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December 14, 2009

Obama: You Stupid Bankers Ruined The Economy With Risky Loans, Now I Expect You To Grow Economy With More Risky Loans

I'm not a big fan of the "run government like a business" school of thought. They are too different in structure and purpose to be compared. Still, it would be kind of nice if the President of the United States of America had a passing familiarity with free market economics.

Last night on 60 Minutes (this is what, His 3rd interview in a year with them? Does Steve Kroft have Obama's 'real' birth certificate or something?), Obama lashed out at bankers ahead of a meeting with them today.

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama said Friday in excerpts of an interview with CBS television to be aired on Sunday.

With unemployment still hovering at around 10 percent, amid a recession triggered in part by the excesses of financial institutions, Obama voiced frustration that "some people on Wall Street still don't get it."

Lavish pay and bonuses on Wall Street have been blamed for encouraging the excessive risk-taking that with the subprime mortgage housing crisis fueled the global maelstrom and brought the US financial sector to the brink of collapse a year ago.

Aside from the rank populism, which I find loathsome, what's the greater drag on the economy? Some bank bonus packages or out of control deficits, with the promise of more to come? And if we want to talk about compensation, let's revisit last week's government pay scale story.

So how does Obama propose the banks pay the American people back for bailing them out after their investments went belly up? Why, by being more promiscuous in their current lending habits of course.

"America's banks received extraordinary assistance from American taxpayers to rebuild their industry," (Obama) said after a hosting a White House meeting today with representatives from 12 banking institutions. "And now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."

The president explained that he has heard from many small businesses that they have been unable to get loans in today's economic climate. "Now no one wants banks making the kinds of risky loans that got us into this situation in the first place," he said. "But given the difficulty businesspeople 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."

Obama added, "We expect some results, because I'm getting too many letters from small businesses who explain that they are credit-worthy."

Oh well if they say they are credit worthy, it must be true. I mean it's not like we'd ever see loan applicants lie or anything.

And only lend to the creditworthy? I mean that kind of thinking is surely worth a Nobel in economics, right? This is ground breaking stuff from Obama. Why didn't those stupid 'fat cats' think of that?

And if the banks are hording their cash there's likely some good reasons, namely the looming crash many expect in the commercial real estate market and the current uncertainty over the tax and spend policies of this administration. Well, they aren't uncertain in the sense we know they will do lots of both but no one is quite sure how much. Amity Shlaes wrote in The Forgotten Man about the devastating effect uncertainty had on the economy thanks to FDR's indecision and "persistent experimentation" had when it came to fiscal, monetary and regulatory policy. You can see a short write up on it here.)

Today's dog and pony show was nothing more that a chance to blame others for the failure of this administration to do anything but make things worse.

On the bight side, He took the day off from blaming Bush*. Baby steps.

(I had linked to a commenter who said Obama did blame Bush today but it turned out the comment he was referring to was from last night's 60 Minutes.)

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posted by DrewM. at 04:05 PM

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