Obama: Eleven Months Later

Obama's Big Sellout
The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?

Whatever the president's real motives are, the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals.

How did we get here? It started just moments after the election — and almost nobody noticed.

'Just look at the timeline of the Citigroup deal," says one leading Democratic consultant. "Just look at it. It's fuckingamazing. Amazing! And nobody said a thing about it."

Barack Obama was still just the president-elect when it happened, but the revolting and inexcusable $306 billion bailout that Citigroup received was the first major act of his presidency. In order to grasp the full horror of what took place, however, one needs to go back a few weeks before the actual bailout — to November 5th, 2008, the day after Obama's election.

That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar — former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett — the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama's chief advisers during the campaign, didn't make the cut. Neither did Karen Kornbluh, who had served as Obama's policy director and was instrumental in crafting the Democratic Party's platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive "a Nobel Prize — for evil."

But come November 5th, both were banished from Obama's inner circle — and replaced with a group of Wall Street bankers. Leading the search for the president's new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama's biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).

Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm. And to help him pick Obama's economic team, Froman brought in none other than Jamie Rubin, a former Clinton diplomat who happens to be Bob Rubin's son. At the time, Jamie's dad was still earning roughly $15 million a year working for Citigroup, which was in the midst of a collapse brought on in part because Rubin had pushed the bank to invest heavily in mortgage-backed CDOs and other risky instruments.

Now here's where it gets really interesting. It's three weeks after the election. You have a lame-duck president in George W. Bush — still nominally in charge, but in reality already halfway to the golf-and-O'Doul's portion of his career and more than happy to vacate the scene. Left to deal with the still-reeling economy are lame-duck Treasury Secretary Henry Paulson, a former head of Goldman Sachs, and New York Fed chief Timothy Geithner, who served under Bob Rubin in the Clinton White House. Running Obama's economic team are a still-employed Citigroup executive and the son of another Citigroup executive, who himself joined Obama's transition team that same month.

So on November 23rd, 2008, a deal is announced in which the government will bail out Rubin's messes at Citigroup with a massive buffet of taxpayer-funded cash and guarantees. It is a terrible deal for the government, almost universally panned by all serious economists, an outrage to anyone who pays taxes. Under the deal, the bank gets $20 billion in cash, on top of the $25 billion it had already received just weeks before as part of the Troubled Asset Relief Program. But that's just the appetizer. The government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets, many of them those toxic CDOs that Rubin had pushed Citi to invest in. No Citi executives are replaced, and few restrictions are placed on their compensation. It's the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin's fuck-up-rich tenure at Citi. "If you had any doubts at all about the primacy of Wall Street over Main Street," former labor secretary Robert Reich declares when the bailout is announced, "your doubts should be laid to rest."

It is bad enough that one of Bob Rubin's former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama's Treasury secretary!

Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.

Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government's bailout generosity would not die with George W. Bush and Hank Paulson. "Geithner assures a smooth transition between the Bush administration and that of Obama, because he's already co-managing what's happening now," observed Stephen Leeb, president of Leeb Capital Management.

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/print

You are quoting the NY Times quoting Obama's chief of staff as evidence of Obama's accomplishments?

That's very persuasive.

More like absent-mindedness.

Wonder how the several million "newly covered" will feel about it? 

Obama is on his way to Bush-level popularity levels. He has lost most of the progressive base, and the Health Care bill will be a nightmare as few progressives are going to defend it.

His failures are epic:

• Toothless Financial Reform
• Even Worse Health Care Reform
• Climate Change Inaction
• No Civil Liberties Restoration
• Failed Foreclosure Policy
• Anemic Stimulus

While his actions are even worse:

• Military Escalation in Afghanistan
• Military Strikes in Pakistan, Yemen, etc.
• Military Bases in Latin America
• Tacit Acceptance and Probable Involvement in Honduran Coup

Next year will be more of the same:

• Neoliberal Reform of Education
• Cuts to Medicare and Social Security

It's bad, real bad.

I have always maintained that Obama will be a worse president than Bush. The reason that he was allowed to be elected is that he re-brands the US while continuing on the path of destruction. I feel sorry for people who support him, they are as dumb as Sarah Palin supporters. More dangerous though becuase they are complicit in "hope-washing" the US crimes against humanity, the planet, the moon and anything else they can get their hands on.

DaveW wrote:

 

I take it from your comment re the overwhelming importance of source over argument that if, say, the Globe and Mail reported that Jack Layton said Harper is a lousy PM, then it could not be valid for you -- because Layton has a vested political interest in his statement;

Hehe, no - if the Globe quoted John Baird saying what a wonderful PM Harper is, that would be an apt comparison with Obama's chief propagandist praising his boss. In both cases, it's laughable.

