Obama holds stage-managed meeting with Wall Street bankers

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Obama holds stage-managed meeting with Wall Street bankers
By Tom Eley
15 December 2009

The stated aim of the gathering of Wall Street bankers at a private
White House meeting with President Barack Obama on Monday was to
cajole the nation's largest financial institutions into offering loans
to cash-starved businesses and consumers.

In reality, the event was a media exercise designed to placate growing
popular anger toward the Obama administration. The true nature of the
event was not lost on its attendees. “It's a PR [public relations]
stunt,” an unnamed CEO flatly told Time magazine prior to the meeting.

Attending were Jamie Dimon of JPMorgan Chase, Ken Lewis of Bank of
America, Richard Fairbank of Capital One, Bob Kelly of Bank of New
York Mellon, Ken Chenault of American Express, and Ron Logue of State
Street Bank. Lloyd Blankfein of Goldman Sachs, John Mack of Morgan
Stanley, and Dick Parsons of Citigroup joined the meeting via video
conference.

The nation's biggest banks will soon hand out year-end executive
bonuses totalling in the tens of billions. This conspicuous display of
bank prosperity comes just over one year after the US Treasury and
Federal Reserve began to funnel trillions of dollars to the finance
industry. This ensured that the banks would profit from the economic
crisis that they precipitated through rampant financial speculation.

The vast majority of the population continues to suffer through the
nation's worst social crisis since the Great Depression. One in six
workers is without a job or underemployed. For those who have work,
speed-up and pay and benefit cuts are the rule. The foreclosure crisis
continues. Hunger is at a record high. The destruction of the social
safety system by cash-strapped states is accelerating, and the Obama
administration is readying years of budget austerity to right the US
fiscal crisis at the expense of the working class.

Appearing on the CBS news program “60 Minutes” on Sunday evening,
Obama acknowledged the anger. Referring to the Wall Street financiers
as “fat cat bankers,” Obama noted, “They're still puzzled why is it
that people are mad at the banks.”

“Well, let's see,” Obama continued, “you guys are drawing down 10, 20
million dollar bonuses after America went through the worst economic
year that it's gone through in decades, and you guys caused the
problem. And we've got 10 percent unemployment.”

Obama did not mention that this is an outcome of the policies of his
own administration, which has overseen the Wall Street baillout and
has explicitely campaigned to oppose any measure that would curb
executive pay. Meanwhile, it has spearheaded the attack on workers'
pay, including through the forced bankrupcy of General Motors and
Chrysler.

Monday's meeting comes nine months after a similar meeting at the
White House in March. Then, Obama pledged not to take any measures
that would impinge on the interests of the financial oligarchy. Bank
of America's Lewis said at the time that he was confident that no
“punitive” actions would be taken after the “pleasant” meeting. (See
“Obama holds ‘very pleasant’ meeting with top US bankers”)

While the media had predicted that Obama's criticisms on “60 Minutes”
meant he would shame the executives or give them a “dressing down” on
Monday, by all accounts the meeting was likewise as pleasant as it was
unsubstantial. No transcripts of the discussion have been released.

Richard Davis, CEO of US Bancorp, told the media “there wasn't a lot
of disagreement.” “He didn't call us any names,” Davis said, referring
to Obama's “fat cat” reference on “60 Minutes.”

Obama pleaded with the bank executives to “explore every responsible
way” to increase lending “to help creditworthy small and medium-sized
businesses.” Over the past year, a general lack of cash liquidity has
forced many businesses to fold, scale back operations, and lay off
workers.

Last fall, Obama, President George W. Bush, and Democratic House
Speaker Nancy Pelosi, among others, justified the Troubled Asset
Relief Program (TARP) as critically necessary in order to “jump start”
or “open the spigot” of lending. Since then every facet of the Wall
Street bailout, including the unaccounted trillions extended to the
banks from the Federal Reserve, has relied on the same rationale.

But all evidence shows that the banks have hoarded the cash or used it
to engage in new forms of speculation. Overall loan volume continued
to fall from the second to third quarters this year, according to
recent data.

What the banks have made liquid has not been invested in production.
Instead much of it has been been shifted into new asset bubbles,
primarily in Asia. From this and other speculative practices the banks
have made windfall profits only one year after they teetered on the
brink of collapse.

The banks have used some of these profits to pay back TARP funds in
order to escape modest limitations on executive pay. Citigroup and
Wells Fargo became the latest Wall Street firms to do so, announcing
Monday they would pay back $20 billion and $25 billion, respectively.
They join Bank of America, Goldman Sachs, JPMorgan Chase, and Morgan
Stanley.

Obama also implored the bankers to “close the gap” between their
declared support for finance reform and their vocal opposition to the
regulatory bill passed by the US House of Representatives last week,
even though the proposed law would, if anything, expand possibilities
for financial speculation.

Such hypocritical entreaties from the president characterized the
meeting. There was no mention of any penalties or consequences to
banks that fail to increase their lending. Unsurprisingly, results
were slim, with only Bank of America announcing it intends to make $5
billion more available to small and medium-sized businesses, a drop in
the bucket compared to the enormous need for capital and liquidity.

Wall Street executives' determination to not lend to the productive
sectors of the economy--while rewarding themselves billions in
compensation--is not a question of morality, nor is it an aberration.
It arises from the historical decay of capitalism and its turn to
evermore parasitic forms of financial speculation.

While media accounts attempted to present the gathering as an example
of Obama “taking on” the bankers, they could not conceal the real
relationship of forces. The Obama administration's efforts to put on
the show of getting tough produced the opposite image, that of the
president as willing supplicant before the masters of Wall Street.

It is significant that Blankfein of Goldman Sachs, Mack of Morgan
Stanley, and Parsons of Citigroup did not attend in person. While
their last-minute cancellations were chalked up to weather--fog in the
Washington DC area delayed some flights on Monday morning--they more
likely aimed a rebuke at Obama over his “fat cats” comments. Parsons
was already a substitute for Citi CEO Vikram Pandit, whose decision to
skip the event was attributed to his bank's negotiations with the
Treasury to pay back TARP.

“The President has real problems only the banks can help him solve,”
according to Time magazine. “On jobs, housing and the strength of the
economy, he needs bankers to change their behavior, and there's only
so much he can do to force them. So when he sits down with the
financial industry elite on Monday, he may talk tough, but he'll also
be asking for their help.”

The admission that a democratically elected president has no power
over a handful of financiers is an acknowledgement of the oligarchic
character of US society. The financial aristocracy in fact controls
every lever of state power and dictates economic and social policy.
Obama is their representative.

http://wsws.org/articles/2009/dec2009/bank-d15.shtml

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