Romney lied repeatedly when he claimed that the Dodd-Frank Act creates a safe harbor for the SDIs.
What does the Obama administration stand for with respect to the greatest financial crisis in four generations? Obama stands for bailing out the banksters and not prosecuting them. The administration’s most cynical act was claiming that programs that were actually designed to bail out the banksters were programs to help distressed homeowners. Barofsky’s (SIGTARP) book reveals the sickening details.
[Elizabeth] Warren asked Geithner repeatedly about HAMP. After several evasions, Geithner said about the banks, “We estimate that they can handle ten million foreclosures, over time… this program will help foam the runway for them.”
Romney lied repeatedly when he claimed that the Dodd-Frank Act creates a safe harbor for the SDIs. Obama failed to rebut the lies, but the greater problem is that because he listens to Geithner’s advice Obama has done nothing to end the SDIs, which would have turned Romney’s attack into Obama’s triumph. Dodd-Frank should have ended SDIs and it would have if the President had rejected Geithner’s advice. If Obama had pushed for Dodd-Frank to end the SDIs it would have smoked out the SDIs’ defenders – which would have included Romney and Ryan.
During the debate, Romney changed his positions when he backed away from his plan to repeal Dodd-Frank and its financial regulations.
The continuing failure to remove the threat posed by the SDIs has nothing to do with (non-existent) Dodd-Frank safe harbors for the SDIs. But that actually demonstrates that the fault lies with Obama listening to Geithner. The administration, prior to and after the passage of Dodd-Frank had and has the statutory authority to shrink the SDIs to the point that they no longer pose a systemic risk to the global financial system. The Obama administration has followed the Bush administration policy of refusing to use that authority and the SDI problem increased greatly under both administrations.
During the debate, Romney changed his positions when he backed away from his plan to repeal Dodd-Frank and its financial regulations. Obama failed to point this out or explain why greater financial regulation was necessary.
But we need to step back and consider why Romney would think he could get away with his lies and evasions on these points. If Obama had appointed vigorous regulators and prosecutors and made it a national priority to remove from office the banksters who control our SDIs and prosecute them Romney could not have attempted these lies. Obama would not have been on the defense – he would be presenting himself as the president who led the successful campaign against the banksters. Similarly, if Obama had appointed vigorous regulators who reestablished the criminal referral process that is essential for prosecuting elite banksters and adopting and enforcing the rules that would prevent future crises he would have been on the offensive taking credit for these successes. If Obama had fought to establish real relief designed to aid distressed homeowners rather than “foam the runway” for the banks Obama would be the hero.
Instead, Obama followed Geithner’s and Orzag’s advice and derided and reduced regulation and cynically used programs purportedly designed to help homeowners to as yet another means to bail out the banks. Obama is incapable of reversing fields and endorsing vital regulations and real programs for the homeowners because of his “man crush” on Geithner – the banksters’ pipeline to the Obama administration.
The debate revealed that Obama does not stand for anything positive when it comes to the banksters or distressed homeowners.
The debate revealed that Obama does not stand for anything positive when it comes to the banksters or distressed homeowners. Geithner is not a banker or a technocrat. He is an American apparatchik who rose by attaching himself to powerful political patrons and telling them what they want to hear. That reflects badly on Obama. Geithner gave Obama the answers Obama wanted to hear – we must not act against our largest donors (and Geithner’s most likely future employer), the banksters, by holding them accountable for their frauds because if we were to do so the economy would collapse. Geithner’s answer, which became administration policy, was to lie about the banksters’ role in causing the crisis and the financial condition of the banks.
Obama should hold Romney accountable for his endemic lies during the campaign and debate, but he would be in a better position to do so if he fired Geithner and Holder, ended his administration’s lies about the banksters, and reversed the administration’s unjust and destructive financial policies. Obama needs to stand for something – he should stand for the American people against the banksters and the SDIs. The irony is that by following Geithner’s advice Obama acted dishonorably and foamed the runway for Romney’s lies about the financial crisis.
About the Author
William K. Black is the author of The Best Way to Rob a Bank Is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.
Follow him at: @WilliamKBlack