Quote:

Q.: why not just evaluate the statement itself?

Emanuel's assessment is wrong.

Quote:

The economy is clearly improving from a year ago ,

You give Obama credit for that? Are you kidding? Or did you also blame Obama for the collapses that happened after his November 2008 election? We're supposed to be intelligent folks here.

Quote:

... and Obama will get a major victory in the next week, one that has been on the table since the 1940s, but that lacked a skilled enough political push to get it adopted, howeever imperfect.

It's a farce. And the rhetoric surrounding it is embarrassing when it gets repeated by Canadians.

translation:

let's keep dreaming -- the Babble Vote (students, progressives, various militants, left-wing unions) represents about 10-15 per cent max of the US electorate -- and wait ANOTHER 20 years for the next chance at any , yes, imperfect health-care reforms in the U.S .

regarding the health insurance bill before the Senate, thank God a more practical spirit has seized Democrats to date,

http://www.tnr.com/blog/the-treatment/why-i-still-believe-bill

 and let's hope for a merry Christmas on that score!

al-Qa'bong wrote:

ANd the solution is.......?

Kucinich?

Either that or a popular uprising that will completely reform the system and change the US oligarchy into a democracy.

Reforms on corporate control of public life and the economy would be a good place to start.  Since Obama is corporate-owned, there's no need to look there for a solution.

Since there is less than one week's supply of food for big-city Ontarians in stock at any time (probably better out west), one should not risk cutting off transport shipments between the warmer states and ourselves - in winter, anyway. Even Victory Gardens would need some working up, like the soil under the lawns of suburbia.

A "public uprising" that caught the attention of the folks between California and here, was what I had in mind, Al. 

There's gotta be another way. (But then, I suppose I should indicate where exaggeration - the basis of humour - is in play.

I would not have heretofore described you as a humourless stoic, Al. I very much appreciate the need for serious discusssion, today, about the world scene, but suddenly, even this old Jeremiad's world view  is challenged by apocalyptic accounts of this democratic president's  depradations. Who knew? 

Hugo Chavez Frias wrote:

I must say: in Copenhagen the Obama illusion was definitively destroyed. He was confirmed in his position as head of the empire and winner of the Nobel War Prize. The enigma of the two Obamas has been resolved.

The Obama illusion has been "definitively destroyed."

That's a handy guide, Pol. Sad, but handy.

I sometimes sign off as Jeremiah George, Rosal. And I thought that I was not one of the Jeremiahs, but one of the jeremiad. I stand corrected.  It is clearly the Jeremiahs who "get up your nose" with their haranguing ...about the future though,eh? It's an overwrought prognisticator at work, right? Heaven or Hell in the balance?

I thought Jeremiah was a bullfrog? 

The imperial rot is not easily reversed. Gorbachev tried but the Soviet Union fragmented and died within a couple of years of withdrawal from Afghanistan. Obama is in a similar situation.

Plus, why save the empire? Especially why expect its victims to ride to its rescue? To hell with that.

"Barack Obama has put his country back on the high road" says Lawrence Martin.

Quote:

He embodies the spirit as expressed in the words of Thomas Paine: “My country is the world and my religion is to do good.”

This is a quote from a section of Thomas Paine's book "The Rights of Man" in which he says "I proceed to the defects of the English government." After analyzing the British tax system he concludes:

Quote:

Is it, then, any wonder, that under such a system of government, taxes and rates have multiplied to their present extent? In stating these matters, I speak an open and disinterested language, dictated by no passion but that of humanity. To me, who have not only refused offers, because I thought them improper, but have declined rewards I might with reputation have accepted, it is no wonder that meanness and imposition appear disgustful. Independence is my happiness, and I view things as they are, without regard to place or person; my country is the world, and my religion is to do good.

I have news for Mr. Paine and Mr. Obama: their country is not the world. It is less than 5% of the world. If they believe they see things impartially, and that what does good for the USA does good for the world, I beg to disagree.

Obama is in a better position than any other American president to see that the USA needs to respect the differences between itself and other cultures. At one point he planned to do this. Has he done so yet?

I would have never thought that Obama would be able to turn things over to the redneck hillbillies after one term as prez but now I'm rethinking that. 

Farmpunk wrote:

Dennis Kucinich has as good a chance to become President as I do.

This is very profound. On that logic, we ought to put our hopes in Michael Ignatieff - aw hell, make that Stephen Harper.

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Redneck hillbillies, Poly2?  I'm not sure what you mean but I get the feeling you aren't fan of people like myself.  Oh, well, keep up the good fight from the trenches of anonymous rabble rousing, dude.

