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Robert Scheer
Truthdig / Truthdig Op-Ed
Published: Saturday 8 December 2012
While the SEC is supposed to supervise the banks rather than abet them in their chicanery and although the Treasury Department has been a captive of Wall Street lobbyists for most of the modern era, one would expect something better from the second coming of Barack Obama.

A Sign That Obama Will Repeat Economic Mistakes

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Please don’t tell me that these reports in the business press touting Sallie Krawcheck as a front-runner for chairman of the SEC or even a possible candidate to be the next Treasury secretary are true. Who is she? Oh, just another former Citigroup CFO, and therefore a prime participant in the great banking hustle that has savaged the world’s economy. Krawcheck was paid $11 million in 2005 while her bank contributed to the toxic mortgage crisis that would cost millions their jobs and homes. 

Not that you would know that sordid history from reading the recent glowing references to Krawcheck in the New York Times, the Wall Street Journal and Bloomberg News that stress her pioneering role as a leading female banker—a working mother no less—but manage to avoid her role in a bank that led the way in destroying the lives of so many women, men and their children. Nor did her financial finagling end with Citigroup, as Krawcheck added a troubling stint in the leadership at Merrill Lynch and Bank of America to her résumé. 

A woman who would be an excellent choice as the most experienced as well as principled candidate to head the SEC or Treasury is Sheila Bair, former head of the FDIC, who labored to protect consumers rather than undermine them. Indeed, her outstanding book “Bull by the Horns,” chronicling her fight in the last two administrations to hold the banksters accountable, should be required reading for the president and those who are advising him on selecting his new economic team. 

The SEC is supposed to supervise the banks rather than abet them in their chicanery. And although the Treasury Department has been a captive of Wall Street lobbyists for most of the modern era, one would expect something better from the second coming of Barack Obama. Those are key appointments in determining whether the president can turn around the still-moribund economy by channeling the spirit of Franklin D. Roosevelt. Or will he continue to plod along on the course set by George W. Bush, bailing out the banks while ignoring beleaguered homeowners and the many other victims of this banking-engineered crisis? 

Obama was given a pass on the economy by voters only because Mitt Romney was an even more craven enabler of Wall Street greed. But the outlines of the Bush Wall Street payoff remain in place, with the Federal Reserve continuing to bail out the banks with virtually free money and the purchase of $40 billion in toxic mortgage-based bonds every month to add to the more than trillion dollars in that junk that the Fed previously had taken off the banks’ books.

The money printing by the Fed is at the heart of the massive debt crisis. But it has been great for the bankers, with compensation at the 32 largest banks slated to hit an all-time high of $207 billion this year, according to a Wall Street Journal estimate. This reward for ripping off the public is almost three times the amount the federal government spends on education. Once again the bankers are blessed for their failures, receiving such wildly excessive compensation despite the fact that banking revenue is down 7.2 percent over the last two years. 

A prime example is Krawcheck’s old bank, Citigroup, whose new CEO this week announced that the company has been forced to engage in a major retrenchment, eliminating 11,000 jobs and closing 84 branches. The bank has been deeply troubled ever since the housing meltdown it helped trigger first began, and it was saved from bankruptcy only by a direct infusion of $45 billion in taxpayer money and a commitment of an additional $300 billion in underwriting of Citigroup’s bad paper.

The ugly tale of America’s Great Recession is inextricably entwined with the deplorable practices of Citigroup, the too-big-to-fail bank made legal by Bill Clinton’s signing off on reversing the Glass-Steagall law that prevented the merger of investment and commercial banks. The first beneficiary of the revised law was the newly created Citigroup, saved from bankruptcy a decade later by the taxpayers. 

I shouldn’t be surprised that Krawcheck would be considered a viable nominee for a central position in managing our economy. After all, her colleague in the top ranks at Citigroup during the years of financial depravity, Robert Rubin, is considered a significant adviser to the Obama administration, and his protégés, led by Treasury Secretary Timothy Geithner, are still directing policy. It was Rubin who pushed through the reversal of Glass-Steagall, an act of betrayal of the public interest that was rewarded with obscene amounts of money when he ultimately took the job of leading the bank he made legal.

The very fact that these folks remain influential, as witnessed by Krawcheck being considered to head the SEC rather than being the subject of one of its much-needed investigations, gives further evidence of the enduring but ultimately terminal illness of crony capitalism.



