Friday, January 22, 2010

President endorsing a new Glass-Steagall Act?

President Obama has been trying to grab some appendage of the populist horse as it passes him again. This time he is picking up on Paul Volcker (no populist but of sound judgment on the banks) who has been suggesting splitting banks into those that are essentially risk-taking investment houses and those that are basically commericial or lending institutions. This was the aim of the Glass-Steagall act, which I have discussed in a previous blog.

The repeal of Glass-Steagall took place under Clinton, who acquiesced easily. His Treasury Secretary was Robert Rubin, close associate of Geithner and Summers. Plus ca change. Instead of going with Rubin's pals, Obama should have gone with Clinton's Labor Secretary, the other Bob: Robert Reich.

Some history. I worked on Reich's Massachusetts gubernatorial campaign. Reich was stiffed in a backroom deal organized by the Boston Menino machine at the Democratic convention, where the eventual candidate was Shannon O'Brien, a very weak candidate -- sort of a precursor of Martha Coakley. Massachusetts is a tough state for women: the really tough ones like Lois Pines are cut down by the macho establishment, while the ones who don't make waves lose to the Republicans. In that election, Republican acting Governor Jane Swift was shunted aside at the last moment when the Party Of The Rich imported "Mittster" Mitt Romney. But the Mittster was not a resident of Massachusetts, since he had moved to Salt Lake City to work on the Olympics. No matter: the POTR cooked up retroactive residence papers for him , paid taxes he had avoided, and convinced the Bay staters to install him as the Guv. The Democrats went down without a wimper, not even protesting the phony residence gambit. There you have part of the saga of the big bad Blue State (or Commonwealth as it likes to call itself) of Massachusetts.

Anyway, it is good to see the President make this small but important break with his Wall Street advisors Geithner and Summers.

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