by Frank James
It looks like there was a debate within the Obama Administration pitting those with populist sensibilities against those with a soft spot for plutocrats how to handle the next financial bailout and those for the plutocrats won.
At least that's one way to read a story in the New York Times that will get a lot of attention today. Stephen Labaton and Edmund Andrews report that President Obama's top advisers were split, with some (read top political strategist David Axelrod) wanting to severely rein in bankers receiving help from U.S. taxpayers and make bank investors take a hit while others (read Treasury Secretary Tim Geithner) wanted an approach more sensitive to bankers. Geithner won.
Geithner is scheduled to announce today the Democratic administration's plan for rescuing the nation's financial system.
An excerpt from the NYT piece:
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.
Because of the internal debate, some of the most contentious issues remain unresolved.
It's hard to know if this is a good cop-bad cop strategy that the new administration is using or something else. For instance, it could be that Obama is trying to get bankers to cooperate by letting them know that, if they don't, the administration is prepared to get tough.
Or it could just be that the bankers are truly running the show and have huge influence over Geithner who knows many of them from his days as president of the New York Fed.
Whatever the case, the NYT notes that the Obama Administration's approach doesn't seem like a huge departure from the Bush Administration's in one key respect.
Another snippet:
And for all of its boldness, the plan largely repeats the Bush administration's approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets.
This may make the financial institutions happy. But it's likely to leave a lot of Obama supporters who were expecting "change they could believe in" cold.
Comments
I hope it includes enough money,so he can be reimbursed for the taxes he had to pay.
Posted by: Paul | February 10, 2009 9:00 AM