I have repeatedly cited the Obama Administration’s failure to break up big banks and prosecute individual executives for their financial crimes, as being a leadership failure of historic proportions. Author Michael Lewis reported that he directly asked Obama about his lack of action on these issues when Lewis was interviewing the then President for a Vanity Fair article in 2012. Lewis said that Obama simply didn’t see the systemic financial corruption before him as a defining issue.
There is no excuse for this epic misjudgment on Obama’s part, but it turns out there is also more to the story. Apparently, Obama did, in fact, order the break up of at least Citigroup in 2009, but his then-Treasury Secretary Timothy Geithner (fresh from heading the New York Fed and on his way to running a hedge fund today), simply ignored the President’s order. See He was the Resistance inside the Obama White House:
According to credible accounts, Geithner slow-walked a direct presidential order to prepare the breakup of Citigroup, instead undertaking other measures to nurse the insolvent bank back to health. This resistance to accountability for those who perpetrated the crisis, consistent with Geithner’s demonstrated worldview, had catastrophic effects—including the Trump presidency itself.
…Geithner and his bank regulator colleagues made sure a breakup wouldn’t be needed by using Federal Reserve loans, guarantees, and a third bailout to save Citi. Little was asked from the company in return. Geithner had devised “stress tests” to judge how large banks would handle another downturn, and Citi’s initial test estimated that the bank would need $35 billion in additional capital to reassure markets that it was safe. But Citi haggled with regulators, dropping their capital requirement to $5.5 billion, about the same as what the bank paid out in bonuses that year.
Democracy? Rule of Law? Accountability? Not in a world ruled by bankers for bankers. We, the people, must demand resistance to the finance cartel if we are to build a sustainable economy and more stable future.
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