The three biggest N.Y. Times columnists — Paul Krugman, Frank Rich and Maureen Dowd — have this weekend delivered serious slapdowns to President Barack Obama, principally about a sense that he’s hasn’t been tough or angry enough with the big banks and the community of rank insider entitlement, that no real transparency has been forthcoming about where stimulus dollars have been going, and that he’s too dug in to the Tim Geithner-Lawrence Summers view of things, which is too Wall Street cozy and laissez-drifty.
The line that got me came from a N.Y. Times letter to the editor, and was used by RIch for the title of his column — “Has a Katrina Moment Arrived?” It was written five or six days ago by a Cupertino woman named Paulette Altmaier. “This is a defining moment for his presidency, and how he responds will determine the trajectory of his term,” she wrote. “He needs to deal with the excesses within the financial industry with the same toughness and conviction that President Ronald Reagan brought to bear during the air traffic controllers’ strike. To date, he is sorely wanting.”
Obama’s team “must start actually answering the questions that officials like Geithner and Summers routinely duck,” Rich wrote.
“Inquiring Americans have the right to know why it took six months for us to learn (some of) what A.I.G. did with our money. We need to understand why some of that money was used to bail out foreign banks. And why Goldman Sachs, which declared that its potential losses with A.I.G. were ‘immaterial,’ nonetheless got the largest-known A.I.G. handout of taxpayers’ cash ($12.9 billion) while also receiving a TARP bailout. We need to be told why retention bonuses went to some 50 bankers who not only were in the toxic A.I.G. unit but who left despite the “retention” jackpots. We must be told why taxpayers have so little control of the bailed-out financial institutions that we now own some or most of. And where are the M.R.I.’s from those ‘stress tests’ the Treasury Department is giving those banks?
“Another compelling question connects all of the above: why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it.”
Krugman scared me the most when he wrote yesterday morning that “the Geithner plan has now been leaked in detail [and] it’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.
“The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.
“This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work. What an awful mess.”
