Research Briefing

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Obama Returns To Cooper Union To Rekindle Campaign Feelings While Pushing His Permanent Bailout For Wall Street

“Remember The Last Time Barack Obama Came To Cooper Union? It Was March 2008, He Was A Surging Primary Candidate … [With A] Speech About How To Fix The Broken Economy. Two Years Later, Obama Will Use Another Speech At Cooper Union To Launch His Bid For Financial Reforms.” (Adam Lisberg, “Bloomberg, Paterson Are On The List,” The New York Daily News, 4/20/10)

AFTER PLEDGING TO STOP CULTURE OF CATERING TO POLITICAL DONORS, OBAMA PUSHING PERMANENT BAILOUT FOR HIS WALL STREET CONTRIBUTORS

THEN: Obama Pledged He Would Look Out For All Americans, Not Just “Those Who Donate To Political Campaigns.”  “Finally, the American people must be able to trust that their government is looking out for all of us - not just those who donate to political campaigns. I fought in the Senate for the most extensive ethics reform since Watergate. I have refused contributions from federal lobbyists and PACs.” (Senator Barack Obama, Remarks At Cooper Union In New York City, New York, NY, 3/27/08)

NOW: Goldman Sachs Leaders Endorse Many Provisions Of Obama-Dodd Bailout Bill That Will Have “Unlimited Executive Bailout Authority.” “Given that much of the financial contagion was fueled by uncertainty about counterparties’ balance sheets, we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions. More broadly, we support proposals that would improve transparency for investors and regulators and reduce systemic risk, including fair value accounting.”; “There are serious problems with the dodd bill. The dodd bill has unlimited executive bailout authority. That’s something wall street desparately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority.”  (Lloyd Blankfein & Gary D. Cohn, Goldman Sachs 2009 Annual Report, 4/7/10; Rep. Brad Sherman, “Interview With Politico’s David Mark,” Poltico’s “Arena,” 4/19/10)

• Because In 2008 Election Cycle, President Obama Was The Largest Recipient Of Donations From JP Morgan, Goldman Sachs, Citi Group, AIG, Morgan Stanley And Bank Of America, Raking In Over $3,456,000. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)
  
  
• Obama White House Features Several Key Players With Ties To Goldman. “Rahm Emanuel, White House chief of staff, was paid $35,000 as a consultant to Goldman while also working as Bill Clinton’s top fundraiser … Mark Patterson, chief of staff to Treasury Secretary Tim Geithner, was a Goldman Sachs lobbyist until months before joining Team Obama.” (Timothy P. Carney, “Goldman Sachs Wants Regulation, Not Laissez-Faire,” The Washington Examiner, 4/21/10)
  
  
• And Obama’s Chief Of Staff Raised “Wave Of Cash” To Build Dem Majorities In Congress. “[T]he Democrats rode to their majorities in the House and the Senate on a wave of cash Emanuel and New York Sen. Chuck Schumer helped them raise from Wall Street.” (Jonathan Allen and Eamon Javers, “Dems Haunted By Corporate Ties,” Politico, 4/21/10)

AFTER PLEDGING TO STABILIZE ECONOMY, OBAMA PUSHING BAILOUT BILL THAT WILL DO EXACTLY THE OPPOSITE

THEN: Obama Pledged To Stabilize “Macroeconomic And Financial Conditions.” “I do not believe that government should stand in the way of innovation, or turn back the clock to an older era of regulation. But I do believe that government has a role to play in advancing our common prosperity: by providing stable macroeconomic and financial conditions for sustained growth; by demanding transparency; and by ensuring fair competition in the marketplace.” (Senator Barack Obama, Remarks At Cooper Union In New York City, New York, NY, 3/27/08)

NOW: Richmond Federal Reserve President Says Obama’s Bill Could Create “Most Instability In Financial Markets Rather Than Less.” “In fact, it seems to me that a major danger is that there’s going to be more instability in financial markets rather than less.” (CNBC’s “The Call,” 4/6/10)

• Letter From 36 Economists, Experts Say Obama’s Bill Would Not Have Prevented Financial Crisis. “Nineteen months after the most devastating financial crisis since the great depression, our financial system remains at risk. Neither the bill passed earlier this year by the house, nor the one currently under consideration in the senate would have prevented the crisis.” (Marcellus Andrews, et al., Letter To Senators Reid and McConnell, 4/14/10)
  
