Meanwhile The Fed continues, as always, doing as little as possible to regulate while siphoning money to a few from the rest of us.
The Fed’s failures were legion, but five are worthy of particular note.
1. Greenspan believed that the Fed should not regulate v. fraud
2. Bernanke believed that the Fed should rely on self-regulation by “the market”
3. (Former) Federal Reserve Bank of New York President Geithner testified that he had never been a regulator (a true statement, but not one he’s supposed to admit)
4. Bernanke gave the key support to the Chamber of Commerce’s effort to gimmick bank accounting rules to cover up their massive losses — allowing them to report fictional profits and “earn” tens of billions of dollars of bonuses
5. Bernanke recently appointed Dr. Patrick Parkinson as the Fed’s top supervisor. He is an economist that has never examined or supervised. He is known for claiming that credit default swaps (CDS, a.k.a the financial derivatives that destroyed AIG) should be unregulated because fraud was impossible among sophisticated parties.
Each error arises from the intersection of ideology and bad economics.
It’s more than that. It’s not just ideology or bad judgment. Because that implies they are misguided or make errors that can be corrected once they understand the damage they are doing. No. What they are doing is quite deliberate – transferring money from us to them and their cronies. They know exactly what they are doing. They are not misguided.
Meanwhile, the job market continues to crater as the banksters prepare to pay themselves $47 billion in bonuses. The response from the White House is pathetic. They are doing nothing. This is not because they are helpless. It’s because this is how they want it. What other explanation is there? I mean, Obama isn’t even trying to cut the bonuses.
Q I actually do. Going back to Wall Street firms, three firms: Goldman, Morgan and Chase have set aside $47 billion, I believe the number is, on bonuses. Does the President think that’s appropriate and is there anything he has talked about or hopes to do, to do something about that?
MR. GIBBS: Well, look, Chip, I think you heard Dr. Romer this weekend and I think you’ve heard the President throughout the past year talk about the continued divergence from, in all ways, reality of what’s going on, on Main Street and what’s going on in some of these firms on Wall Street. There are folks that just continue not to get it.
Q Is he doing anything about it?
MR. GIBBS: Well, the President has discussed ways of — well, we can — we have done stuff relating to banks that have received extraordinary assistance from the federal government. There is a lot less, as you know, that we can do with somebody that’s not tied in terms of a direct correlation between money that’s given through TARP. The President has repeatedly pushed, and the House passed as part of their financial reform, a say on pay. We have greatly encouraged anybody that’s giving out bonuses and executive compensation to tie it not to short-term risk-taking but to the long-term health of the company, as most stockholders and taxpayers would prefer; and that is, give that compensation in stock, have it vest over a series of years so that the health of the firm is first and foremost, not short-term risks that might have people making different actions.
Q But despite everything the President said and everything that he’s proposed and everything that’s been done, this may be the biggest year yet for money falling from the sky for these guys.
MR. GIBBS: Chip, there’s just — like I said, there’s a limit to what the President can do for firms that don’t receive assistance from the American government.
Q Use the bully pulpit more effectively, just get out there? I mean, he could pick up the phone and call these guys.
MR. GIBBS: Well, I can assure you the meeting that we had not recently — not too recently with the bankers in the Roosevelt Room included a discussion about executive compensation. I think they know where we are on this issue.
Q Is it fair to say they’re just not listening to him?
MR. GIBBS: I think they’re not listening to the American people, Chip. I think — like I said, I think there’s a divergence in reality as to what’s going on in this economy if you talk to somebody that is in line for a huge cash bonus at a Wall Street firm and a small business on Main Street that’s trying to get a loan, that’s trying to get some help, and trying to get their business and this economy back on track, absolutely.
Q When the President talks about this, does he still get visibly angry about it?
MR. GIBBS: Absolutely. I mean, I don’t — the truth is — I think the story that you were referring to was the one in Sunday’s paper. I don’t know anybody, save for a few that work for those banks, that don’t get visibly angry and in reading those stories, absolutely.
Yet Obama resolutely does nothing about it. Boo hoo hoo. The poor president against the bad old banks. Pass me a hanky. On second thought, spare me the bullshit. Obama is plenty smart and canny. Allowing Wall Street to loot billions appears to be exactly what he wants. Because by his actions he has repeatedly done little or nothing to rein them in.