[Peace-discuss] Obama to coddle bankers

[C. G. Estabrook]

Emily Dickinson once advised: “Tell all the Truth but tell it slant.” Evidently 
the New York Times’ headline writers are taking advice from the enigmatic poet. 
The headline on the story on how the Obama administration will be going easy on 
banks and bankers getting bailout money blamed it all on the Treasury Secretary: 
“Geithner Said to Have Prevailed on the Bailout.” In internal administration 
battles, Geithner “successfully fought against” stricter rules on executive pay, 
and beat back the attempts to replace top maangement.

Of course, to say that Geithner won these battles is to say that Obama agreed 
with him. Once again, the embodiment of hope and change went with the status quo 
when he didn’t really have to. There would have been little political price to 
pay for putting the screws to the banksters.

And it looks like the Treasury and the Fed will pump up some $250-500 billion to 
help hedge funds buy bad assets - with the FDIC guaranteeing the buyers against 
losses.

At this point, the only thing that makes any sense is to nationalize the weakest 
banks, kick out management, wipe out the shareholders, clear the decks, and 
start over with a tightly regulated system. This isn’t even all that radical a 
position anymore - and it may be inevitable, if these sick and devious 
“public-private partnership” schemes don’t work out, which seems likely. There 
is a radical nationalization position - take the banks over and convert them to 
public institutions - but I know that’s completely out of the question with this 
gang. But they’re doing absolutely everything they can to avoid even an orthodox 
nationalization. This is looking more and more like Japan’s disastrous 
indulgence of their “zombie banks” in the 1990s than Sweden’s successful 
bailout, the model for the “nationalize them and clear the decks” approach. 
Instead of a few rough years, we’re likely to get a miserable decade.

They’ve botched the stimulus, and they’re botching the financial rescue. They’re 
worse than I expected, and I wasn’t expecting much in the first place.

--Doug Henwood <http://doughenwood.wordpress.com/>