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ABOUT Robert Scheer
Robert Scheer, editor in chief of Truthdig, has built a reputation for strong social and political writing over his 30 years as a journalist. His columns appear in newspapers across the country, and his in-depth interviews have made headlines. He conducted the famous Playboy magazine interview in which Jimmy Carter confessed to the lust in his heart and he went on to do many interviews for the Los Angeles Times with Richard Nixon, Ronald Reagan, Bill Clinton and many other prominent political and cultural figures.

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7 comments on "A Sign That Obama Will Repeat Economic Mistakes"

nate111

December 12, 2012 10:10pm

We have a two party system: the party of the rich and party of the superrich.
I always vote third party. But I know that the corporate media machine will chew up the third party candidiate and spit him out as a 'kook'. The Naders and Perots will never win because 'the house always wins'. At least I did my small part to 'rage against the machine' rather than lounge against the machine lol.

brad roon

December 09, 2012 6:39am

Amazing. Everyone here seems to think that it makes a difference whether we have republican or democrat presidents or congress. Wrong.

Both parties are the ONLY two parties to control the govt since 1804. Both are servicing the wealthy - that is why both parties have the same Wall St donors as their top 20 contributors. The ONLY difference is how they are going to destroy the country and give the rich people more money and power.

The rape-public-again (say it fast) party wantst to give all the money to the rich and have us (socialistically) support what their tax burden would go to. No clue how they expect us to pay their tax burden and keep their corporate roads open and commerce flowing when they are not paying us enough to keep fed and a roof overhead.

The so called liberals think they should spend all your money. It will do a dash of good to help some of society's disadvantaged, but most of it will go to war corporations, subsidies, exemptions, tax breaks, tax returns for companies that didn't even pay US taxes, etc.

In other words, regardless of party, your money will be supporting the rich people. This is not socialism how?

The only option is to NOT VOTE for republicans or democrats with very, very rare exceptions. That will force them AT LEAST to pay attention to the issues that they don't put on the table, that they don't want you to think about.

This is why Romney made Ron Paul noises. So many people liked some of what RP was saying that he thought he could garner those votes by fooling people into thinking he had some sort of RP qualities. Obviously a lie, but hey, the avg Us Citizen seems to have the critical thinking skill set of tree sap or maybe bug spit. Maybe it got him some votes. People think GW Bush was a Christian because he mouthed the platitudes, despite causing horrific wars and doing many un-christian things, so they may've believed this load of blahooey too.

We CANNOT elect and reelect the same two parties that have caused all of our political damage, and expect either of these parties to be a solution to the problems which they cause and further. That is simple insanity.

American Bolshevik

December 08, 2012 8:43pm

The interests of Wall Street and the interests of Main Street are diametrically opposed. The choice is stark: on the side of the 1% or on the side of the 99%. This decision of SEC chief along with a few other decisions such as the Keystone XL pipeline will set the tone for Obama's second turn. Reformer or sellout? Which will it be?

FullBlad

December 08, 2012 1:48pm

Nothing new here. So the Demo voters can't say they were betrayed again. Where did all those people go who were going to hold the Democrats feet to the fire insisting we must all vote for the lesser evil? What a laugh....

anono

December 08, 2012 4:00pm

It's hard to pass this one up since Yobama has done nothing but prolong GWB's policies.

Yobama is just a Big Eared "Bush-man"! No offense to real Bushmen intended.

Jeffrey Hill

December 08, 2012 11:03am

Obama's thieving Wall Street "Savvy Businessmen" buddies should be on the lifelong world prison tour "doing GOD's work".

kofi123

December 08, 2012 10:58am

What about Obama's full throated rehabilitation of Bill Clinton who gave the main speech at the democratic convention. I can feel Obama's brain working as to how he can reward his class and give the shaft to the middle class and poor.

The fiscal cliff was exposed as the fraud that it was so Obama and the republicans had to tweedle their tumbs for weeks saying no one had any plans.

Notice how conveniently jobs were taken off the table and sequestration made the main issue. Obama just realized that sequestration isn't so bad a deal. Military is cut, taxes goes up for the rich, social security and medicare is left alone.

In January democrats can dare the republicans to not vote for a middle class tax cut. If they don't, make them pay at the polls in 2014.