Obama's Banks, Our Jobs

Published: Thursday 8 September 2011

The same sector that screwed the country over, and that, despite some unpleasant lawsuits they will likely settle, remains as powerful, unrepentant, unaccountable, selfish and Main-Street-destabilizing as before Obama took office

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Be­fore to­mor­row's 2012 pre-elec­tion speech in which Pres­i­dent Obama's vocal elo­cu­tion will be earnest, and re­sults - to put it mildly - tepid, about how he could cre­ate jobs dammit, if only the Re­pub­li­cans would be­have, it's in­ter­est­ing to note who's sup­port­ing Obama keep his job.

A cur­sory look at the early stages of his cam­paign fundrais­ing re­veals that the same group of peo­ple that ben­e­fit­ted from poli­cies (bi-par­ti­san) that lav­ished them with cheap money, se­cret loans, debt guar­an­tees and other forms of perks not avail­able to the av­er­age cit­i­zen, are back­ing him for Pres­i­dent. Big Time. 

And whereas it's true, Obama's most re­cent poll num­bers look as abysmal as any Pres­i­dent (save FDR who he will never, ever be) fac­ing a de­pressed econ­omy and a near dou­ble-digit 'of­fi­cial' un­em­ploy­ment rate (worse if you get be­neath its mas­saged sur­face), this isn't ef­fect­ing his most im­por­tant sup­port, the fi­nan­cial kind. To date, Obama's Pres­i­den­tial bid dosh comes largely from - wait for it - the fi­nan­cial sec­tor.

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Yes, the same sec­tor that screwed the coun­try over, and that, de­spite some un­pleas­ant law­suits they will likely set­tle,  re­mains as pow­er­ful, un­re­pen­tant, un­ac­count­able, self­ish and Main-Street-desta­bi­liz­ing as be­fore Obama took of­fice. No won­der he's been able to keep Trea­sury Sec­re­tary, Tim Gei­th­ner by his side - some­one has to allay Wall Street con­cerns that true ret­ri­bu­tion or mean­ing­ful reg­u­la­tory reper­cus­sion will be­fall them.

So far, Obama has raised $49 mil­lion dol­lars. (More than all the GOP wannabes com­bined, but that's largely be­cause he's got the head-start and in­cum­bent fac­tor going for him. Plus, he's a hit at fundrais­ing events. Here in Los An­ge­les, he's tied up traf­fic sev­eral times with those al­ready.) Nearly $35 mil­lion has come from 'bundlers', those wealthy, con­nected, folks that cir­cum­vent the caps on their in­di­vid­ual do­na­tions by pool­ing their dough to­gether. And just over a third of that, or $11.8 mil­lion, comes from the Fi­nance Sec­tor (and yes, one of the sec­tor's 44 bundlers is from Gold­man Sachs, his num­ber two con­trib­u­tor in the 2008 elec­tion). 

Now, it's not shock­ing that the banks are bank­ing on Obama. Until they see a surer bet on the Re­pub­li­can side emerge, they're not going to be dif­fu­sive with their cap­i­tal that way. And, be­yond some scold­ing words a cou­ple years ago around elec­tion time, fol­lowed by a Wall Street speech to which none of the CEOs showed, Obama has done zero to ex­pose, de­nounce, or change the spe­cific fraud­u­lent ac­tions of his sup­port­ers - that would be - po­lit­i­cal sui­cide for him. Plus, in the game of pol­i­tics today, the issue for both par­ties is slam­ming each other, Wall Street ire has been re­placed with en­ti­tle­ment spend­ing cut ban­ter, whether this re­sults in mean­ing­ful pol­icy is not even an af­ter­thought.

Mean­while, Obama will re­lease de­tails of a new $300 bil­lion jobs stim­u­lus pro­gram and urge the GOP to allow him to do his job by cre­at­ing the na­tion's jobs. He might even throw in a sen­tence or two about help­ing down­trod­den bor­row­ers re­fi­nance, which will re­quire bank ap­proval and fa­cil­i­ta­tion, which there­fore will be as suc­cess­ful as HAMP. And the GOP will balk and say we must cut spend­ing not in­crease it, re­fus­ing to ac­knowl­edge the ex­tent of debt we cre­ated to float a crim­i­nal bank­ing sys­tem.

Stale­mate to the nth de­gree. Big yawns all around. 

What Obama will not dis­cuss, is the pri­vate lend­ing prob­lem that caps the abil­ity of in­di­vid­u­als to stay afloat and small and mid-size busi­nesses to hire. Though they have been treated with kids gloves and deep pock­ets by Wash­ing­ton, the big banks have not shared the joy they re­ceived. Small busi­ness loans re­main ane­m­i­cally at late 2008 lev­els in­hibit­ing hir­ing or ex­pan­sion - and these are the com­pa­nies that don't off­shore in a heart­beat. Re­fi­nanc­ing and mort­gage re­struc­tur­ing, de­spite record low in­ter­est rates mak­ing the trans­ac­tion sen­si­ble and re­duc­ing risk all around, are neg­li­gi­ble, thus home move­ment is im­pos­si­ble and con­sumer con­fi­dence and con­struc­tion jobs are hit in the process as well. Per­sonal and busi­ness bank­rupt­cies con­tinue to mount ab­sent op­por­tu­nity. This isn't a healthy sce­nario for job growth.

You can blame it on 'the econ­omy', 'tough times' 'all of us strug­gling to­gether' or any other generic poli-sound bites. Or you can blame it on the biggest banks sit­ting on extra cap­i­tal, which ei­ther a) is stored at the Fed in the form of $1.6 tril­lion worth of Trea­sury bonds that re­ceive in­ter­est in ex­cess of the cost of bor­row­ing the money to pur­chase them, b)  is used to trade and spec­u­late, or oth­er­wise de­rive ways to make a 'quick' buck, or c) is set aside to deal with law­suits they brought upon them­selves. Again, none of this is na­tion­ally pro­duc­tive or job in­duc­ing.

The pri­vate bank­ing sys­tem is hold­ing peo­ple's homes, po­ten­tial jobs, and gen­eral con­fi­dence and eco­nomic well-be­ing hostage. Thus, how­ever Obama phrases what­ever he says to­mor­row, and even if his plan for a job stim­u­lus pack­age is ver­bal­ized in a more co­her­ent strat­egy than last time - with­out a loos­en­ing of credit - new or re-ne­go­ti­ated or oth­er­wise more be­fit­ting the low rate en­vi­ron­ment that the Fed of­fers banks, it's just one tiny piece of a giant puz­zle that won't be able to do squat to turn the tide.