“Big, bad banks” — a “faux-populist” response
Uh-oh. It was speculation yesterday, but reality today – President Obama and the Democrats have the banking industry in their sights with their trigger fingers itching. It’s their populist response to the “Massachusetts Miracle” election of Republican Scott Brown. After reviewing the election results and polling numbers, they probably finally realized that “We the People” don’t want a cobbled-together, trillion-dollar health care plan rushed through Congress. Nor do they want a cap-and-trade bill that will restrict energy use and jack up their energy costs. Neither do they want more spend-and-tax schemes that leave them holding the bag.
Picture White House advisors plotting: “So what else makes People mad that we can use to get popular with the People again?” “Big, Bad Banks! Big, Bad Banks!” is the answer and is likely to be the Democrats’ populist slogan in this mid-term election year.
So President Obama today said that he will be cracking down on big banks and restricting their activities. And , if they don’t turn over and play dead, he warned:
“If these folks want a fight, it’s a fight I’m ready to have.”
Congressman Scott Garrett (R-NJ) was right on target with his response to President Obama’s announcement. Garrett attacked what he called Obama’s “faux populism” in jumping quickly – in the wake of the Massachusetts election — to paint the banks as the sole villains in the financial debacle, while ignoring Fannie Mae and Freddie Mac:
Garrett said in his press release:
“What is indisputable is that Fannie Mae and Freddie Mac were central to the mortgage market meltdown, which ignited the economic crisis that has left millions of Americans unemployed and has yet to be resolved. It is laughable that Chairman Frank and the Obama Administration have ignored their parasitic effect on our economy, yet proclaim the desire for reform. Passing strong GSE reform legislation should be at the top of the agenda of the House Financial Services Committee this year, in order to stabilize the mortgage market and alleviate risk to the taxpayer. Any financial regulatory reform that does not reform Fannie Mae and Freddie Mac is not true reform.”
That’s a point that CEI’s John Berlau has long made. In a statement today on President Obama’s announcement, Berlau pointed to the likely consequences of the President’s ill-conceived plans, which he termed “Glass-Steagall 2.0”:
What it would do is hurt economic recovery, reduce types of financing available to businesses big and small and give European and Asian financial services firms a huge competitive advantage over their U.S. counterparts.
“In short,” Berlau concluded, “The biggest systemic risk is that of hazardous government subsidies to and regulation on the financial sector.”