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Author Topic: Obama Skim Coating A Rotten Foundation? Volker ignored in Obama Administration?  (Read 990 times)
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WhiskeyGirl
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« on: October 28, 2009, 03:10:24 PM »

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Editorial: On financial reform, listen to Paul Volcker

07:24 PM CDT on Friday, October 23, 2009

Last week, Mervyn King, Britain's equivalent of Federal Reserve chairman, delivered a scathing speech..Among his recommendations: break up the "too big to fail" banks and separate risk-taking investment banks from meat-and-potatoes commercial banking.

That's hardly Ben Bernanke's view. In fact, the only financial player in Washington who publicly agrees with King is Paul Volcker, the former Fed chairman advising President Barack Obama, though Volcker's successor at the Fed, Alan Greenspan, recently startled observers by waxing favorably about busting up the banks. Reports, however, indicate that Volcker is mostly ignored within the Obama administration, where financial policy is largely guided by Treasury Secretary Tim Geithner and senior economic adviser Larry Summers, both highly sympathetic to Wall Street.

The Volcker position would resurrect the Depression-era Glass-Steagall Act prohibiting commercial banks from engaging in brokerage activities. Why the ban? Because losses from the risky securities business could be covered by drawing from federally insured deposits. This gives high-rolling bankers incentive to behave recklessly, confident the feds would save them if they crapped out.



Wow...Obama administration keeps the good times rolling on Wall Street.  What happened to all those little people he proclaims to care about on Main Street?  All those skeptical folks he tries to calm? 


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Glass-Steagall evaporated in the 1990s deregulation mania. The financial industry and its Washington friends – especially Texas Sen. Phil Gramm and then-Treasury Secretary Larry Summers (yes, that Larry Summers) – argued that for America to remain globally competitive, the Glass-Steagall firewall had to come down. In fact, this newspaper agreed at the time.

...Sen. Byron Dorgan, the North Dakota Democrat, prophesied: "I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past." Lo, here we are a decade later, clawing our way out of the worst economic crisis since the Depression.

Where is the reform in all this skim coating from Geithner?  Obama?  Meaningful firewalls to protect taxpayers and Americans from more tsunami's of debt and the Wall Street gambling casinos?

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The era of believing that what's good for Wall Street is automatically good for America is over. "Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are.""The banks are there to serve the public, and that is what they should concentrate on. These other activities create conflicts of interest.""If they're too big to fail, they're too big. In 1911 we broke up Standard Oil – so what happened? The individual parts became more valuable than the whole. Maybe that's what we need to do."



http://www.dallasnews.com/sharedcontent/dws/dn/opinion/editorials/stories/DN-glass_1025edi.State.Edition1.331ba30.html

I can't find fault with these words.

Build up some strong firewalls.  All the reform I see coming from the Obama Administration is a 'skim coat' over a foundation that continues to rot.

The Wall Street Gambling Casinos should have never opened.  All this loss due to 'globalization'?  When will Washington and the White House work for ALL Americans?
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