You may have caught some of President Obama’s comments about the banks. It is also hard to avoid seeing that the White House has released a picture of Obama towering over Larry Summers and Sec’y of Treasury Tim Geithner in what appears to be a ‘trip to the woodshed’ conversation.
The belief among the pundit class is that the Prez is 1. unhappy with the loss in MA to Scott Brown , or 2. unhappy with the bank bonuses or 3. ready to push on banking reform but Summers and Geithner are not in agreement.
I don’t think that #1 is a strong reason to be upset. I think that #2 is the likely reason and that #3 is what he is going to do about it. I believe that the Prez has decided that the evil bankers owe him/the government some respect for bailing them out and he is not getting any.
It is possible, too, that the Banking War is not yet over. Somehow I think that Financial Service banks true objective is to control the wealth in America and that the Commercial banks stand in their way. The Federal Reserve definitely stands in the way of Goldman Sachs from becoming the “Official Bank of the US Government”. I also imagine that the FS banks feel snubbed that the Commercial banks refused to loan them money when the market fell last year.
I don’t have a clear vision of all of this but it seems to me that there are four forces at work: 1. Commercial banks are defending their turf and their tradition of being America’s solid bankers, 2. FS banks got their comeuppance last year when commercial banks refused to loan them money and they had to go to Uncle Sam to get bailed out; they are embarrassed but not humbled and they want more , 3. the Federal Reserve saved the Wall Street wealth of America (the FS banks) and wants to prevent a second occurrence, and 4. Obama’s Administration sees that the FS banks are arrogant and unregulated and that, without Obama’s push on them, Geithner and Summers would let the FS banks do what they want.
The Prez is unhappy that this mess was not all sorted out earlier this year and he absolutely will not tolerate any bank thinking that it can snub its nose at the US government. And $16B in bonuses is a big snub. (Obama may regret not nationalizing the FS banks when he had an opportunity. He chose capitalism instead and bailed them out.)
Now that Obama has told the FS banks to “Bring it on”, we will see if he can bring them to heel. They have lots of money and influence. Obama has Congress and the Fed Reserve. A fair fight , I should think.
The FS banks also have Arianna Huffington against them. She is urging people to take their money out of the big banks and put it in community banks. A good idea , I believe. The Commerical banks loan money to corporations and governments and Arianna’s Move Your Money project should not impact them but the FS banks may be hurt by Arianna’s project if their cash on hand is reduced significantly.
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