Obama Addresses Wall Street

Yes, standing in Federal Hall the president was sonorous as usual, grandiloquent to say the least. But it was the same old rhetoric, the same old unctuous patter. The left will praise him for his pointedness. They will slobber all over themselves for his message of saving the American taxpayer in the future. He will receive credit for insight on how to prevent this from ever happening again and for pulling us out of our current economic travails. (Even though the Federal Reserve was instituted after the last great financial debacle just for this type of scenario.) The fawning left will rejoice in hearing him call the “evil doers” of Wall Street to task for their misgivings, and for setting them on a path of righteousness in the eyes of taxpayers.

Was anyone really listening to his speech though? Or more felicitously, his didactic lambasting of Wall Street’s exalted ones. The audience was replete with powerful and imperious names: Richard Parsons, chairman of Citigroup; Gary Cohn, president of Goldman Sachs; Daniel Loeb, founder of Third Point; Peter Peterson, co-founder of Blackstone Group; et al, including the famous short-seller, James Chanos.

In the New York Times today, Andrew Sorkin was right-on in his article: Obama’s Speech: How His Wall Street Audience Reacted. “These were the people Mr. Obama was really speaking to when he said, ‘You don’t have to wait to put the 2009 bonuses of your senior executives up for a shareholder vote. You don’t have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains.’”

He was referring to the names I mentioned above, and the look on these fat cat’s faces was priceless when Obama continued. I know, I watched them.

“It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system and a more broadly shared prosperity.”

It was with those words that many of these same fat cats looked away, frowned or scowled, in defiance or chagrin.

But wait! What about the others that were responsible? The ones Obama pointed out as borrowing money, knowing it couldn’t be repaid. Oops.

That’s right, Obama said it wasn’t only the fault of banks and Wall Street executives that caused our financial cataclysm, the responsibility was also laid on those who borrowed that really shouldn’t have. I bet that toned down the joy of the drooling dolts watching their television sets. The obsequious zombies who dote on every word out of Obama’s mouth. That stung a little, didn’t it?

But I still didn’t hear what I was looking for, the genesis of our financial decline. Obama’s assent to complicity and guilt. Who was the originator of our problems? Who was the mastermind behind scene? There was no shared responsibility there, at least not that I heard.

The truth to the matter is, our federal government is the major culprit in this crime. More apropos, the Clinton administration between 1992-1995 and Barney Frank’s opposition to Bush’s reform measures in the early 2000’s. It not only exacerbated the problem, but started the ball rolling in the first place.

Obama called Frank “my good friend” and a financial genius. That’s far from accurate. Let’s look at what ol’ Barney did. I’ll let you look up Clinton’s involvement in the Community Reinvestment Act and see for yourself.

In 2003 Frank was the ranking Democrat on the Financial Services Committee. When the Bush administration proposed oversight of Fannie and Freddie, transferring it from Congress and the Department of Housing and Urban Development (HUD), to a new agency that would be created within the Treasury Department, Frank opposed it vehemently. A spokesman for the Bush administration was quoted as saying. “Congress neither has the tools nor the stature for adequate oversight.” To which Frank replied, “these two entities are not facing any kind of financial crisis. The more people exaggerate these problems the more pressure there is on these companies, and the less we will see in terms of affordable housing.”

That was in 2003. You think maybe Bush had it right? Fast forward five years and what do you have? Frank doesn’t look much like a financial genius now, does he?

I don’t proclaim to be a financial pundit, but I assure you, from what I’ve seen in the last twenty years, I’m as good as Barney Frank will ever be. Here’s the way it really went down, from a layman’s point of view.

In 1977 Carter enacted the Community Reinvestment Act, a good thing at the time. Through 1992-1995 Clinton expanded it and turned its oversight over to Congress and HUD. The ramifications were catastrophic. Our government wanted to tout a 60% home ownership in America to the world. We were the most luxurious country in the world in which to live.

Through this administration Freddie and Fannie were forced to devote more than fifty percent of their assets to low and moderate income housing, people that could not realistically repay the debt. To further exacerbate the problem, Congress, HUD and groups like Acorn pushed legislation to require banks and other lending institutions to do the same. After years of objection and the implementation of onerous fines and penalties our financial institutions acquiesced. Thus, the beginning of the end.

It was our government, the Democratic led Administration, that was the fulcrum of this disaster. Next in line are the stupid people. Yes, I said it. I know it’s not politically correct, but any logical thinking person is thinking the same thing. How can anyone with a ten dollar an hour job possibly think they can buy a $200,000 home? They most certainly do have a responsibility in this, Obama was right. The truest word he spoke all day.

But what happened next? Obama was almost right this time when he said the market shucked their responsibility and liability by bundling mortgages and passing them on. Sure, they did that. But could that have been self preservation? After all, they knew as early as 1995 when the chairman of the Cato Institute, William Niskanen, addressed Congress and proclaimed that what they proposed was doomed to failure. Why wouldn’t they want to cover their butts?

That’s not the end of the story however. Our lending institutions’ faults lie in greed. Avarice being the greatest of all sins. When did “creative financing” come to bear? Think back. I don’t recall such a thing when I was young. In those days if you wanted to buy a house you came up with ten, maybe twenty percent down and financed a loan over a fifteen, twenty or thirty year term. Right? When did sub-prime mortgages come about? Could it have been in the late 80’s or early 90’s? Hmmm?

Yes, the market is guilty, but not of what our government accuses them of. They are guilty of greed, only after our government showed them the way. Who forced the banks to lend to unqualified borrowers? Who opened Pandora’s Box? Once it’s open, it’s hard to put the genie back in the bottle.

So there you have it. First in line for criticism, for shucking their responsibility and starting the ball game, our government. Primarily the Democratic Party. Next are the stupid people. But give them a break, they can’t help being stupid. And then come the banks, mortgage companies and the market in general. They were shown the way and then greed came abounding. Who wouldn’t have taken the same oppertunity?

Obama, what a lovely speech.