Did Obama Sell Out to Wall Street?

Questions raised by Matt Taibbi's latest rant

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Matt Taibbi, anti-Wall Street ranter extraordinaire, has trained his ire at President Obama in a big new piece for Rolling Stone, and the blogging world is taking notice. The president, argues Taibbi, has betrayed the American public by getting in bed with bankers.

Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place.

Taibbi particularly zeroes in on Tim Geithner, noting that he was "hired to head the U.S. Treasury by an executive from Citigroup--Michael Froman--before the ink [was] even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering."

While not all agree with caustic Taibbi's tone or his allegations of back-scratching, the piece is raising questions. Is Taibbi right? Should we be surprised that Obama is surrounded by Wall Street advisers?

  • Is Obama Actually Carrying Water for Wall Street?  At The Huffington Post, Bob Burnett's not sure, but "at the least," he writes, Obama has "made a serious mistake assembling an economic team headed by Rubin, Geithner, and Summers. Obama has continued the economic policies of the Clinton era - widely bemoaned as Reganomics-lite."
  • Are We Surprised?  Calling the article "one of the worst pieces of journalism I've ever encountered," The American Spectator's Joseph Lawler is  berates Taibbi for setting up Wall Street bankers "in opposition to Obama in the introduction" so that he can reveal, dramatically, that the two are in fact allies. He quotes Taibbi: "it's not like you saw him out on the campaign trail flanked by bankers from Citigroup and Goldman Sachs." But Goldman Sachs and Citigroup wereObama's second and sixth largest donors, respectively, Lawler points out.
  • Did Froman and Geithner Conspire to Favor Citi?  Credit Writedowns' Edward  Harrison looks at the section describing the relations between Froman and Geithner. He's not sure that the dealings were as deliberate as Taibbi thinks, but says it doesn't matter:
You don’t need to prove intent, you only need to prove motive. I don’t care if Froman or Geithner 'intended' to favour Citi over other institutions; I care whether they were mentally predisposed to helping Citi and other large institutions at the expense of others because they ascribed unwarranted and disproportionate importance to them. Unfortunately, cognitive regulatory capture leads to crony capitalism just as outright corruption would do.
  • Is Obama Exiling Academics?  "What I’d like to know," writes Balloon Juice's DougJ, " is if President's Economic Recovery Advisory Board really is 'Siberia.'" This is where the president has sent economist Austan Goolsbee, and Taibbi sees it as a snub.
  • Is Obama Similar to Bush?  "I," says finance blogger Barry Ritholtz, "have been calling the President 'Barack W. Obama' for some time." Taibbi's piece, he says, B"squares up with my views of [Obama's] economic team as more of the same economic policies of the 43rd president."
  • Is Taibbi a Hypocrite?  Don Surber at the Charleston Daily Mail takes exception to Taibbi's outrage at Obama's trickiness and equal outrage at conservative "tea partier" apathy on the subject of Wall Street:
After 5 takes of complaining how he was fooled, in the 6th and final take he dared to call the Tea Party crowd fools for not being as savvy as he. Guess what? By and large, they did not vote for this guy. Taibbi did.

This article is from the archive of our partner The Wire.