If you listen only to his speeches, President Obama has certainly taken on a more populist and progressive economic message. In December, for example, he called out trickle-down economics, saying “It doesn’t work. It has never worked.” In that same speech, the president said that income inequality was the “defining issue of our time” that also “distorts” our democracy.
Those words have at times been matched with action—Obama successfully pressed for extended unemployment insurance in December, and in January, he used controversial recess appointments to staff the Consumer Financial Protection Bureau and the National Labor Relations Board.
But the administration’s newly found populism has a glaring weak spot: its failure to punish the large financial institutions that helped create the current economic crisis, and the corollary failure to help those hurt most by the mortgage crisis.
In fact, it would be more accurate to say that the administration is trying to protect those large financial institutions by pushing for a nationwide settlement that would let bankers avoid any investigation into the wide-scale mortgage fraud that took place for much of this decade—to say nothing of punishment.
The settlement, which the administration is trying to force upon sometimes unwilling state attorney generals, would force banks to write down the principal on many mortgages—but using bank investor money, not the bank’s own funds. This would lead to less, and lower, write-downs, and wouldn’t ask the banks themselves to sacrifice anything. And given the failures of the administration’s mortgage assistance programs to date, it’s even harder to believe people with underwater mortgages would be helped under a similar federal initiative.
Moreover, the settlement then protects the banks from prosecution over the housing crash forever. As 60 Minutes noted in December, there hasn’t been a single prosecution of a high-ranking executive nor Wall Street firm for their role in the crisis. As Campaign for America’s Future RJ Eskow writes, “[j]ustice isn't served by letting an entire group of wealthy and powerful individuals remain above the law. And justice isn't served when millions of Americans continue to pay the price of financial ruin or hardship for crimes that will forever remain unpunished.”
So today, several progressive groups—The Campaign for America’s Future and MoveOn, Credo, Progressives United, New Bottom Line and Color of Change—is working to deliver petitions to the White House and the Obama campaign office in Chicago demanding that the big banks not be left off the hook. It reads:
We the undersigned urge you, President Obama, to launch an immediate investigation into what the FBI warned was an “epidemic of fraud” that contributed to the housing crisis and threw millions out of their homes. The proposed sweetheart deal that would prevent such an investigation from taking place should be stopped. It is vital that the laws be enforced, that those who broke the law be held accountable—or else Wall Street bankers will feel free to defraud people in the future.
You can view the petition here. We’ll keep you posted in its progress.