Obama Pulls a Clinton

Here we go again. When Bill Clinton
suffered an electoral reversal after his first two years in office, he
abruptly embraced the corporate money guys who had financed his
congressional opposition in an effort to purchase a second term. On
Tuesday in his Wall Street Journal Op-Ed piece, Barack Obama veered
sharply down that same course, trumpeting his executive order " ... to
remove outdated regulations that stifle job creation and make our
economy less competitive. ..."

He employed the same "creating a
21st-century regulatory system" rationalization used by Clinton when he
signed off on the sweeping deregulation legislation that unleashed the
Wall Street greed that ended up being the biggest job-killer since the
Great Depression. "Over the (past) seven years, we have tried to
modernize the economy," Clinton enthused as he signed the Financial
Services Modernization Act that repealed key New Deal legislation,
adding, "And today what we are doing is modernizing the financial
services industry, tearing down those antiquated laws and granting banks
significant new authority." Modernizing was the propaganda constant, as
in the Commodity Futures Modernization Act that Clinton signed, thus
shielding financial derivatives from any government regulation.

That deregulation, as Obama concedes in his
WSJ column, led to "a lack of proper oversight and transparency (that)
nearly led to the collapse of the financial markets and a full-scale
depression." But Obama now promises that his deregulation efforts will
be more sensibly targeted and will "bring order to regulations that have
become a patchwork of overlapping rules, the result of tinkering by
administrations and legislatures of both parties and influence of
special interests in Washington over decades."

When he wrote that he intends to accomplish
this revamp "with more input from experts, businesses and ordinary
citizens," did he have in mind his two new key White House advisers who
were the most effective advocates for those special interests? Tom
Donilon, Obama's national security adviser, was the Washington lobbyist
for the housing behemoth Fannie Mae, which will cost taxpayers $700
billion because of its marketing of toxic derivatives. Obama's new Chief
of Staff William Daley was the lead Washington representative for a
similarly afflicted JPMorgan Chase. These are the folks, along with many
other Wall Street alums in this administration, who will oversee the
latest update of already weakened regulations.

The first target will be the
administration's puny efforts to protect consumers: "The move is the
latest effort by the White House to repair relations with corporate
America," the Wall Street Journal's report on Obama's column stated,
"Business leaders say an explosion in new regulations stemming from the
president's health-care and financial regulatory overhauls has, along
with the sluggish economy, made them reluctant to spend on expansion and
hiring. Companies are sitting on nearly $2 trillion in cash and liquid
assets, the most since World War II."

This is a case of corporate blackmail pure and simple. The economy is
sluggish because of a housing crisis that shows no sign of improvement.
It stands history on its head to blame government financial regulations
that had worked splendidly for six decades for the meltdown or the
failure to fix a housing market that is the key to improved consumer
spending.

Fixing housing would require efforts to
keep the 50 million Americans whose mortgages are underwater in their
homes. But the government bailouts under both George W. Bush and Obama
have not required any significant cramp-down or reappraisal of mortgages
by banks to enable people to stay in their homes. Instead the Fed and
Treasury have flooded the banks and top corporations with cheap money
and bailouts but, in the classic problem of pushing on a string, the
corporate ingrates are hoarding that money.

Obama, and the party he heads, failed to
provide a progressive narrative during November's election holding the
financial elite that created this mess responsible. The key issue is not
big government or onerous regulation but rather transparency and fraud
prevention. When you are evicted, it is a government agent, a marshal or
sheriff, who will force you out, so shouldn't the government also be
involved in assuring that the consumer is protected by a properly vetted
contract? Instead the U.S. Chamber of Commerce spearheaded the
marketing of an alternative narrative, as successful as it was devious,
by Republican candidates that held regulation-rather than
deregulation-responsible for the mess. Now Obama seems poised to join
their ranks. As the WSJ reported:

"On Feb. 7, Mr. Obama will visit the U.S.
Chamber of Commerce-a chief opponent to his administration's regulatory
approach-for a discussion on how the White House can work with the group
to create jobs. The efforts are designed to give companies more
confidence in the president's stewardship of the economy, and bolster
his re-election prospects among a wealthy constituency not traditionally
allied with Democrats."

A constituency that Daley, Obama's new
chief of staff, can faithfully represent, having received $5 million a
year from JPMorgan Chase. And so ends the season of hope for the less
wealthy constituency traditionally allied with Democrats.