By Jay Hansen
I just finished watching the latter half of the FRONTLINE Documentary “Money, Power, & Wall Street,” and Holy S#&% it was amazing. I didn’t even know about this documentary series until this evening when I happened to stumble upon it on PBS right as part three was beginning. I can’t recommend the whole thing because I’m yet to see parts one and two (though I likely would), and because in all the whole documentary is four hours long. Essentially, it is the story of the entire creation, rise to power, fall, and fallout of the mega financial industry that led to the crash of 2008 and devastated not just the American economy, but the global economy. It’s a lot of information but it’s presented very orderly when you’re actually watching it. I’ll try to summarize as much as possible in this article I’m quickly slapping together, but I couldn’t do this documentary justice if I spent a week on it. I’d highly encourage watching at least parts three and four, which is where I will start my summary.
PART 3 – Obama Inherits a Crisis
(Apologies, but embedding seems to be malfunctioning. Click the link to watch the video on the PBS website)
Starting with Episode 3, the documentary explained the crisis from late 2008 onward and its implications on the still-developing Obama administration. What suddenly drew me in to this documentary was its rather open criticism of, and even disgust with, Secretary of the Treasury Timothy Geithner. The only guys I ever see giving out such harsh criticism of Geithner are The Young Turks, for which I admire them. Geithner was one of two possibilities that Obama had to choose from for his Treasurer, the other being Paul Volker. Volker was a reformist that believed proper response to the 2008 collapse would be a major reformation of the financial sector with stronger regulations of banks and trading, much like how the American government responded in the 1930s during the only other economic downturn as large and catastrophic as this one, the Great Depression. Geithner was the establishment candidate who had helped orchestrate many of the big bailouts for financial institutions and, most infamously, the insurance company AIG, under the Bush administration. He himself had worked on Wall Street his entire life, and his political motives throughout his time at the federal level had thus far only reflected that he did not represent the interests of the American people, but rather only Wall Street’s interests. The “Stress test” plan he developed for the big banks to determine if they were financially stable was laughably weak to the point where any of the banks, regardless of their current circumstances, could pass (helping me understand and appreciate this SNL skit even more). Despite the obvious corruption of this man, how deeply seeded he was within the establishment, and worst of all, how big of a hand he had played in the deeply unpopular Bush administration and even more deeply unpopular Wall Street bailout, Obama picked Geithner over Volker. This was the first large misstep of Obama’s time as President, and it was literally only days into his first term.
The question is why did Obama pick him? His base was clear in their support of Volker, yet Obama went with the establishment guy for the job that would only represent the banks and Wall Street and not those of the average American or Main Street. The answer, which again took me by surprise to see somewhere in moderately mainstream media, was also included in the documentary. Obama has an almost childlike obsession with pleasing the establishment. He’s had this obsession since day one, and Geithner is proof of that. Obama wants the best of both worlds; to get the public credit of calling bankers fat cats and proclaiming to be hard on them, while at the same time picking regulators, advisors, secretaries, and other people that surround him and operate the government on a daily basis that will be friendly with Wall Street and do nothing to actually regulate or reform them. This is the fundamental flaw with Obama. It’s one of the core reasons I’ve had disagreements with him literally since day one. He wants to appease those people in a position of power, while appearing populist at the same time by claiming he’s going to be tough on them. It leads to a President that is all talk and no game; one whose bark is much worse than his bite. Ultimately, it leads to a weak President.
Weakness is exactly what the banks detected from the President when they had their first meeting with him where Obama laid out his plans as he had been persuaded to do by Geithner. The CEOs of the biggest banks in the nation were terrified going into that meeting, fearing reinstitution of depression-era regulations, limiting CEO bonus payouts, or possibly that some of them could even be fired entirely after they took so much taxpayer money to stay afloat. Geithner’s plans, however, were laughable. The bankers came out of that meeting without so much as a slap on the wrist and the message that Obama and Geithner were on their side, according to their own testimonies to the press upon leaving. What they learned from that meeting, however, and what that they didn’t say after leaving the meeting is far more important. They learned that the Obama administration, just weeks after coming into office, was weak. This was literally the most vulnerable the bankers had been and were ever going to be in this recession, and the only possible time there could have been repercussion for their actions, and the Obama administration did absolutely nothing, letting them off the hook, giving the bankers a strong sense of invincibility and hubris, and they did so at the behest of Tim Geithner.
