Views » April 16, 2009

Bailout Bandits

By Joel Bleifuss

In these days of “bank stablization plans” (bailouts for fat cats) and “overseas contingency operations” (wars), Americans who celebrated President Obama’s victory last November are beginning to recognize that “change we can believe in” is now endangered by serious obstacles, including obstructionist personalities within the administration itself.

What are Obama’s progressive supporters to make of the fact that Lawrence Summers (who crafted banking deregulation during the Clinton administration) is Obama’s chief economic vizier? Or the fact that Treasury Secretary Timothy Geithner, a Summers protégé, seems determined to address the economic crisis by protecting the banking industry executives with whom he was cosseted for the past five years as head of the Federal Reserve Bank of New York?

As David Moberg writes in “The Meltdown Goes Global,” Geithner’s reforms exclude “breaking up institutions that are now ‘too big to fail,’ banning many derivatives, and treating financial institutions as tightly regulated public utilities.” In fact, Geithner’s policies may greatly enrich the very people who made out like bandits thanks to the Summers-orchestrated banking deregulation that led to the present crisis.

On the Center for American Progress website, Michael Ettlinger and David Min, had this to say about Geithner’s Public-Private Investment Program (PPIP) to manage toxic assets: “One shadow over this proposal is that we may end up subsidizing an enormous windfall for wealthy participants in hedge funds and their kin…The profits to be made on the approximately $2 trillion of PPIP [toxic] assets sitting on bank balance sheets could make the [AIG] retention bonuses causing such an uproar seem like peanuts.”

So, where is the outrage?

On March 30, Newsweek gave us the cover story “The Thinking Man’s Guide to Populist Outrage.” One contributor, Robert J. Samuelson, warned against “anger that could veer into a vindictive retribution.” For example, “The AIG hearing last week often seemed a political gang beating.” While Newsweek Editor Fareed Zakaria told us, “The trouble with populist outrage is that it bubbles over.” The message: populist outrage must be kept in check. But what might change if we just let it flow?

It doesn’t help that few political venues exist for people to express their concerns.

The Obama campaign apparatus, an amazing organization that might have become an independent vehicle for progressive pressure and mobilization, is under tight White House control and has been drafted to support Obama’s economic policies. And while MoveOn.org fulminates against AIG’s executive bonuses, it has so far failed to question the assumptions behind the administration’s cash-for-trash schemes and unleash its 5 million-plus members on either Summers or Geithner.

Online organizing has been key to revitalizing the American progressive movement. But perhaps it’s time for us to set aside our laptops and learn a lesson from the old school. In this issue (May, 2009), I review At Home in Utopia, a fascinating documentary about a cooperative living experiment launched by New York Jewish radicals in the 1920s. In 2009, it is worth remembering that the rich history of the American left offers us a panoply of tactics and strategies with which to fight injustice and confront power.

Yes, sometimes a Facebook group or e-mail campaign just won’t cut it.

On a different note, with this issue we say a sad goodbye to three irreplaceable members of the In These Times staff: Sanhita SinhaRoy, Brian Cook and Jeff Allen.

• Help In These Times publish more articles like this. Donate today!
• Subscribe today and save 46% off the newsstand price!

• subscribe to print magazine

• stay in touch with our email newsletter

  Subscribe to our regular weekly e-mail newsletter. It's packed with updates on recent and upcoming stories, events, campaigns and things every progressive should be informed about.

   

• email this article to a friend

  Your Name Your Email Recipient Email

  Personal message Thought you might be interested in this article from In These Times.

   

  Please help us prevent spam by verifying the word you see in the image above

  Send to multiple recipients. Just separate each email address with a comma.

• Reader Comments

  Nearly everyone I know is angry with the lack of real change. But who’s listening?

  Elizabeth Warren, chair of a Congresstional oversight committee, made it pretty clear back in February that Henry Paulson, lied to the committee and came up $78 billion short in accounting for TARP 1. She made another report this week. How many people know about her findings? What can we expect of a Congress dominated by the party who also owns the White House?

  Are you aware of her findings?

  This week was the Tea Party “protest”. Herei in my city we were instructed not to throw our tea into the river or on the ground — imagine how King George the Third would have reacted to a PC protest in 1773.

  Do we have to see a re-run of the 1960s Viet Nam violence before anyone pays attention? I don’t think anyone wants that.

  So I guess we will continue to see bank bond holders 100% protected with money stolen from our posterity, bonuses paid to the crooks at Fannie Mae, Goldman Sachs and all the rest of the bstards who have already made millions for themselves.

  Posted by whattheheck on Apr 16, 2009 at 8:32 PM

  Yes, deep in his heart Obama is a politician first.  He knows that those that vote, vote their 401k’s.  Reagan was a brilliant destructor of populism by getting everyone to put their retirement eggs in with the large corporations, he also started taxing my student stipend and unemployment benefits (mr monkeywrench).  Lets stop for a moment to be thankful that social security didn’t go to Wall St too—that was one of the few things that was denied GWB during his reign.
  I supported Obama, especially during the primary.  One of the reasons for my not supporting Clinton was knowing that NYC would be asking for tax money.  How did I know that economic crisis was on the horizon as early as 2005?  I knew by getting news from financial blogs, not CNBC.  Many blogs were warning of the housing bubble, though few thought we were headed for GD 2.0.  I got out of the stock market long before it went bust.  Then, I got out of the money market and into an fdic insured account a full year before the problems of fannie and freddie were publicized.  Those that were screaming about impending doom were ignored by the corporate controlled MSM because there was lots of money to be made on the way up the debt-fueled bubbles.
  But back to the teabaggers.  The guy that started it all, Rick Santelli (a rational voice among the CNBC clowns) ranted about how the taxes were being spent, not about the tax rates.  He was against the corporate welfare before Obama was elected.  The concept has been hijacked by the top 2% income earners.
  One last thing, as a member of moveon, I thought they were against the bailouts.  Would you offer proof of their recalcitrance to confront Obama?  I have directly contacted whitehouse.gov with my objections to the bailouts.  Also, I have bought some gold to hedge against the collapse of the US dollar.

  Posted by Bill Leonard on Apr 17, 2009 at 3:25 AM

• register a new account »Posting Security

  To participate in our forums, please register for a free account.

  Username Password

    Remember me
  

  Retreive lost password »

Also featured ‘Reform’ To Nowhere
The Meltdown Goes Global
Casualties Continue in Vietnam

Full contents
Previous issues
Subscribe and save!

Also by Joel Bleifuss

• Block ’Em, Sock ’Em
  Across the country progressive groups are mobilizing to support legislative initiatives, but to… morePosted on July 9, 2009
• Buy Back Our Government
  Porn rentals, duck islands and moat-cleaning are among the frivolities British members of… morePosted on June 11, 2009
• A Specter is Haunting Dems
  Sen. Arlen Specter (D-Pa.) had every reason to free himself from the wing… morePosted on May 12, 2009
• Building Utopia
  A new documentary profiles the rise and fall of a Depression-era utopian experiment in the Bronx.Posted on April 13, 2009
• To Boycott Israel…or Not?
  Naomi Klein and Rabbi Arthur Waskow debate whether divestment will bring peace to the Middle East.Posted on March 30, 2009