  
• And Bill Could Limit Credit Available To Consumers, Make Lending More Expensive And Hurting Job Creators. “Although tougher standards on banks could benefit many consumers, they could also lead to tighter credit conditions in certain states or for certain borrowers. ‘The cost to fully understand and comply with rules changes is hundreds of millions of dollars, which we will all subsidize to a great extent,’ says John Ulzheimer, president for educational services at Credit.com. Issuers and banks could wind up fleeing certain states to avoid compliance, he adds.” (Diana Ransom, “How Financial Reform Could Affect Your Credit,” The Wall Street Journal’s “SmartMoney” Blog, 3/23/10)

AFTER PLEDGING TO STREAMLINE FINANCIAL REGULATIONS, OBAMA PUSHING BILL THAT WILL CREATE MORE JOB-KILLING BUREAUCRACY

THEN: Obama Pledged “To Streamline A Framework Of Overlapping And Competing Regulatory Agencies” Because “Reshuffling Bureaucracies Should Not Be An End In Itself.” (Senator Barack Obama, Remarks At Cooper Union In New York City, New York, NY, 3/27/08)

NOW: USA Today’s Editorial Board Says Obama’s Financial Regulation Plan Will Create Bureaucratic “Turf Wars.”  “The most worrisome aspect of Obama’s plan — which would create both a Consumer Financial Protection Agency and a Financial Services Oversight Council — is its potential to spawn turf wars and bureaucratic bloat.” (Editorial, “Our View On Preventing Economic Excess: Obama Plugs Financial Holes, But Opens Door to Bloat,” USA Today, 6/18/09)

• Obama’s Financial Regulation Reform Plan Includes Consumer Financial Protection Agency That Would Reduce Businesses’ Ability To Invest, Cutting “Net New Jobs Created In The Economy By 4.3 Percent.” “Under plausible yet conservative assumptions the CFPA would… increase the interest rates consumers pay by at least 160 basis points… reduce consumer borrowing by at least 2.1 percent… reduce the net new jobs created in the economy by 4.3 percent.” (David S. Evans and Joshua D. Wright, “The Effect Of The Consumer Financial Protection Agency Act Of 2009 On Consumer Credit,” 10/7/09)
  
  
• Detroit News Editorial Board Says Dodd’s Bill “Raises Questions About Regulatory Overreach.” “The bill also creates a wholly unaccountable Consumer Financial Protection Bureau that would be located within the Federal Reserve with powers to regulate all kinds of financial transactions throughout the economy, including any firm that extends credit to buyers and allows payments to last longer than four installments. A council of regulators could order any financial institution, even if it is healthy, to sell off parts of itself or cease certain kinds of operations in the event the council deemed the firm a risk to the financial system. Overall, the legislation raises questions about regulatory overreach.” (Editorial, “Editorial: Financial Regulations Reform Shouldn’t Smother The Markets,” The Detroit News, 3/30/10)

AFTER PLEDGING TO TACKLE HOUSING CRISIS, OBAMA PUSHING A BILL THAT DOES NOTHING TO FIX THE PROBLEM

THEN: Obama Said That Housing Crisis Must Be Confronted. “Most urgently, we must confront the housing crisis … Over two million households are at risk of foreclosure and millions more have seen their home values plunge. Many Americans are walking away from their homes, which hurts property values for entire neighborhoods and aggravates the credit crisis.” (Sen. Barack Obama, Remarks At Cooper Union, New York, NY, 3/27/08)

NOW: Obama Pushing Bill That Leaves Fannie Mae, Freddie Mac “Untouched.” “Home lending giants Fannie Mae and Freddie Mac will be left untouched for now by financial reform legislation, Sen. Bob Corker (R-Tenn.) said Tuesday. Corker … said that the legislation under consideration wouldn’t deal with the two government-administered companies …” (Michael O’Brien, “Corker: Fannie And Freddie Left Out Of Financial Reform Bill,” The Hill “Blog Briefing Room,” 3/9/10)

• After Losing Billions In Taxpayer Dollars, Obama Only Promising “More Discussion” And No Action On Fannie And Freddie.  “By now, the Obama administration was supposed to have a plan to reform Fannie Mae and Freddie Mac, the ‘government-sponsored’ mortgage finance enterprises (GSEs) that have been under federal control -- and absorbing $126 billion in federal cash -- for the past 19 months. But last week Treasury Secretary Timothy F. Geithner told the House Financial Services Committee that all he can promise is a ‘public comment’ period starting April 15, in which the various housing interest groups -- and there are a lot of them -- can submit their ideas … In short, after a year of discussion, Mr. Geithner promises more discussion.” (Editorial, “Fannie Maybe,” The Washington Post, 3/29/10)