While Goldman is reporting record profits once again, Obama looks like he is siding with Volcker:
President Obama on Thursday will publicly propose giving bank regulators the power to limit the size of the nation’s largest banks and the scope of their risk-taking activities, an administration official said late Wednesday.
The president, for the first time, will throw his weight behind an approach long championed by Paul A. Volcker, former chairman of the Federal Reserve and an adviser to the Obama administration. The proposal will put limits on bank size and prohibit commercial banks from trading for their own accounts — known as proprietary trading.
The White House intends to work closely with the House and Senate to include these proposals in whatever bill dealing with financial regulation finally emerges from Congress.
I’ve been under the impression that all the reputable folks who I read about the Wall Street and financial crisis were upset that Volcker was being marginalized. If he is in fact siding with Volcker, then this is a good thing, no?
Joe Beese
The last time Obama called the banksters on the carpet, they couldn’t even be bothered to show up.
Yeah, I’m sure they’re real frightened of this.
Chyron HR
Oh, that Obama, always throwing the
under the bus. When will he stop pissing all over the true liberals in the
?
Svensker
As long as he can do it through Exec Order, cuz he sure as heck isn’t going to be able to get any legislation thru with our 59 ninnies.
General Winfield Stuck
But no greedy traders will be hung in the public square.
Another Obama – FAIL
the corporatist satan.
Montysano
If he gets it done, then yes, it’s a fine thing. As I commented on a previous thread, the perfect storm of the Wall Street bailouts and the HCR debate have brought the corporate control of government into sharp relief. This is what is driving much of the National Anger, and if Obama can begin to rein it in, good on him.
CT Voter
Sorry. Guess I’m still so angry that even this doesn’t seem like a big deal. In fact, I find it ludicrous that there’s even a notion that there’s going to be legislation involving financial regulation.
He may have gotten the wake-up call, but it may have been five minutes too late. Republicans aren’t going to cooperate, and Democrats aren’t going to legislate.
We’re screwed.
Montysano
@General Winfield Stuck:
Well then… maybe 50′ yachts instead of 100′? More modest weekend homes on the Vineyard? It’s a start… I guess.
QFT. It’s the problem from which most all of our worst problems arise.
Fergus Wooster
God I hope so. Back during the campaign, I remember repeatedly being impressed that this was a man who learns from his mistakes.
Whether he has waited too long. . . let’s say I’m not optimistic, but eager to be proven wrong. Please.
I’ve been too depressed to even get on the intertrons for the past couple days.
danimal
Banking reform is a good issue for Dems to maintain a hard line. Make the GOP kill it, then bring it up again. Marry the obstructionists to the financial lobby. Demagogue it.
I’ll even lead the charge on my magical unity pony if they do this.
BTD
Unreservedly good news.
Kudos to Obama.
Carwin
Given all the blah blah blah about the Mass. election wouldn’t now be a good time to get rid of Geithner?
Montysano
@danimal:
Absolutely. It would be a slam dunk. The populace would eat it up. The only problem? The Dems in Congress are corporate whores in almost equal measure to the Repubs.
arguingwithsignposts
@danimal:
A horde of magical unity unicorn ponies would be an awesome sight on the steps of the Capitol.
I do think it’s a good thing Obama is starting to listen to Volker. I’m hoping Timmeh and Summers are on the outs.
Here is another question related to financial reform: I know that the FCC has certain powers to regulate without going through Congress. Do the financial regulators have similar powers? Is there a way to do some of this through the executive branch without going through the Bank of America – Congress(tm) branch?
kay
“Mr. Volcker, chairman of the president’s Economic Recovery Advisory Board, a panel of outside advisers set up at the start of the Obama administration, has gradually lined up big-name support for restrictions on such trading.”
Smart.
max
If he is in fact siding with Volcker, then this is a good thing, no?
If he in fact is siding with Volcker, you damn skippy. I don’t know what they put in the Koolaid over there, but if they’re actually changing flavors, outstanding. About goddamn time.
We’ll see what the actual proposal says. Larry & Timmy really really hate the dividing the investment banking from the commercial banking, so I am very curious to see what’s going on. (If the investment banks control a bunch of consumer deposits, they can use the deposits as a base to make a bunch of risky loans and/or speculate in the stock market, which is good for the hedge funds, but bad for everyone else.)
max
[‘They were talking up aggressive reform last year, but you know: zip. So we’ll see.’]
Robin G.
