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Saturday, October 8, 2011

Obama, Solyndra, the Banks and Wall Street: Quis Custodiet Ipsos Custodes?

We are more than a year away from the 2012 presidential election, yet Obama is already in full campaign mode, seeking to blame others, i.e. the banks and Wall Street, for America's persistent economic woes. Obama's October 6, 2011 press conference was illustrative of this offensive (in both senses of the word) strategy:

"So I'm going to be fighting every inch of the way here in Washington to make sure that we have a consumer watchdog that is preventing abusive practices by the financial sector.

I will be hugely supportive of banks and financial institutions that are doing the right thing by their customers. We need them to be lending. We need them to be lending more to small businesses. We need them to help do what traditionally banks and financial services are supposed to be doing, which is providing business and families resources to make productive investments that will actually build the economy. But until the American people see that happening, yes, they are going to continue to express frustrations about what they see as two sets of rules.

. . . .

What I think is that the American people understand that not everybody has been following the rules; that Wall Street is an example of that; that folks who are working hard every single day, getting up, going to the job, loyal to their companies, that that used to be the essence of the American Dream. That's how you got ahead -- the old-fashioned way. And these days, a lot of folks who are doing the right thing aren't rewarded, and a lot of folks who aren't doing the right thing are rewarded.

And that's going to express itself politically in 2012 and beyond until people feel like once again we're getting back to some old-fashioned American values in which, if you're a banker, then you are making your money by making prudent loans to businesses and individuals to build plants and equipment and hire workers that are creating goods and products that are building the economy and benefitting everybody."

Ah yes, the old-fashioned American value of making prudent loans to enable businesses to build plants and hire workers to create products that benefit everybody. And I suppose that the half billion dollars in federal loans granted to Solyndra provide an example of this rock solid, old-fashioned American value?

Let there be no mistake: I am in favor of reinstating both Glass-Steagall and the uptick rule in order to prevent predatory financial practices. On the other hand, Obama and friends have demonstrated their own incompetence in providing federal loans and are hardly in a position to furnish financial oversight by way of a "consumer watchdog." Given the warnings about the legality of the Solyndra loans from within Obama administration (see: http://www.washingtonpost.com/politics/solyndra-obama-and-rahm-emanuel-pushed-to-spotlight-energy-company/2011/10/07/gIQACDqSTL_story.html?hpid=z1), this scandal appears ready to enmesh the highest echelons of the West Wing and even the president himself.

Federal supervision of the banks and Wall Street? By all means, but who will guard the guards?

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