Free Market Fundamentalist Opinion

GOP Taking Cues from Wall Street?

President Barack Obama was unusually defiant in his weekly televised address this Saturday, attacking special interests and “their allies in Washington” for resisting financial reform.

The recession, according to the president, was caused by the financial industry. Indeed, it could have been avoided “if Wall Street firms were more accountable, if financial dealings were more transparent, and if consumers and shareholders were given more information and authority to make decisions,” he said. “But that did not happen” because lobbyists have waged “a relentless campaign” against what Obama described as “even basic, common sense rules” that aim to prevent abuse and protect consumers.

“The consequences of this failure of responsibility — from Wall Street to Washington — are all around us,” said Obama. Eight million jobs lost, trillions in savings erased, countless dreams diminished or denied; it’s all to blame on “special interests” who selfishly attempt to ensure the legitimacy of their destructive practices.

Or is it? Obama made no mention of the Federal Reserve’s irresponsible interest policy during the past several years. He made no mention of Fannie Mae nor Freddie Mac, all of which contributed significantly to the crisis, indeed, more significantly than the sometimes questionable policies of private banks did. Yet because of the failures of some banks, all must now bear the punishment.

Is it proper for a government to force “big banks and credit card companies to provide clear, understandable information so that Americans can make financial decisions that work best for them”? That is what, according to the president, Senator Dodd’s consumer protection agency will be all about. In fact, if the Democrats get their way, it will be authorized to regulate mortgages, credit card policies and consumer loans entirely, with little congressional oversight in place. Personal responsibility is completely lost.

Another part of what apparently led to the crisis was “firms like AIG and others making huge and risky bets — using things like derivatives — without accountability.” Financial reform must bring greater transparency to Wall Street therefore. Complicated financial transactions, said Obama, must take place on an open market. “Because, ultimately, it is a marketplace that is open, free, and fair that will allow our economy to flourish.”

If that is so, why are Democrats in Congress pushing for pervasive controls of the financial industry? If free markets make an economy flourish, how can the president allege that private banks caused the recession at the same time? Obama can’t have his cake and eat it too.

The Republicans are fighting against reform but not because they think it’s a bad idea, we’re told. Special interests have spent “a lot of time and money lobbying to kill or weaken the bill,” said the president, while “just the other day,” the Republican leadership “met with two dozen top Wall Street executives to talk about how to block progress on this issue.”

The meeting in question took place two weeks ago and quickly became a left-wing talking point. Republicans have responded by reminding Democrats that they, too, participated in numerous of fundraisers hosted by bankers and captains of industry.

The president warned that, “every day we don’t act, the same system that led to bailouts remains in place.” This has become a familiar mantra: the bailouts were a necessary evil; they were inevitable in a system that put profits before people. The government, supposedly, had to act, but aside from vaguely describing doomsday scenarios of an economy on the verge of total collapse, no lawmaker has ever decidedly made the case for the necessity of the bailouts.

Concluding his weekly address, the president said that “if we don’t change what led to the crisis, we’ll doom ourselves to repeat it.” Which is perfectly true, hence a clear and honest understanding of the causes of the financial meltdown is of the greatest importance. Unfortunately though, even Obama prefers to reiterate the sort of anti-business bashing of “greed” and “corruption” instead of truly trying to figure out where the problems began.

The Senate is set to address financial reform next week. All Republican senators have lined up already to oppose the bill, meaning they could filibuster the process. Obama once again called upon the legislators to engage in bipartisanship but “one way or another, we will move forward,” he promised. “This issue is too important. The costs of inaction are too great. We will hold Wall Street accountable.”