Another FDR era ”relic“  appears headed for the waste bin.

It has long been the goal of the Republicans to dismantle the progressive gains and protections for the average American that were granted by programs and legislation put into place during the FDR era. They are getting help from our “Democratic” administration. Riverdaughter links to this New Yorker article  (a must read) and remarks:

Bair, described as “not a team player” by Tim Geithner’s guys, is having her department subordinated to Treasury so that the bankers can escape the possibility that the FDIC can take them over.  For the first time since the FDIC was created, its power in the area of bank regulation and resolution has been become secondary to the power of the Treasury and the Fed.

From the New Yorker article:

But in the white paper detailing the new legislation, which the Administration released on June 17th, all the new authority to regulate firms that posed systemic risk was vested in the Federal Reserve. During Geithner’s testimony before the Senate, Jim Bunning, of Kentucky, echoing Bair, was incredulous. “It took fourteen years for the Fed to write one regulation on mortgages after we gave it the power to do that,” he said. “What makes you think that the Fed will do better this time around?” In addition, while the March plan said that the “Secretary and the FDIC would decide” how to resolve a failing firm, the new plan said such power should “be vested in Treasury.” Geithner could appoint the F.D.I.C. to do the technical work of cleaning up the firm, but between late March and mid-June—when Bair’s aggressive ideas about how to handle Citigroup leaked to the press—Bair’s agency had been downgraded from Treasury’s equal partner to a sidekick. The senior Treasury official said that stripping authority from the F.D.I.C. had nothing to do with pressure from the banks. “Making a group decision on something that must be done really quickly is not easy,” he said. “At the end of the day, someone has to have the ability to make a call, and it’s better to have that authority vested in one person.”

From two people to one. And that one person is Tim Geithner.

Riverdaughter gives the short version:

Ok, to recap: Bair came up with a pretty good idea to regulate bank holding companies by the FDIC.  Geithner took that idea and made it his own with the additional spin that the department that does a superb job of actually regulating the banks, the FDIC, would be bypassed as regulator in favor of the Treasury, which has a record of one regulation in the past 14 years.  Problem solved!  There is something deeply unsettling going on here if the Obama administration is willing to trash one of the best departments it has in order to give the finance guys what they want.  We’re all going to suffer for this.

Stunning.

If you haven’t already done so, read Matt Taibbi’s Rolling Stone article describing how Goldman Sachs has its tentacles everywhere, and has for quite some time. After going through the history of various ‘bubbles’ from which Goldman Sachs always managed to profit, Taibbi turns to the Obama administration and the recent cap-and-trade legislation.

Fast-forward to today. It’s early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm’s co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an “environmental plan,” called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that’s been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won’t even have to rig the game. It will be rigged in advance.

Sigh. What I find so disturbing in reading this article is that Taibbi was just another voice in the Hillary-bashing/Obama-loving chorus in the last election. It was really quite disturbing to see his Hillary-hate override his normally excellent, clear-eyed populist reporting. Perhaps he is awakening from his Koolaid induced stupor?

Back in April, Glenn Greenwald weighed in on the corrupting connections between Wall Street and D.C.

Last night, former Reagan-era S&L regulator and current University of Missouri Professor Bill Black was on Bill Moyers’ Journal and detailed the magnitude of what he called the on-going massive fraud, the role Tim Geithner played in it before being promoted to Treasury Secretary (where he continues to abet it), and — most amazingly of all — the crusade led by Alan Greenspan, former Goldman CEO Robert Rubin (Geithner’s mentor) and Larry Summers in the late 1990s to block the efforts of top regulators (especially Brooksley Born, head of the Commodities Futures Trading Commission) to regulate the exact financial derivatives market that became the principal cause of the global financial crisis. To get a sense for how deep and massive is the on-going fraud and the key role played in it by key Obama officials, I highly recommend watching that Black interview (it can be seen here and the transcript is here).

Yours truly blogged on this back in April too. At the time, Obama was repeating the “looking foward” mantra and I objected. It’s even clearer to me now that this “nothing to see here” attitude was merely a politer way of telling us, “Who you gonna believe, me or your lyin’ eyes?”

Greenwald continued:

Just think about how this works.  People like Rubin, Summers and Gensler shuffle back and forth from the public to the private sector and back again, repeatedly switching places with their GOP counterparts in this endless public/private sector looting.  When in government, they ensure that the laws and regulations are written to redound directly to the benefit of a handful of Wall St. firms, literally abolishing all safeguards and allowing them to pillage and steal.  Then, when out of government, they return to those very firms and collect millions upon millions of dollars, profits made possible by the laws and regulations they implemented when in government.  Then, when their party returns to power, they return back to government, where they continue to use their influence to ensure that the oligarchical circle that rewards them so massively is protected and advanced.  

To the oligarchs, it’s a feature, not a bug.