Sunday, December 13, 2009
President Obama Doesn't Get It
President Obama has lashed out at financial institutions, as the Wall Street Journal reported, “Fat cats” who “don’t get it" and will demand they start lending money when he meets with top banking executives this week.
The president needs to turn his accusatory finger back on himself. It’s not Wall Street, it’s not the banks, it’s not the American people – it’s the president who doesn’t "get it." And if he’s is not careful, his meeting with the so-called “fat cats” on Monday could have the opposite effect the president wants for the American people.
Already having a frosty relationship with the banking industry, the president says he wants to meet with the top bank officials to get them to loosen their collective purse strings and start lending money to more Americans.
As the president likes to say, let me be perfectly clear – this is exactly the WRONG thing to do right now in this economy. After the mortgage meltdown and the collapse of Wall Street, the banks shuddered and then shuttered much of their lending for a reason. They want to remain solvent and hang on to their equity to stay in business.
President Bush thought (incorrectly) that by infusing money into our financial system, it would help the banks to stay solvent and keep money flowing into the economy. It didn’t and most banks held onto the TARP money only to pay it back (with interest) once the Government started dictating terms and conditions of using the money.
Now the president thinks he can invite these CEOs, these Capitalists to the White House and strong-arm them into lending again?
If we are to give money to people who don’t have the means to pay back these loans, or if the bank wants to take on more debt by risking more lending, aren’t we back where we started from about 15 months ago? Wasn’t the entire collapse of our economy because of giving someone money for something they couldn’t pay back when the note was due and they defaulted?
Barack Obama can’t have it both ways. He can’t keep giving TARP money with strings attached and he cannot influence the banking system to go back on hundreds of years of conventional wisdom on how and when to lend money, (influencing an-already unstable, tenuous market) to people and companies.
If the banking system actually listens to Barack and lends money to people and businesses who cannot pay the money back, then we are right back on the financial precipice that Hank Paulson and Nancy Pelosi warned us we were teetering on last year.
Except this time when we fall into the abyss, we can’t blame faceless Wall Street “fat cats,” we can blame one person – one man. President Obama.