commercial banks saw an opportunity and concocted securities backed by dicey "sub-prime" loans, in which borrowers paid higher interest based on questionable credit. These mortgage-backed instruments were a hot item, yet when the banks learned that the underlying values had vanished, they lent money to mortgage origination firms to gin up even more bad loans at higher and higher interest rates to shape into even more mortgage-backed securities to sell to their customers -- and each other.
Right there criminal fraud is manifest, contradicting Obama's claim that the scam was legal. But there was more. The banks, knowing that the instruments were worthless when they sold them to their own clients, purposefully bought "insurance" (credit default swaps) against their own products, thus doubly swindling their customers. And they made millions doing it -- first on the commissions from the sale, and then from their short position as the securities tanked. In 2008, the house of cards came tumbling down, taking with it the American economy.
Then enters Treasury Secretary Hank Paulson, formerly chief of Goldman Sachs -- the ubiquitous investment banking firm that has left fingerprints all over the meltdown -- who insisted that we must save the hides of the big banks (his compatriots) with the stimulus bailout to "rescue the financial system." Originally stated to be $787 billion, the total, according to Bloomberg research, reached $11.6 trillion -- all secured by American taxpayers. The result was the near-destruction of the consumer sector, which represents 80% of the economy, all to save the criminals who committed the illegal acts that brought down the economy. But worse, commercial and community banks are still burdened with bad real estate loans and investments. Consequently, they are under orders from banking regulators not to lend, which further exacerbates the decimation of the middle class and small business owners who cannot find loans to recover and grow. The stimulus should have been distributed -- via tax breaks and rebates -- to households to stimulate consumer spending, which in turn would have stabilized the small business sector that could have kept workers and hired for new positions.
Thus, Obama's claim on 60 Minutes that Paulson's policies averted another Great Depression is ominously premature. Big-bank economists and government policy wonks do not understand the U.S. economy -- that all new jobs are created by the small business sector. After three years of pain and suffering, someone saw the light, and Obama set out in 2011 to claim that he is now pushing small business recovery to create jobs. Yet his approach widely misses the mark by proposing federal money to create bogus "green energy" firms (like Solyndra) or the pitiful and outdated plan to rebuild the nation's infrastructure and dump billions into high-speed rail transit.
Obama and his cohorts -- like Paulson, now replaced at Treasury by Timothy Geithner, another investment-bank rent boy -- have not only failed in their approach to the recession, but they may be the architects of an economic calamity more painful than the Great Depression when all is said and done. The European Union debt crisis is just one of the continuing manifestations of the global economic crisis set off by the American financial scandal. Add in the inability of real estate values in the U.S. to recover, and unemployment figures that boggle the mind, and the worst is yet to come.
But the central question Steve Croft asked Obama must be addressed before Americans can begin to regain hope for the future: what is being done to expose and prosecute the criminals who caused the economic collapse? The Securities and Exchange Commission has tried to wipe the shame from its face by investigating some of the sleazy practices, but this comes well after the fox has left the coop with all the eggs. And indeed, fines have been levied against some of the best-known bank brands in the world: JP Morgan Chase, CitiGroup, Morgan Stanley, Bank of America, and others to come. But the fines are paltry, the banks are not required to admit guilt, and the individual culprits are not identified.
It turns out that the SEC cannot bring criminal charges under its charter, and Congress has refused to haul the perpetrators in front of an investigative committee. Obama dodged and weaved and said to 60 Minutes that it is not up to him to punish the culprits. Instead, he threw the ball back into Attorney General Eric Holder's lap, who has yet to bring a single charge against the conspirators. Why are these two and Congress avoiding the justice Americans demand? Are they under the influence of the mandarins at the Federal Reserve, the Treasury, and the New York Fed, who regulate the big New York banks? Do they believe that criminal prosecution or congressional hearings will divulge even more nefarious behavior that could shake financial markers even more? Are they taking hush money, or fearful of losing campaign contributions? The U.S. may be a polyglot nation today, but even newcomers understand the national belief that justice must be done.
Yet Obama refuses to go after the bad guys, to stand up for the people against the crooks on Wall Street, who walked away with all our money derived from a gigantic criminal conspiracy. Patting reporter Steve Croft on the knee, and purring that Croft and the public just don't understand, Obama is lending credence to the fear that he is a liar with an agenda, hell-bent on a new world order emphasizing big government and the demise of the middle class and small business -- the bourgeoisie, as Lenin called it.
Obama got away with another question by Steve Croft, who asked about the president's role in the divisiveness in Congress and across the political spectrum. Obama once again took on an avuncular visage and said that the ill will was caused by special interests and the Republican refusal to budge on new taxes -- mentioning Grover Norquist, author of the "no new taxes" pledge taken by a clique of Republican congressmen.
But our wily and mendacious president failed to mention his role in dividing the country by introducing his health care plan when citizens were reeling from the first throes of the financial meltdown. Indeed, it was the president and a Democrat-controlled Congress who split the country with ObamaCare, a far-reaching and frighteningly expensive overhaul that challenges core constitutional and free-market values held strongly by most Americans. And it was Obama who added to the disharmony on spending cuts and the budget by failing to acknowledge the findings of the debt reduction commission he created, co-chaired by Erskine Bowles and Alan Simpson. As an old friend once said of a cheater, "he bears watching."
But the Republicans in Congress are not helping by continuing to refuse to take initiative on spending, except to stonewall any compromise. Compounding the danger that Obama could win again in 2012 is the manic contest for the Republican presidential nomination that is exposing each candidate to merciless attacks by his or her own brothers and sisters. The voting public watches with distress as the office-seekers fall, taking with them another slice of credibility for the GOP. Frontrunners Rick Perry and Herman Cain have fallen, leaving space for Newt Gingrich to challenge Mitt Romney, the one candidate who can beat Obama. With congressional Republicans in gridlock and the presidential primary candidates committed to a suicide pact, the unopposed Obama is avoiding the harsh light of scrutiny when it is needed the most. Hang onto your hat if he wins again.