Obama Tries to Save Capitalism – The Right Whines

U.S. Seeks Expanded Power to Seize Firms

The administration’s proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed’s other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

You have various factions who for their own reasons – some logical and bizarre – that are against nationalizing the banks drowning in toxic debt or non-bank financial institutions like AIG(insurance). At the head of that pack are probably the Wall Str inner circle. As president you hedge your bets. You’re a known centrist that is perhaps so pragmatic that you’re hesitant to startle everyone with drastic changes. So you come out with a revised rescue plan that has a compromise public-private bent. Maybe your advisers are aware that the plan doesn’t cover every contingency and are not immune to opinions from  Paul Krugman or Kevin Drum at Mother Jones. You line up your ducks, so to speak, in a way that nationalization is still in the mix, but as an emergency option.

If, several weeks ago, you had charged a task force with figuring out how to successfully nationalize a big bank, what do you think they’d say you had to do? Three things, at least: (1) you have to figure out a widely acceptable way to value the toxic assets on bank balance sheets, (2) you have to set up a fair and consistent test for evaluating bank solvency based on those values, and (3) you need to make sure you have the legal authority to take over a huge, multinational financial conglomerate in an orderly way.  Is it just a coincidence that these are precisely the things Tim Geithner has set in motion over the past month?  I wonder.

AIG is clearly a blood sucking emergency on the rescue plan and tax payers. Right Wing News without a hint of irony runs this headline, Obama’s Creeping Fascism: Power To Seize Private Firms. By all means let’s not stop firms like AIG from funneling bail-out funds to Goldman Sachs in a blatant example of the kind of corporate crony socialism that Conservatives like Right Wing News promoted for years. maybe the Right wants to make sure that companies like AIG, Goldman and Citigroup keep their offshore tax havens. A Republican site called The Strata-sphere is wrong on so many levels one wonders if he has read a newspaper in the last ten years, much less the entire WaPO article, “…team Obama thinks it can also take control of our nation’s businesses.” The government has had private-public participation with business since Thomas Jefferson invented a wine elevator for his dining room. Obama is not taking over “businesses”, he going to Congress for permission to take over financial firms like AIG, should the need arise, to save the good or bad old capitalism that Strata feels is being trampled on. Couldn’t find a post over there where he expressed similar concerns about Wall St destroying $10 trillion dollars of America’s wealth or objecting to no bid contracts that became the norm under Bush. The stock market is so fickle that I hardly pay attention to the daily ups and downs, but they must all be socialist too, For Stocks, Treasury Plan ‘May Be a Game-Changer’

Investors looking for any reason to drive stocks higher found their elixir in the government’s bailout plan for toxic assets, and some think it could be only the beginning.

Before even getting a chance to sort through its multi-layered details, Wall Street soared higher, capitalizing on the positive news cycle and an oversold market to resuscitate dreams that a bull market was just over the next horizon and paved with more billions in bailout money.

[  ]…Stocks gained sharply on the news, and the rally gathered even more steam after an economic report showed a surprising increase in home sales for February.

For those that do have money its a home buyers market.

If Obama is a socialists for taking drastic steps to save the economy from a crisis that he inherited, then so is Saint Ronnie, who nationalized one of the nations’ biggest banks during the S&L crisis of the 80s, S&Ls, Big Banks and Other Triumphs of Capitalism

Unable to find a buyer for Continental, the F.D.I.C. became its owner. As Judy Woodruff put it, “The nation’s eighth-largest bank had, in effect, been nationalized by the most conservative Administration in fifty years. Nothing like this had ever happened before.” Once again the formula had been capitalism for profits, socialism for losses.

The Obama/Geithner plan, whether one likes the details or not, is not to make the government the owners of the financial sector in perpetuity, but to brace the financial sector up until it can operate on its own. That’s rescuing capitalism, not destroying it.

The right-wing’s latest meme against President Obama is that he can’t do a thing without a teleprompter. The Right thinks this propaganda tact is clever. Seeing that most of the Galters will not have enough money or guts to actually leave the country, the rest of us can enjoy the irony of yet more kool-aid drenched campaigns to smear President Obama. The poor things seem incapable of having a cogent opinion about economics so the failure to get traction on these petty attacks is no surprise.

The latest teleprompter meme from the Right is based solely on his mispronunciation of the word Orion.

Language master

There is an odd assortment of blogs and politicians, including myself that are not comfortable with passing a special tax directed at a hand full of people. The AIG bonuses were awful, but there are other ways to get most if not all of them back,  Attorney General Andrew M. Cuomo of New York  Says Most Huge A.I.G. Bonuses Were Returned

He also said 15 of the largest 20 bonus recipients in A.I.G.’s financial products division had agreed to give back the money, for a total that he estimated at about $30 million. “Those bonuses will be returned in full,” Mr. Cuomo said during a conference call with reporters.

The attorney general noted that about 47 percent of $165 million in retention bonuses was awarded to Americans, accounting for nearly $80 million. All told, Mr. Cuomo said, A.I.G. employees have agreed to return about $50 million in bonuses.

Mr. Cuomo acknowledged that some bonus recipients declined to give back bonuses, especially those overseas who are outside the jurisdiction of New York State

Advertisements