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If Wall Street Wants a Fight, Obama Should…

Posted by Larry Doyle on January 21, 2010 3:59 PM |

Earthquakes always lead to after-shocks.

With all due respect and sensitivity to the residents of Haiti, the earthquake felt in the Massachusetts Senate election on Tuesday has led to the after-shock dropped on Wall Street today by President Obama. Obama’s call to limit the size and risk-taking of Wall Street banks is meant to address the rage and anxiety of the American public. Any vision, however, will only be as effective as those commanders charged with its execution.

Who on Obama’s team will ultimately be in the position to execute this vision to reconstruct Wall Street? Tim Geithner, Ben Bernanke, Larry Summers, and Mary Schapiro. Each of these individuals is badly scarred as a result of the crisis that started on Wall Street and, in turn, crushed Main Street.

I do think Obama’s proposal to reign in risks on Wall street has some real merit. That said, I have little confidence that it will be consummated in the face of the heavy Wall Street lobby which will inevitably weigh down on Washington.

In fact, Wall Street has already indicated its enormous displeasure with Obama’s plan. Bloomberg addresses this fact in writing, Obama Calls for Limiting Size, Risk-Taking of Banks:

The plan is subject to approval by Congress, where the president’s earlier regulatory proposal has hit resistance from some lawmakers and opposition from financial firms. Financial industry executives, lobbyists and analysts were critical of the proposal.

Obama’s proposals are “arbitrary restrictions on growth and activities” of banks, the chief executive officer of Wall Street’s main lobbying group said in a statement today.

Tim Ryan, CEO of the Securities Industry and Financial Markets Association, said the group supports “strengthened regulatory oversight, and flexibility like that originally proposed by the administration.”

Obama anticipated that reaction in his remarks.

“If these folks want a fight, it’s a fight I’m ready to have,” he said.

The problem Obama faces in having a fight with Wall Street is the very fact that his financial generals, specifically Geithner, Summers, and Schapiro, are very much conflicted. Each of these three generals have proven themselves incapable of effecting real change and making real impact for the American public against their former Wall Street cronies. Thus, how effective can and will Obama’s proposal be without financial generals who are not largely beholden to the Wall Street industry?

What does Obama need to do?

He needs new financial generals if he thinks the American public will buy his plan and if he thinks Congress will implement it.

To this end, Obama should do the following:

1. Fire Tim Geithner and replace him with Paul Volcker.

2. Fire Larry Summers and replace him with Harvard economist, Martin Feldstein.

3. Fire Mary Schapiro and replace her with New York Attorney General Andrew Cuomo.

If anybody in Washington, on Wall Street, or in any other part of America views these moves as overly aggressive, they clearly are not feeling the same sense of rage as those I engage. That rage consistently is directed at Geithner, Summers, and Schapiro.

Obama can’t fire Congressmen. The American public will take care of that.

Massachusetts sent a missile right up Washington’s ass with the vote on Tuesday. If Obama wants to redirect that missile and send it up Wall Street management’s ass he needs to strap Geithner, Summers, and Schapiro to its back.

Short of these moves, Obama’s talk will be watered down and his punch will likely land very softly upon those from Wall Street filling Washington’s coffers.


  • Patriot

    If Barack is cleaning house, can he sweep out the following garbage as well, Rahm-bo, Axelrod, the nitiwt Gibbs, and just for good measure, throw Biden in there as well.

  • Lou

    Reminiscent of Nixon’s Saturday Night Massacre when he cleaned out Watergate Special prosecutor Cox, AG Eliot Richardson, and Deputy Attorney General William Ruckelshaus.

    I like where you are going with this.

    America won’t continue to eat the **** sandwich that Obama and team are feeding us.

  • fiscalliberal

    Reconfirmation of all these people will
    take time. How about calling them into the
    office and read the riot act to them. At least
    get the ball rolling. Make it public to show
    that he understands what needs to be done.

    I think you left the most important person
    for firing – Rahm Emanual – he is contaminating
    the air

  • Bill

    I agree with the cashiering of all the folks
    listed. Ditto on the proposed replacements
    with the possible exception of Cuomo.
    Some attention needs to be paid to his role
    as head of HUD vis a vis Fannie Mae before
    he’s elevated any higher, bearing in mind
    he might come through with a clean bill
    of health.

  • wrc1000

    O has you all fooled again . . . this is just political grandstanding, “change” as usual with BO. There is no real, substantive change coming. This is all political expediency and misdirection, watch the hand he is not waving in front of your face with the colored handkerchief . . .

    • Larry Doyle

      WRC….he may be fooling America but he certainly is not fooling those who come to Sense on Cents.

      I conclude as much in writing,

      Short of these moves, Obama’s talk will be watered down and his punch will likely land very softly upon those from Wall Street filling Washington’s coffers.

      I think you and I are close to being on the same page.

  • Bay State

    For Obama to make these moves he would be admitting mistakes. Has he ever done that? No. Narcissists never acknowledge personal failures. Never.

    As much as I agree that these moves should be made, Obama does not have the balls to do this.

  • Bill

    I’m going to add to my previous post that Brooksley Born might be a good one to head the SEC, assuming at age 70 she’s not too old. She was head of the CFTC under Clinton and tried to regulate derivatives market only to get whacked down by the Wall St./Washington axis. About everything she predicted, and for which she was severely chastised by the Axis, came to fruition.

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