Somehow, no post is truly satisfying unless one takes a brief moment to attack another babbler - especially when the other babbler dares to attack a public figure like Obama. A cardinal sin. Which reminds me, Merry Christmas to all.

Farmpunk wrote:

I'm definitely telling my redneck hillbilly comrades to vote for you, dude, when you get around to getting involved beyond posting a couple thousand words a day on rabble.

Don't get me wrong - we're all grateful for the few moments you borrow from your busy political life of mobilizing, organizing, and lobbying to come and lecture us couch potatoes from on high. Would that we were worthy to learn from your pungent and piquant pinpricks.

Tell me honestly (if you have time) - what's it really like to interact with real people all day long? I've read a lot about it, in between watching TV and stuff. Does it help to distinguish theory and ideology from reality - truth from illusion? The reason I ask is because of your last couple of posts.

It's an attack on the voices of "relative" freedom. No advertising, no broadcasting. They are moving resolutely toward a fascist outcome - complete ignorance. (Reminds one of Dickens' concern for ignorance in A Christmas Carol that I watched again today (The Sims' Scrooge who shows us the workings of early 19th century capitalism): The "worst" of the two, ignorance and want, is ignorance, says spirit of Christmas present (Dickens).  Necessary ground for authoritarian beginnnings.

In other bad news, Obama and Emanuel have allowed Dawn Johnsen's nomination as head of the DoJ's OLC (Office of Legal Counsel) to fail -- well, pretty obviously, they declined to support it, to wrangle it through the Senate, which could have been done in a number of ways. If you're interested in getting into the procedural weeds, you can follow the discussions at [URL=http://emptywheel.firedoglake.com/2009/12/25/why-was-dawn-johnsen-nomina...'s place.[/URL]

Why does this matter? The OLC was one of the sites where the Cheney/Bush torture regime was plotted, organized, and authorized, in concert with the general counsels at the DoD and the CIA, all that orchestrated from Cheney's office by David Addington, None of that is speculation or conspiracy theory; it is documented in the Senate Armed Services Committee hearings of last year and major report of this year. And of course much of it had been documented earlier by scholar-journalists like Philippe Sands and Jane Mayer. Some of it has even been confessed to, openly, defiantly, by Cheney.

Johnsen's nomination to head that office looks now like a bone thrown to progressives a year ago. The symbolism of putting a genuine progressive into that totally polluted office was briefly very powerful. But a lot of people started to feel early on that there was a string attached to the bone and that Emanuel would yank it back sooner or later, which he has now done. Johnsen has always been a strong critic of the torture regime and the legal contortions underlying all the rationalizations of the "unitary executive." Obama and Emanuel clearly do not want to give up any of the exceptional powers BushCo arrogated to themselves, whereby they effectively trump the legislature, and maybe even the courts, certainly all international law. Or in plain English, they want to continue their programs of rendition, indefinite detention, illegal acts of war, warrantless wiretapping, excessive surveillance, and worst of all, torture. They don't want Dawn Johnsen telling them and the world that the president can't do those things, and they don't want any investigations into the crimes of the Bush regime since they wish to continue those crimes, and are arguing a number of cases before the courts right now in which they pretty much say that.

It's very Edgar Allan Poe -- everything is in plain view.

The single progressive thing Obama has done imho, and fairly early, was to release the infamous five OLC memos, two Yoo/Bybees from 2002 and three Bradburys from 2005. From the Bradbury memos of 2005 especially we got a lot of the plot. The political effect of those memos was major, especially when good detectives like EW ran with it ... and I think that's when Emanuel decided we'd have no more of that progressive nonsense. I have seen nothing progressive, not even anything basically decent and humane, since then.

I dunno -- if you've got a dictator, is it better to have one with good table manners who is well spoken, or does it matter?

skdadl:

"I dunno -- if you've got a dictator, is it better to have one with good table manners who is well spoken, or does it matter?"

I would have thought, skdadl, that the mouthings of the GOP these days, the stuff of a chained, junkyard dog, demonstrated exactly that difference. And they have only just begun. The extent to which that fact is studiously avoided hereabouts seems part of a process of mystification (to use an old '70s expression.

Obama is authorizing torture, kidnapping, the murder of civilians, and assassinations, and that's just overseas. He has happily taken on the Cheney cover-ups at home, so now he owns those, and he is extending multiple violations of U.S. law to betray his fellow citizens and his oath to uphold and defend the constitution. 

And just because Sarah Palin and Michele Bachmann would be even worse than that, people are prepared to blink and wink?

If I followed that logic, I'd be voting Liberal. Screw that.

Torture is the bottom line. No quarter.