Web Letters: Obama's False Financial Reform

When I read Mr. Greider's "Who Will Tell the People," it filled me with hope he would eventually rise to the stature of another I.F. Stone. Alas, this is obviously not to be: while Mr. Greider does a superb job of reporting on the Obama Administration's failings, he remains oblivious to--or in deliberate denial of--their broader implications.

Taken as a whole, Obama Administration domestic policy expresses ever more succinctly the bitter truth that "change we can believe in" was never anything but the latest Big Lie fed the hopelessly submissive electorate of what--behind the labels "Republican" and "Democratic"--has been effectively a one-party state since November 22, 1963, and is now at last publicly declaring its identity.

This is clearly the message sent us by the lists of those the administration has already defiantly betrayed--financial reformers, gays and civil libertarians--or the others, most notably advocates of single-payer healthcare and supporters of the Employee Free Choice Act, from whom the administration is now distancing itself.

That such betrayal was predictable makes it no less painful. When I voted for Mr. Obama, I did so believing his candidacy was nothing more than a pacifier fed us by the ruling class but nevertheless hoping he might evolve into another Franklin Delano Roosevelt and his administration thus become another New Deal.

Now, of course, I know that will never happen. For the past forty-six years the United States has ever more obviously transformed itself into not just a one-party despotism but a realm in which the sole purpose of government and governance at all levels is the perpetuation of capitalism: the absolute protection of the ruling class, the total subjugation of all the rest of us. And now it is becoming clear that nothing on earth can stop its juggernaut of expanding tyranny.

Thus President Obama is merely doing what he was elected to do: first pacify us, then teach us that hope is audacious only in its most original sense: defiance of some shibboleth or status quo, a self-destructive act not only foolhardy but irrevocably doomed.

Meanwhile the present socioeconomic order is cemented ever more firmly in place. The sole beneficiary is Big Business: note, for example, how its obscene profiteering will be guaranteed by mandatory health insurance, which in effect will forever enslave us to the insurance oligarchs.

Perhaps then the real deception in the Obama campaign was not in its slogan but in the meaning of its pronoun--for there's no longer any doubt "change we can believe in" applies only to the ruling class.

Loren Bliss

Tacoma, WA

I would like to add several names of enablers to the list; Greenspan, Friedman and Rubin. Museums are full of gluttonous free-roaming monsters that literally ate themselves to death.

How about my hero Sheila Bair? Why isn't she at the table in all of this? She seems like the only reasonable and rational voice to date.

James L. Pinette

Caribou, ME

President Obama told us that if we wanted him to do something, then we should make him do it. Undoubtedly this proposed bank regulation will get watered down from the current version if we do not follow his advice. In comparison to the credit card legislation, which fails to ban usury and will turn us into a slumdog nation, the banking regulation is off to only a slightly better start.

Auditing the Federal Reserve by Congress is definitely positive, but it has to be followed by a serious investigation into possible organized criminality in the mortgage crisis. Consider what happened.

It could have been possible that a small number of individuals working together from key positions within the financial industry and the government looted personal home equity, which taken cumulatively comprises the largest asset base in the country. Poisoned-pill subprime and alt-A mortgages were written and sold in large numbers without regard to risk. This event was preceded by systematic acts of deregulation, lessening of oversight and protection from liability. Large financial incentives for writing these mortgages were also put in place. Home equity was securitized, pooled and traded, which obscured the trail of these funds. Poisoned mortgage securities were traded for bank cash and the money moved from the banks to offshore shadow banks as effectively as a bank robbery.

Individuals working together would be aware of the impending failure of the mortgage securities because they were responsible for the booby-trapped securities and could profit a second time by selling the bank stock short, and a third time by insuring the poisoned securities at AIG. When the banks were left holding a large portfolio of toxic mortgage securities, "mark to market" would trigger the banks' failure to meet their capitalization requirement and they would ask for government help. The banking system would need to be shored up with new cash by the taxpayers or allowed to collapse. Interestingly, without the recently added wrinkle of "mark to market," neither the credit bubble nor its bursting would likely have occurred.

Trillions of taxpayer dollars were lost in the mortgage crisis. Are we so numbed by the events of the last eight years that we are going to "move forward" but leave "justice" behind? How do we know that no laws were broken without an investigation? How can you write tough laws until you know what happened? Where is the outrage?

William J. Hague

Hoboken, NJ

No doubt Obama et al. have not done very much to reform the economy, as Grieder notes, but what is downright awful is that their failure will cause the rest of us more misery.

Consider: The Obama reform does not eliminate the fraud that was at the center of the great Wall Street crash. What was the fraud? Straw was turned into gold and knowingly sold the world over:

How did this fraud work? It centered on the subprime mortgage business. Credit was so easy to obtain that anyone with a pulse was given a subprime mortgage; these, in turn, were shoveled through the doors of the banks and insurers like AIG. Next, our best and brightest bankers prevailed (since they paid the rating agencies for their ratings) upon the rating agencies to label the junk as AAA securities. These “troubled assets” were then sliced and diced, securitized, leveraged 30 times and sold around the world as if they were gold. The business was such a money machine that it was impossible to say no to it. When the housing bubble burst, people lost their life savings, and countries went down. (Take particular notice of the "securitization" part. This is the way they turn junk into gold. They can do this any day of the week, including Sundays: beware when Madoff or Summers knocks on your door!)

The Obama reforms has not stopped this process--we still have a "debt bubble," as well as a "housing bubble." Credit can still issued for cars, student loans, housing, etc., securitized, falsely labeled as AAA and sold. Bankers fly high and live large until the bubble deflates and the rest of us lose our jobs, houses and health.

Howard Kaplan

Belmont, MA

I 'm always happy to see Mr. Greider's articles in The Nation and have read most of his books.

One problem though, Mr. Greider. How can you divorce the financial machinations going on from the radical changes to the US economy that you so thoroughly outlined in your book about global capitalism?

So many progressive writers are losing sight of our economy's transformation to the finance capitalism reminiscent of 1929. Discussing Wall Street is useful in pointing out the corruption that goes with their power, but without context it won't lead to any meaningful discussion or change.

Myron Perlman

Chicago, IL