Even though it’s been out for a couple months now, Dan Froomkin decided to bring up Ron Suskind’s Confidence Men again:
In the book, Suskind describes how Obama made the conscious choice to staff his economic team with former Clinton appointees whose sympathies were with Wall Street — and that those men were unable to see how drastically out of whack the country’s financial system had gotten both because they helped create it and because it had served them so well.
Then, rather than forcefully impose his campaign’s populist vision on these men, Obama again consciously chose to defer to them repeatedly — and tolerated it even when they slow-walked, pushed back against, or simply ignored his instructions.
During his 2008 presidential campaign, Obama spoke eloquently and strikingly about the excesses of Wall Street.
In the midst of the U.S. government’s September 2008 bank bailout, Obama told a Nevada audience: “Let me be perfectly clear. The fact that we are in this mess is an outrage. It’s an outrage because we did not get here by accident. This was not a normal part of the business cycle. This was not the actions of a few bad apples.
“This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years.”
And although he said it wasn’t time yet, he promised: “There will be time to punish those who set this fire.”
In October 2008, he promise to “take on the corruption in Washington and on Wall Street to make sure a crisis like this can never, ever happen again.”
And one day before he was elected president, he told a Florida audience: “Tomorrow, you can turn the page on policies that have put the greed and irresponsibility of Wall Street before the hard work and sacrifice of folks on Main Street.”
Obama’s most seminal speech on the crisis was his March 2008 address at Cooper Union. There, he laid part of the blame for the disaster on Clinton-era financial deregulation, including the 1999 repeal of the 1933 Glass-Steagall Act. That repeal, which broke down barriers between commercial and investment banking, led to the growth of financial behemoths that were able to take enormous risks with impunity because they were “too big to fail.”
“[I]nstead of establishing a 21st century regulatory framework, we simply dismantled the old one, aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight,” Obama said. “In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.”
Among the foremost champions of that deregulatory regime were the key members of President Clinton’s economic team, including Robert Rubin, who was Clinton’s treasury secretary, Larry Summers, who succeeded Rubin, and Timothy Geithner, who worked directly under both of them.
But once Obama was elected, and was staring into the maw of staggeringly large financial crisis, he made a fateful decision: He left most of his progressive economic advisers behind — including such liberal luminaries as Robert Reich and Joseph Stiglitz — and chose to go with name brand Clinton officials instead. Summers became his chief economic adviser, Geithner became his Treasury secretary, and fellow Rubin protégé Peter Orszag became his budget director. (According to Suskind, Obama even offered Rubin himself an office in the White House.)
The “bold visions of the campaign season… resolved into the serious, often risk-averse business of actually governing,” Suskind writes. “In the midst of a battering economic storm, it no longer seemed like the right time to be making waves.”
While the appointments of these men and a slew of similarly pedigreed subordinates reassured the financial markets, their leadership undermined Obama’s populist promises.
Many of them had already spent their interregnum feeding at the Wall Street trough.
Back in March 2010, I wrote for HuffPost that “people looking for the reasons why the Obama presidency has not lived up to its promise won’t find the answer amid the minor rifts between key players….. The fact is that after a campaign that appealed so successfully to idealism, Obama hired a bunch of saboteurs of hope and change.”
Why is Froomkin blaming Bill Clinton for what the Obama administration has done (or failed to do?)
Look, if you want to make a case that Bill Clinton is responsible for the financial meltdown, then go ahead and make it. Yes, he signed the repeal of Glass-Steagall. But that bill (Gramm–Leach–Bliley Act) passed Congress with veto-proof majorities. (Senate 90-8, House 362-57) So it’s a little disingenuous to blame it all on the Big Dawg.
But does anyone really think that Bill Clinton wanted to cause a financial meltdown? In hindsight it seems easy to connect the dots, but I don’t recall hearing lots of controversy back in 1999. More importantly, the Big Dawg left office on January 2001, nearly eight years before the shit hit the fan.
What is really ridiculous is blaming Bill Clinton for what his former appointees have done since leaving his employ.
First of all, Obama had limited options if he wanted to appoint Democrats with executive branch experience. There aren’t many former Kennedy/Johnson staffers still above ground, and the Carter people are getting a little long in the tooth.
Obama picked the people he wanted. Once they were in office they were HIS people, not Bill’s. Whether they gave Obama bad advice or ignored his directions, Bill Clinton had no responsibility or control over any of them.
If you read the whole article you will see that the reason why Obama has failed to hold Wall Street accountable is right in front of Froomkin’s nose:
Consider what progressive hero Elizabeth Warren told Suskind in a September 2009 interview:
“You can’t run a policy based on a misdirection, on a fiction,” she said. “I don’t know what the president is thinking. I don’t see the president. He meets with bankers. He doesn’t meet with me. But if he’s involved in this at all, he’s got to know that his angry words at Wall Street, at their recklessness and dangerous incentives in compensation, about how they do their business in ways utterly divorced from what’s actually good for the economy — that he can’t just say that sort of thing, and then dump money in their laps and be credible.”
Who’s the number one recipient of Wall Street donations?
They didn’t spend all that money for nothing. He’s the best investment they ever made.
Filed under: Barack Obama, Financial Meltdown, Wall Street Banks | Tagged: Barack Obama, Bill Clinton, Financial Meltdown | 16 Comments »