I’m hopeful. Realistically, I don’t think this could have been done a year ago — the banks were holding a thermal detonator. Remember how thoroughly unstable the economy was; it would have only taken one good hit for the entire country to collapse, with literal mass panic, and Wall Street wasn’t afraid to take everyone down with them. Even Jabba negotiated under those circumstances.
Now things are more stable (not good, mind, but stable), and Wall Street has been lulled back into complacency. In other words, I think this is a great time to go after them. Of course, Obama has to follow through — but, again, hopeful.
danimal
@Montysano:
Nawww, the Dems have plenty of union whores that’ll vote for reform. But you’re right, the Blue Dogs are bigger corporate whores than a lot of Republicans.
Yossarian
This is great. As Yglesias among others has pointed out, banking/financial reform is the sort of issue where you really can afford to pick a high-profile fight and lose legislatively. And who knows, you just might win, at least on a few important things.
Scott Brown won, ultimately, because he was seen as an outsider who stuck up for the little guy (total bullshit, but still). Those sorts of victories will be few and far between if Obama can credibly turn the GOP into the Party of Banks, legislative success be damned.
The Grand Panjandrum
This is very good news. No downside here.
Brick Oven Bill
”Harry, I have a gift”.
In the above link, Professor Ogletree explains how Barack, when at Harvard, would say lots of syllables and people would tend to think that he agreed with their own views. The key to this approach is to not make any verifiable points. For instance, one should never say:
‘The system worked’.
This sentence contains one point and only four syllables, and is thus very bad. Bad Janet. Now consider Professor Ogletree’s observation.
“Everyone was nodding, Oh, he agrees with me.”
In my opinion, I think that if the government stopped printing and giving money to the banks at zero percent, and then buying it back from them at three percent, then the banks would have to loan money to worthy businesses, which is a more difficult business model. In this scenario, bank would have to earn their money. Bonuses would then very likely fall into line with merit.
This is why my recommendation is for the President to authorize Doug Hoffman, and the United States Marine Corps, to audit the books of these bailout banks, in the name of transparency.
cat48
It’s good news for John McCain I think. Hope you are comfortable this morning.
Violet
@danimal:
Absolutely. This issue is nothing but win for the Dems. People are really angry at the banks and Wall St. types, who are all seen as bringing home eight figure bonuses.
Dems should take on this issue, talk about enacting reform to protect “average Americans” and let the Republicans be the ones to protect the bankers. Of course that means the Dems need to have their house in order and avoid having cosy relations of their own with bankers.
General Winfield Stuck
@danimal:
This, and his remarks last night in that interview were also a “this”. He drew a handful of jokers on the economy upon taking office, and even though this unprecedented, at least since the GD, economic shit sandwich has not been handled with aplomb always, it was necessary to stave off even greater disaster. The opportunity to remove this thorn in the electorates side is paramount for Obama to stay popular and keep from getting labeled a soshulist menace from the right, and a business as usual corporate whore from the left. This is a good first step, but it is a great issue for dems, if the real corporatist whores in dem congress quarters, can be quartered themselves from blocking meaningful reform.
Fergus Wooster
@Carwin:
Yes – bring out the long knives. Fire Geithner, bring Volcker in for a larger and official role.
The NYT interview indicates Obama at least understands the source of the frustration. Now bloody act on that. As everyone before me said, demagouge it. Make the Repubs stand with Lloyd “God’s Work” Blankfein.
Please.
Brian J
It’s probably a good thing, yes.
drunken hausfrau
Yes.
Sasha
It’s occurred to me that Obama’s response to the Massachusetts debacle is to go Full Metal Populist. This might be the first pivot.
robertdsc
No because the GOP will block any SecTreas nominee. Someone is going to have to smack Timmeh upside the head several times to get him to go with the program. We’re stuck with him for good unless the Dems remove the filibuster at the start of 2011.
jwb
Except he either needs to get his economic team out in front talking down the bankers using language that is convincing or he needs to fire at least one member of the Geitner, Summers, Bernanke troika. Because at this point he has little credibility on the issue and really I’ll believe it when I start to see some meaningful action that shows he’s behind the reforms.
KXB
Wall Street often argues that regulations will inhibit innovation in banking and finance. When Volcker was asked this question recently, he said that the only worthwhile “innovation” in banking in the past 30 years was the ATM.
jwb
@Sasha: It’s not really in Obama’s character to go full metal, but, yes, it would be nice if he at least returned to the populist themes on which he ran his campaign. It would also be nice if he asked his supporters to do something concrete.
