Time is running out for Senator Bernie Sanders to tell the truth about the last several years of the Obama administration that has run a protection racket for the Wall Street predators that cratered the economy, even as their pillage of Main Street continues unabated. By avoiding this awful truth, perhaps in fear of alienating African-Americans voters, Sanders is squandering a once-in-a-life opportunity he’s worked so hard for -- to speak truth to power.
There is a certain incoherence to the Sanders message in ads that blast the Department of Justice’s recent settlements with the likes of Goldman Sachs, yet fail to note the reality that this deal, and many more like it, have been cut by officials that ultimately report to the President of the United States.
In one Sanders ad that got saturation play in the New York market, the rhetorical question is asked: “How does Wall Street get away with it?” The answer offered is “millions in campaign contributions and speaking fees,” which, the ad goes on to suggest, insures that “our economy works for Wall Street.” The ad's closing line states the obvious: “As long as Washington is bought and paid for we can’t build an economy that works for people.”
However, by just zeroing in former Secretary of State Hillary Clinton’s insatiable appetite for six-figure Wall Street paydays, and millions of dollars in campaign donations, he lets President Obama slip into what promises to be a platinum-plated retirement after his dutiful service to the one percent that resides both in Hollywood and New York.
It has been widely reported that the biggest players in the 2007-08 financial crisis escaped criminal prosecution on President Obama’s watch. Even though their fraudulent behavior collapsed America’s housing market and sucked the wealth out of the nation’s pension nest egg, these titans of finance have during Obama's presidency gone on to prosper and preside over institutions that are even larger today than they were before the Great Recession.
Thanks to a New York Times report earlier this month, we know that the latest $5.1 billion settlement between the Department of Justice and Goldman Sachs is an “even sweeter deal” than all the others that the Obama administration has been busy signing off on. “Buried in fine print,” the Times reports, were government incentives and tax credits that mean the Wall Street giant will have to pay only a fraction of what the DOJ press release says it will.
“For example," the Times report states, "the settlement calls for Goldman Sachs to spend $240 million on affordable housing. But a chart attached to the settlement explains that the bank will have to pay at most 30 percent of that.” So while the fine print gives away close to a billion dollars, the DOJ can loudly proclaim the deal “holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew they were full of mortgages that were likely to fail.”
The settlements are as fraudulent as the conduct they purport to punish. No doubt, we can expect the government lawyers that cut these Wall Street deals to follow the same path as former Attorney General Eric Holder, who upon leaving his post at the DOJ proceeded right back into the rarefied air of his corporate law firm Covington & Burling, where he worked before his latest stint of public service.
Candidate Obama raised millions from Wall Street in two national elections, and over all these years they got what they paid for. The prime malefactors avoided prosecution and have gone on to prosper. Their firms got bigger, even as the national wealth continued to increasingly be concentrated at the top, and the income disparity only continued to widen.
This was a protection racket run under the guise of “hope and change.” Consider Ron Suskind’s reporting in “Confidence Men; Wall Street, Washington and the Education of a President.” It recounts how Larry Summers and Treasury Secretary Tim Geithner co-opted any real Wall Street reform from inside the Obama administration. In one telling excerpt, Suskind describes the president's first big meeting with the “golden thirteen,” including JP Morgan’s Jamie Dimon and Goldman Sachs’s Lloyd Blankfein, to discuss issues like potential caps on Wall Street compensation.
"After a moment, the tension in the room seemed to lift," writes Suskind. "[T]he bankers realized he [Obama] was talking about voluntary limits on compensation until the storm of public anger passed. It would be for show."
Suskind goes on:
"Nothing to worry about. Whereas [FDR] had pushed for tough, viciously opposed reforms and famously said, 'I welcome their hate,' Obama was saying, 'How can I help?' With palpable relief, the CEOs carried the discussion, talking, easily now, about credit conditions and how loan demand was soft because it should be; business was already over leveraged."
Suskind quotes the President as telling this group: "My administration is the only thing between you and the pitchforks."
* * *
William Black was the federal banking official who blew the whistle on the role of members of Congress -- known as the Keating Five -- in a scandal involving the nation’s savings and loan industry meltdown. Black is now a professor of economics and law at the University of Missouri-Kansas City and an advisor to the Bernie Sanders campaign.
In a recent op-ed, Black argues that the Dodd-Frank legislation -- championed by the Obama administration and candidate Clinton, as the toughest Wall Street reforms since the great Depression -- was actually window dressing that did noting to “mandate that the regulators transform Wall Street’s corrupt culture.”
“The most you can say is that it provided increased authority to allow the Obama administration to act against that culture should it muster the will to do so,” wrote Black.
Thanks to the political fallout from the Great Recession, President Obama had an FDR-like opportunity to push for real reform; but, instead, he protected the status quo and went golfing with the bankers.
But that’s actually the least of it. As I have previously reported, the so-called Obama recovery is a corporate news media fiction that is based on aggregate national data that belies the hard truth on Main Street. As the National Association of Counties reports, only 7 percent of America’s 3,069 counties have experienced a recovery based on the four criteria NAC uses: job creation, unemployment rate, median home prices and the local county gross domestic product.
Over the last eight years, America’s urban core in places like Newark, Baltimore and Ferguson have become pockmarked with millions of vacant zombie homes as the foreclosure crisis was permitted to play out. After years of inaction by Washington, these neighborhoods have been permitted to die. Now, what just a few years ago was a still-salvageable housing stock has to be demolished, as rents soar and affordable housing is harder and harder to find.
President Obama does not get a pass on this because he was saddled with an obstructionist Republican Congress that tried to undermine his legitimacy as a way to kneecap his presidency. If Bernie Sanders does not draw real attention to the reality of the history we have all lived through, rest assured a candidate Donald Trump will have no qualms in doing so. The talented shapeshifter he is, Trump will lay claim to being our latest incarnation of “hope and change,” and warn that the election of Secretary Clinton will be little more than a third Obama term. And that could prove to be a very effective message.