Did Obama Resuscitate a Corrupt Banking System?

big bank.jpgThe New York Times editors nail it today in a piece ridiculing the settlement between too-big-to-fail banks and states designed to assist anti-foreclosure efforts and underwater home mortgage victims.

Although the Obama administration did get some financial sector reforms through, like Dodd-Frank, the result seems to have been not a rewiring of the system to change the balance of power between economic stakeholders, particularly consumers and workers, but rather a resuscitation of the old system with some fig leafs (like this $26 billion foreclosure settlement) designed to cover up the corruption.

The editors write:

When it comes to helping homeowners, banks are treated as if they still need to be protected from drains on their capital. But when it comes to rewarding executives and other bank shareholders, paying out capital is the name of the game.

And at a time of economic weakness, using bank capital for investor payouts leaves the banks more exposed to shocks. So homeowners are still bearing the brunt of the mortgage debacle. Taxpayers are still supporting too-big-to-fail banks. And banks are still not being held accountable.

National Journal Chief Correspondent Michael Hirsh concurs, writing along these lines a few days ago, "Has Wall Street Really Changed?" as well as his "A Tale of Two Financial Heroes" which pivots off The Atlantic's Economy Summit that brought together the likes of Paul Volcker, Robert Rubin, Sheila Bair, Lawrence Lindsey, Douglas Holtz-Eakin, Lawrence Summers, Gene Sperling, Laura Tyson, Allan Meltzer and others.

photo credit: Reuters

Presented by

Steve Clemons is Washington editor at large for The Atlantic and editor of Atlantic Live. He writes frequently about politics and foreign affairs. More

Clemons is a senior fellow and the founder of the American Strategy Program at the New America Foundation, a centrist think tank in Washington, D.C., where he previously served as executive vice president. He writes and speaks frequently about the D.C. political scene, foreign policy, and national security issues, as well as domestic and global economic-policy challenges.

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Videos

Why Is Google Making Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

More in Politics

Just In