This is a blog by a helicopter pilot. I am not an expert on politics, or the economy, or anything else. But although I am as interested as anyone in current events, I try to stay away from subjects about which I know very little. I’ll leave that to people who do know what they're talking about. But a recent article by Matt Taibbi in Rolling Stone Magazine got me thinking. In it, Taibbi lists who’s who among President Obama’s economic advisors, and shows how they’re all connected. It’s a long article, but a fascinating read. A link to it is at the bottom of this post.
A lot of people think President Obama is a huge, flaming socialist who’s “driving the country off a cliff,” whatever that means. They ridicule his “hope and change” campaign platform, saying that the kind of change we’ve seen so far is not what we need or want. Less than a year into his presidency, many already consider it an abject failure.
Me, I’ve taken a wait-and-see attitude. I know better than to judge someone on short-term effects. Sometimes things take a while to play out. Like, oh, ten years?
In 1933, in the midst of the Great Depression, Congress passed the Glass-Steagall Act (also known as the “Banking Act of 1933”). Very simply, it prohibited banks from being at the same time a commercial bank, investment house and insurance company. It must have seemed like a good idea at the time to keep these things separate and thus, to keep the overall risk for bank depositors low as the economy rebuilt itself.
In the rock’n’roll 1980’s, business was booming. Banks wanted to be more things to more people. They pressured the government to do something about Glass-Steagall. It took a while, but it eventually happened. In 1999, Republican Senator Phil Gramm, along with Republican Representatives Jim Leach and Thomas Bliley introduced the Gramm-Leach-Bliley Act ("GLBA") which effectively did away with the Banking Act. A bill such as GLBA had been wanted all through the ‘80s. It was worked on in the 90's and finally signed into law by dumbshit President Bill Clinton on November 11, 1999.
And with that, Citigroup began its takeover of our economy. Well, it and Goldman-Sachs. (If you think the President “controls” the economy you are sadly mistaken.)
The repeal of Glass-Steagall was the instrument that allowed companies like Citigroup and Goldman-Sachs to become “too big to fail.” It allowed banks to, with little oversight, invest in all kinds of cockamamie things like mortgage-backed securities and the infamous collateralized debt obligations (CDO’s). It opened the doors to the sort of financial hanky-panky that uneducated boobs like me barely understand. What uneducated boobs like me do understand however is that things obviously got out of control and the economy collapsed. And by God, somebody is to blame. That "somebody" is a guy named Robert Rubin. But that's getting ahead of ourselves.
When it comes to blame, it’s easy to point at Bill Clinton, but Gramm-Leach-Bliley was mainly a Republican initiative. But Clinton did sign it. And they say that Democrats aren’t for big business! How or why he thought it would be good for the economy is anybody’s guess. Mine is that he was an idiot. I take that back- in the short term, the repeal of the Banking Act was "good" for the economy.
But here we are, ten years later and the country is in shambles; the result of Wall Street running amok with nobody watching. No, that’s not correct- lots of people were watching…and approving. Like that nitwit, Alan Greenspan who thought corporations would exercise good moral judgment and responsibility. Yeah. Uh-huh. Right, Alan, good call.
Today, a person doesn’t put their money in a simple “bank” anymore. Oh, no. Now it’s a financial services organization. Smalltown banks get swallowed up and absorbed by progressively bigger and bigger banks. Sooner later, the fish gets so big we can't let him die. He has to go on some sort of fish-life-support funded by the U.S. taxpayers.
Okay, back to Obama. People call him a socialist? Heh. Let’s look at the people around him.
Now we get to Bob Rubin. Right now, Rubin is listed as one of Barack Obama’s “financial advisors.” Let’s see why.
In the early 1990’s, Rubin was with Goldman-Sachs for twenty-six years, ending his career with the company as CEO. In 1992, Rubin was appointed Secretary of the Treasury under President Clinton. It is said that during his time at Treasury he was one of the driving forces behind Gramm-Leach-Bliley, without which Citibank would never have morphed into the giant conglomerate it is today. (So sure was everyone that Gramm-Leach-Bliley would succeed that the merger of Citicorp and the insurance giant, Traveler’s Group into Citigroup was approved before the bill even passed. Talk about a ringer!)
After "retiring" from Treasury in 1999, Rubin went right to work for…ta-da!…Citigroup where they paid him $126 million dollars over the next eight years. A cynic might conclude that this salary was a “Thanks!” for a job well-done on Gramm-Leach-Bliley.” Rubin finally resigned in controversy if not disgrace from Citigroup in January of this year, unable to survive the economic meltdown he more or less engineered.
While he was Treasury Secretary, Rubin had a guy working for him named Timothy Geithner. Geithner left Treasury in 2001, and in 2003 was named President of the Federal Reserve Bank of New York where he stayed until 2009. Now here’s where it gets fun.
When Barack Obama was elected President on November 4, 2008, he appointed a former Harvard Law School classmate of his named Michael Froman to be his Deputy Assistant of the National Economic Council. At the time of the appointment, Froman was working for...(wait for it)...Citigroup. Coincidentally (or not), Froman had been Chief of Staff to Bob Rubin when Rubin was Treasury secretary under Clinton. While still working for both Citigroup and President-elect Obama immediately after the election, Froman appointed Tim Geithner(!) to be Secretary of the Treasury. Obama concurred.
A little over two weeks later, on November 23, 2008, the huge bailout of Citigroup was announced. I mean, whodathunkit!
Are there others? Oh hell yeah! When it comes to economics, just about everybody who surrounds our current President is connected either to Bob Rubin, Citigroup, Goldman-Sachs, or all three.
Who really runs this country? The people who control the money, of course. This should come as no surprise to anyone. But banish any thoughts of Barack Obama being a socialist. Obama talks out of both sides of his mouth. He says we should hold "Wall Street" accountable. Yet at the same time he will do what the bankers and his “economic advisors’ tell him to do. The really rich and powerful are not being hurt at all by this current economic burp. For them it is business-as-usual. (There is no telling where Bob Rubin will land next, but it will surely be on his feet.)
Wall Street (and thus capitalism) still rules, if that’s any consolation. The bad news is: The same people that caused this mess in the first place are still in charge now.
I don't know about you, but I don't see this as a good thing.
Rolling Stone Article