A new set of villains has been found in America, thanks to President Obama’s economic truth ray.
Today, the president hauled a group of the nation’s leading bankers in to the White House for talks on why the banks aren’t lending.
The tone was set for the meeting, if it hadn’t already been, by an Obama quote on 60 minutes last night that “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.”
With that warm statement, the president then proceeded to lecture the bankers that because the government had shoveled money to them in the aftermath of the financial industry’s breakdown last fall and “given the difficulty business people are having as lending has declined and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again.”
It’s clear, however, that Obama’s cajoling and bullying doesn’t alter economic realities, with which the bankers at the White House today are eminently familiar.
“He can say what he wants, but we’re not going to go back to the kind of lending that put us in this mess,” said a person who is helping prepare executives for the meeting.
Bank regulators have been telling banks for over a year that their capitalization ratios are too thin. Obama’s minions have also sought to re-engineer bank executives’ compensation plans to reward those who declined to engage in excessively risky language. And there is little question the banking industry as a whole is undercapitalized – with commercial and residential real estate in depressed circumstances, low interest rates and the stock market down by 30 percent from its high points two years ago, how could it not be?
Most of all, though, the arrogance of an administration which believes that it has the right and/or ability to dictate the business practices of private-sector managers while at the same time publicly demonizing them as “fat cats on Wall Street” and engaging in invasive regulatory activity into their current practices is striking. It’s reminiscent of actions taken by lawless dictators like Chavez in Venezuela or Putin in Russia – or another famous left-wing American president, Franklin Delano Roosevelt, whose meddling in the financial economy prolonged a sharp recession and turned it into a decade-long depression.
The idea that the market will correct itself if left alone, which used to be a proven staple of American economic understanding, is all but dead within the current ruling class in Washington. It is, however, not dead within the American people, and this is a disconnect which cannot long endure without a major correction of its own – as we will see beginning next November.
UPDATE: There is an excellent piece in the new issue of National Affairs dealing with the federal government’s treatment of financial institutions – which without question nobody in the Obama administration has read.