Monday, December 14, 2009

Obama's Big Sellout

Yesterday, two separate readers, Mark and Gwen (thanks to both), left an URL to this article in their comments.  I had not seen it, because the source where it was originally posted does not offer an RSS feed.  Today I found it cross posted in one that does.  Although we have discussed it somewhat in another thread, the information it contains is far too important not to feature it in its own article.

By Matt Tabbi

ObamaChange Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?

Whatever the president's real motives are, the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval - and without providing taxpayers a single dime in equity on the deals.

How did we get here? It started just moments after the election - and almost nobody noticed.

'Just look at the timeline of the Citigroup deal," says one leading Democratic consultant. "Just look at it. It's fucking amazing. Amazing! And nobody said a thing about it."

Barack Obama was still just the president-elect when it happened, but the revolting and inexcusable $306 billion bailout that Citigroup received was the first major act of his presidency. In order to grasp the full horror of what took place, however, one needs to go back a few weeks before the actual bailout - to November 5th, 2008, the day after Obama's election.

That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar - former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett - the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama's chief advisers during the campaign, didn't make the cut. Neither did Karen Kornbluh, who had served as Obama's policy director and was instrumental in crafting the Democratic Party's platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive "a Nobel Prize - for evil."

But come November 5th, both were banished from Obama's inner circle - and replaced with a group of Wall Street bankers. Leading the search for the president's new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama's biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters - chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).

Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm. And to help him pick Obama's economic team, Froman brought in none other than Jamie Rubin who happens to be Bob Rubin's son. At the time, Jamie's dad was still earning roughly $15 million a year working for Citigroup, which was in the midst of a collapse brought on in part because Rubin had pushed the bank to invest heavily in mortgage-backed CDOs and other risky instruments.

Now here's where it gets really interesting. It's three weeks after the election. You have a lame-duck president in George W. Bush - still nominally in charge, but in reality already halfway to the golf-and-O'Doul's portion of his career and more than happy to vacate the scene. Left to deal with the still-reeling economy are lame-duck Treasury Secretary Henry Paulson, a former head of Goldman Sachs, and New York Fed chief Timothy Geithner, who served under Bob Rubin in the Clinton White House. Running Obama's economic team are a still-employed Citigroup executive and the son of another Citigroup executive, who himself joined Obama's transition team that same month.

So on November 23rd, 2008, a deal is announced in which the government will bail out Rubin's messes at Citigroup with a massive buffet of taxpayer-funded cash and guarantees. It is a terrible deal for the government, almost universally panned by all serious economists, an outrage to anyone who pays taxes. Under the deal, the bank gets $20 billion in cash, on top of the $25 billion it had already received just weeks before as part of the Troubled Asset Relief Program. But that's just the appetizer. The government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets, many of them those toxic CDOs that Rubin had pushed Citi to invest in. No Citi executives are replaced, and few restrictions are placed on their compensation. It's the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin's fuck-up-rich tenure at Citi. "If you had any doubts at all about the primacy of Wall Street over Main Street," former labor secretary Robert Reich declares when the bailout is announced, "your doubts should be laid to rest."... [emphasis added]

Inserted from <Common Dreams>

I have posted a very small beginning of a very large article.  I strongly encourage you to click through and read it in it’s entirety.  The further into it you go, the worse it gets.

Did Obama hoodwink us?  Call me a sucker, but I tend to doubt it.  I think it more likely that he was hoodwinked himself.  Coming into office with the nation in the throes of economic meltdown, several advisors, including key Senators and Representatives from the establishment wing of the Democratic party, must have told him that only the people we now call Banksters had enough knowledge of the workings of Wall Street to save the economy.  Sadly, to our great detriment, he must have believed them.  Now he faces another challenge.  How can he extricate himself from their web without committing political suicide in the process?


rjs said...

Yes, Obama is Getting Serious About Banks. He is Now Calling Them Bad Names! (this is mostly about media coverage)

Annette said...

Matt Taibbi article is not completely true.. according to some others it is questionable.. I know that isn't possible according to people who follow Matt.. but if you only read one source you only believe that source..

From Bob Cesca's site:

Tim Fernholz describes Taibbi's piece as "a factual mess," "a conspiracy theorist's dream," "pernicious for a lot of journalistic reasons," and sidestepping actual administration policy failures. "It's almost as if he cherry-picked what he thought would fit with his narrative," Fernholz adds.

In Fernholz's corner, there's Oliver Willis who says Taibbi is "beclowning" himself. In Taibbi's corner is Glenn Greenwald who says Taibbi's item is "masterful."

So.. it is who you want to read and who you want to believe.. I think Taibbi has it in for Pres. Obama and has had for a long time.. He is like Arianna Huffington.. No matter what the President does on the economy it isn't correct.. and it isn't enough.. Look back over the last 11 months and you will see what I mean... They, the two of them have never, not once approved of anything he has done, nor have they approved of anyone he has appointed to the cabinet in the economic arena... So.. draw your own conclusions.

TomCat said...

Thanks, RJ. You know we can't depend on the media.

Thanks Annette. I disagreed with Tabbi to considerable extent in my commentary to the article. What cannot be denied is that the progressives who advised him to victory are nowhere to be found and the Banksters hold the key posts in his administration. I'm still in his corner, and if the election were today, I would vote for him again. But when he announced that he had appointed Geithner at Treasury and Summers as his chief economic adviser, I almost needed to change my underwear. He needs to dump the Banksters and give those positions to people who will administer for Main Street, not Wall Street.

Jo said...

Tom, Tom, Tom, Tom -- I'm just a dumb blonde from Canada, but none of this surprises me. I have always believed Obama had a hidden agenda, and it did not include the folks who supported him and got him into office.

I'm glad I'm not an American, because the man truly frightens me.

"How can he extricate himself from their web without committing political suicide in the process?" What on earth makes you think he wants to extricate himself?

Did you watch his interview on 60 Minutes last night? He has learned to speak with a bit more humility, and he pretended to be angry at the banks and especially at their bonuses, but -- hey -- it's all happening on his watch.

I admire your steadfast loyalty, but I think -- sadly -- that you are in for a huge disappointment.

Oso said...

Both Kevin Drum and Felix Salmon weigh in on the matter and side with Taibbi.

rjs said...

everyone "cherry picks what they think will fit into their narrative", thats the way most people make their case in any argument, and everyone who reads taibbi knows he is given to hyperbole and reads him with that in mind...(ie, who really believes that goldman sachs is actually a "great vampire squid with its tenacles wrapped around the face of humanity sucking anything that smells of money"?)

here's taibbi's response to his critics, including fernholz: "On Obama's Sellout"

TomCat said...

Josie, do you think the US would be better off with McConJob and Mooseolini?

Thanks for the links, Oso.

RJ, I think that a lot of the problem is that some folk are not willing to hear anything good about Obama, while others are not willing to hear anything bad about him.

rjs said...

Taibbi: Sorry Mainstream Journalists, I Don't Have To Be Two-Sided Like You Guys Do (video) "Matt Taibbi gave a very good interview on CNN yesterday afternoon, discussing his recent Rolling Stone piece on Obama's sellout. One of the more interesting points came when Taibbi was asked about some criticism from Andrew Ross Sorkin. Taibbi's response, basically: sorry maisntream jouranlists, I don't have to be evenhanded."
(video seems to be cut off after 4 minutes on this site, just when it was getting interesting)

TomCat said...

He doies have a point there. I don't claim to be even handed. I admit that I'm biased as hell and proud of it. But I do claim to be truthful.