This looks like it's going to be one hell of a read from Robert Sheer. Democracy Now's Amy Goodman interviewed Sheer about his new book, The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street. I wish Obama would take some of Sheer's advice here and put a floor on housing foreclosures so people can stay in their homes and appoint Elizabeth Warren to head the consumer protection agency.
I'd like to see him get rid of Tim Geithner and Larry Summers as well. If he wants some enthusiasm from his base this mid-term election, looking out for main street instead of Wall Street would go a long way. I already know the Republicans are horrible. I'm tired of Democrats just saying we're not as bad as they are while they're protecting the bankers instead of the home owners. I'm not quite as down on him as Sheer is since I don't think you can discount all of the things President Obama has managed to get done in the face of unprecedented Republican obstruction, but on this matter, I agree with Sheer.
They haven't fixed the problems with the financial institutions. The bill they got passed was weak tea and they haven't done nearly enough to keep people in their homes and he's surrounded himself with the wrong people. And he was right about what needed to be done when he said the problems with our economy were due to reckless deregulation when he was on the campaign trail. I want to see that Obama come back, not in words, but in his actions. He gave a really great speech on Labor Day. President Obama, I hope you decide to back up that speech with some action. Talk is cheap if you don't back it up with some action.
AMY GOODMAN: As we continue our discussion on the state of the economy, we’re joined in Los Angeles by veteran journalist and Truthdig.com editor Robert Scheer. His book is out today; it’s called The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.
Bob, welcome to Democracy Now!
ROBERT SCHEER: Hi, Amy.
AMY GOODMAN: What is wrong with the economy today? And how did we get here?
ROBERT SCHEER: Well, you know, you say a longtime journalist. I worked for the Los Angeles Times as a national reporter, and I covered these hearings in Washington when the Clinton Administration in the '90s basically fulfilled the promise of the Reagan Revolution. Reagan was not able to reverse the sensible regulations of the New Deal of Franklin Delano Roosevelt designed to prevent us from getting into another depression. And those regulations of Glass-Steagall, which Feingold was against—was for keeping and against reversing, said that investment banks playing with supposedly rich people's money should not be allowed to merge with commercial banks that were using the deposits of people that were insured by the taxpayers and that these were different activities. And Reagan could never pull off that kind of deregulation. In fact, because of the savings and loan scandal at the end of his term, he actually had to sign off on increased financial regulation. But when Clinton came in, he brought in one of the big players on Wall Street, Robert Rubin, who has been head of Goldman Sachs, and basically turned to him and said, "You know, what do I need to do to get Wall Street on my side?" And they said, reverse what they considered to be onerous financial regulation. And Clinton delivered on that. He brought in Rubin then to be his Treasury secretary, who was followed by Lawrence Summers, who’s now the top economics adviser in the Obama White House.
And in addition to the Gramm bill that reversed Glass-Steagall, he did something even more significant for our current crisis. He—after Summers had pushed it through, Congress signed off on the Commodity Futures Modernization Act of 2000. He was already a lame duck president. It was in the closing weeks of his administration. And this is the source of our whole problem, really, in terms of the housing meltdown, because we had these suspect derivatives that sensible people in the administration, like Brooksley Born, had warned against. No one knew what these toxic investments all about, the bundling of mortgages, which is what encouraged all of the wild subprime and Alt-A financing, because they were then going to be packaged together, made into securities, and then backed by credit default swaps, and all of this stuff that really didn’t exist. It certainly didn’t exist in Adam Smith’s capitalism, but it didn’t really exist even in Ronald Reagan’s capitalism. This newfangled—these gimmicks that were developed and spiraled wildly out of control were made possible because of that Commodity Futures Modernization Act, which Clinton signed and which said in Titles III and IV, no existing government regulation, no existing government regulatory body, will be allowed to supervise these credit default swaps, these collateralized debt obligations that were there. Read on...