Glocksman
@Violet:
In other words, bid good riddance to Chris Dodd.
geg6
@max:
This. I have no trust in what they say they are going to do now. Show me some action. Can Geithner and Summers. Put Volcker in the spotlight as the face of the economics team. He’s been practically screaming bloody murder about this for a year. Why Obama was so goddam idiotic as to re-nominate Bernanke to the Fed chairmanship is beyond me. His vaunted expertise on the Great Depression cannot seem to overcome his Randian values and his actions and words show it in every way. Gawd, I hate the team this president seems to defer to on economics and I have seen no evidence that they deserve his confidence, either in their pasts or in the present. Complete tools of their investment banker masters.
gwangung
@geg6:
I’d say this was more practical a week ago than now. Who’re their replacements?
gypsy howell
Ha. Well timed announcement with the SCOTUS decision on campaign finance.
Does anyone — ANYONE — think legislation and regulation will survive the onslaught of corporate-cash-to-congressmen?
No, I don’t either.
gex
Frankly, if this is the battle he wants to engage in over the coming months leading to election season, I’m all for it. I think the discussion needs to be had very publicly whether or not anything substantive passes. We need to start making a dent in the misconception of the free market as a market free from rules, and that rules are required to keep the free market operating. Not only is addressing the Wall Street problem important, it will hopefully re-energize supporters.
The one thing that gets through to just about every voter are issues to do with their money. The tax on big financial industries to pay us back will resonate. Fixing the financial system so that we can let failed companies actually fail without being able to blackmail us all into saving them should resonate as well.
@danimal:
I suppose that’s true. There’s less value in bribing a Republican, they were going to vote corporate interest anyhow, just based on party platform. Much more valuable to own a Blue Dog.
Glocksman
@geg6:
Indeed.
The names have changed since Bush but the underlying philosophies have not.
Hindsight is 20/20, but I should have realized at the time of Geithner’s nomination that it was going to be ‘business as usual’.
Hopefully this is a sign of real change and not just another fucking maskirovka to keep us stupid proles occupied.
p.a.
We’ll see. Personally I predict more foundering on the rock
of bipartisanship. “We want this to be a joint effort. Messrs.
Lieberman, McCain, Graham, what say you?” One more round of ‘thank you sir may I have another…’ File under: insanity is doing the same thing over and over while expecting different results.
geg6
@gwangung:
Why is it more practical then than now? What is the downside? Are you saying the GOP senators would filibuster a Sec. of the Treasury nominee? And there is a downside to that at this point? And why not put Volcker in as Sec.? A filibuster against a former Fed Chairman? The former Fed Chair who is widely credited with ending the Carter stagflation in the early years of the Reagan administration, leading the great Ronaldus Maximus to reappoint him to the Fed? Oh, I hope so.
Econwatcher
I think Obama needed to wage a loud and aggressive populist campaign against bankers right out of the blocks, last January. If he tries it now, I think it may ring kind of hollow. (But better late than never to try it.)
Plus, he just doesn’t seem to have a natural talent for vilifying wrongdoers to help focus blame and further his agenda. That may speak well of him as a human being. But he may be lacking what his party needs right now.
PTirebiter
@geg6:
I really agree with getting him in the spotlight. Not only does he make a lot of sense to me, his demeanor is the antithesis of The Gordon Gecko crowd. He has a unique ability to explain the complex to laymen, and mathematically challenged dolts like me.
Mattsky
Does that include pushing the bank tax?
Sleeper
If he follows through on this, then this is a great first step.
I think a major, concerted, aggressive effort to take on the banks, and WIN, not just make a little noise and look like he tried but to actually ram something through, will help staunch the bleeding from the loss of health care reform. Might even be enough to make people forget that.
At this point, I just don’t see passing the Senate bill as doing much, politically. (Just setting aside the matter of whether or not it’s good policy, that’s a separate debate.) There’s enough discontent about how bad the Senate bill is that passing it without also passing fixes at the same time will alienate as many people as it cheers. But that, coupled with a haymaker thrown right at the face of Wall Street, might rejuvenate the Obama Administration, or at least let them regain their equilibrium.
Quiddity
I have been a mega-fan of Volker for years. He was correct to warn about a financial problem several years ago. He’s not impressed with “financial innovation”.
This move is long overdue.
Chad S
There’s bipartisan votes on this. Get it out asap.
Sleeping Dog
Knowing Obama as we now do, by the time this becomes law it will remove the income tax from the bonuses of bankers.