Why Won’t Obama Regulate the Banks?

As a progressive, it is getting increasingly difficult to defend Barack Obama’s continued coddling of the financial industry. Not only has the Obama administration used tax payers money to bail out the toxic banks that gambled their assets away, he is refusing to properly regulate them at a time when the government actually has the power to do so.

In another infuriating move, the Obama administration has basically squashed an idea from Chris Dodd that would see the Federal Reserve lose its power to regulate banks to an independent agency not corrupted by the companies it is supposed to oversee. Writes Robert Scheer:

White House economic adviser Austan

Goolsbee frets that taking power from the Fed would cause financial

industry “nervousness.” Isn’t that the whole point of government

regulation—to make the bandits look over their shoulders before they

launch their next destructive scam?

Not so in the view of Deputy Treasury

Secretary Neal Wolin, who blithely insists that the Fed “is the best

agency equipped for the task of supervising the largest, most complex

firms,” despite the mountain of evidence to the contrary. There is some

irony in the fact that the largest of those complex firms got to be

“too big to fail” because of the radical deregulatory legislation that

Wolin drafted during his previous incarnation as the Treasury

Department’s general counsel in the Clinton administration. Wolin is

now deputy to Timothy Geithner, who as head of the New York Fed in the

five years preceding the banking meltdown looked the other way as the

disaster began to unfold.

While I am still broadly supportive of the Obama administration, this type of blatant pandering to huge financial institutions has the potential to drive progressives away from the President. There is only so long that money can continue to funneled upwards, and policy crafted directly in favor the rich before popular anger takes over. And when it does, it will be interesting to see where Obama’s loyalty lies. So far, it hasn’t been with the people.

Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.