There’s more too. Geithner, Obama’s most trusted economic confidant, perpetuates the ideology of “extend and pretend.” Basically, Geithner is in it entirely for short-term gains (which is explained in the fourth episode of this documentary series as endemic of the Wall Street and banking culture); he ensured that whatever it took to keep the “too big to fail” banks alive would happen, regardless of how much it cost the American taxpayer or the long-term damage it could do by only pumping more and more money into the banks without them generating enough revenue on their own to stay alive. That’s why he originally supported the bailout, and why he opposes ending the ideology of too big to fail, or reforming the financial system in any significant way. It’s a back-door admission of Geithner that the financial sector and banking industry is so horribly instable that the faintest pin-prick or breeze could cause the entire system to collapse. This leaves him with no option but to continue business as usual, not reform a clearly broken, corrupt system, and pump more and more taxpayer money into these massive corporations against the will of the American people. By extending the current system, Geithner is pretending there is no real problem, when in reality a catastrophic financial meltdown is inevitable if we don’t do major reform immediately.
This same principle of extend and pretend is why Geithner was one of the primary opponents of many provisions within the Dodd-Frank financial reform bill, and worse yet, why the bill ended up getting so heavily watered down to the point where it’s so ineffective and riddled with loopholes it does absolutely nothing (more of that was discussed near the end of part four). Geithner convinced the President to extend and pretend for so long whilst feeding the big banks so much money from the Federal Reserve and the taxpayers that the banks managed to recover from the economic catastrophe, while no other industry or class of society has. This enabled them, upon the inception of Dodd-Frank, to send an army of lobbyists once again to Washington that they wouldn’t have been able to afford in the anemic financial state they were in before Geithner came to Washington. So, with the very money funneled to them by Geithner and his ilk of former Wall Street employees-turned-politicians from the taxpayers, banks were lobbying against the will of the taxpayer and prevent any new reforms or regulations from even scathing them or making them change their deeply corrupt, unethical system. Banks used your money they stole from you to prevent the stealing of your money from being classified as a crime punishable by law.
Are you mad yet?
You want to know why the banks are yet to be punished for their actions in 2008? You want to know why banks continue to funnel millions of dollars from taxpayers into the bonuses and wallets of their CEOs? You want to know why the Dodd-Frank financial reform bill will do nothing to reform finance? You want to know how and why Wall Street got all the bailouts that they did in sums of hundreds of millions, if not trillions if you count the interest-free loans they got from the Federal Reserve, with no strings attached? If there is a single person that could be blamed, I make no exaggeration or straw-grasping when I say that person is Timothy Geithner, Secretary of the Treasury as chosen by President Barack Obama. There’s a reason Cenk Uygur considers Geithner the worst Secretary in American history, ranking him up on the list of Presidential failures with Donald Rumsfeld who famously started an entirely unnecessary war with no exit strategy, destabilized an entire region of the world, killed thousands of Americans and many more Iraqi civilians and soldiers, and all for no real God-damn reason at all. Plus, if you pay attention, you never, ever see or hear about Geithner in the mainstream media. No one ever criticizes him or points out his massive flaws. Why? Because the media is part of the establishment now. FOX, CNN, MSNBC, all of the major news networks don’t want to disrupt the “established order,” and right now Tim Geithner is the biggest, most powerful protector of that order in the nation, and therefore, in the world.
This is why we have an Occupy Wall Street movement. Wall Street, led by the banks, have captured our entire system of government, and Tim Geithner is, in the exact words of a Wall Street banker, their “man in Washington” to keep the system rigged. So long as Geithner is in office, or at the very least, so long as Obama is still listening to him, our system will never be fixed.
But more on Occupy and our system next time, when I discuss part four of this series.