In my last post I said “President Obama is doing a great job, but…….,” and what I was referring to was his reluctance to encourage investigations of what everyone knows was lawbreaking, en masse, by the previous administration. Sort of leaving the impression that Presidents don’t “testify” against Presidents – kind of like doctors don’t testify against doctors, lawyers don’t testify against lawyers – while the rest of us essentially get left “holding the bag.” In the instance of the reluctance to hold Bush et al accountable, the reputation of the United States belongs to ALL OF US! So, in protecting the “brethren” President Obama is willing to leave a “stain” on the rest of us that seems pretty much overwhelmingly that “WE” don’t want. I believe eventually these investigations and the truth will come out – whether there is any legal accountability is an entirely different matter. I have suggested that Obama’s reluctance to do this along with his willingness to continue the Bush wiretapping policies stand to undermine his reelection chances in four years (well, I guess it would be more accurate to say three and a half years now). I fully believe that is true.

However, there are other areas which might “undermine” Obama’s Presidency. Of course, he came into office with the most challenging “docket” possibly ever. And, as long as the opposition is today’s version of the Republican party, he will probably be OK. But, I still have an awful feeling about Timothy Geithner and Larry Summers. Geithner, if you haven’t been paying attention, is the Secretary of the Treasury and Summers is Obama’s “chief” economic advisor. Geithner devised the “amended” version of the TARP bailout program that was originally put in place by Henry Paulsen of the Bush fiasco. This is the program that took the position that our major banks are “too big to fail” and that their failure would lead to a collapse of our economic system. I was never in favor of this bailout and I’m less in favor of the revised version as I understand it. I keep thinking of the saying “Don’t throw good money after bad.” I know from my own personal experience (on a much smaller scale, of course) this is a very bad predicament to find yourself in. And that, to me, is what is happening with our government regarding the big Wall Street banks whose gambling habits caused this financial mess in the first place.

You could argue, and many have – somewhat convincingly, that the crux of the problem was the removal – over a period of about 25 years – of many Depression era regulations which would have prevented this banking crisis. And, for you Democrats out there, the worst part of that argument is that the repeal of the Glass-Stegall act was a bill signed by Bill Clinton, and at least partially championed by Larry Summers and Clinton’s Treasury Secretary Robert Rubin – who used the freedom’s granted by the repeal of this and other regulations to lead CitiCorp into virtual bankruptcy following his tenure in the Clinton administration. Yes, Phil Graham was the co-author of the legislation but there is no denying the part the Clinton people played in the process. With the removal of that regulation, along with others, and combined with the Bush administration’s tendency to ignore regulations that were still in place, we ended up with Wall Street gambling other people’s money away like a runaway train.

That has led to the TARP program which Geithner seems to have modified into a potential major “boon” for private investors (presumably the hedge funds that have been TOTALLY UNREGULATED and that control billions of dollars worth of America’s wealth) where they stand to make huge gains with miniscule investments. The same leveraging of your money theory that got us into this mess in the first place, only the government – ie taxpayers – are guaranteeing that if the losses are significant, they will bear the burden and the “private investors” have a small risk. I believe the private investors put up something like 7.5% of the investment and get 50% of the gain. That may be a great idea, it just sounds “fishy” to me, and considering that both Geithner and Summers have close connections to all the parties on Wall Street who were imploding, I’m not sure President Obama is making a wise choice here. Again, I believe this is one of those things that could “blow up in his face.” Once they have modified this program, then they have ownership of it. And, the American people tend to have a short memory about these things, and something around 50 million Americans voted for a ticket that had Sarah Palin and John McCain on it – so you know that anything is possible here. (I honestly can’t imagine them running this government)

The Republicans look like a thing of the past, and rightfully so, but President Obama needs to remember who’s side he’s on and I’m not sure about this plan to save the Wall Street banks. From what I’ve been able to find out there are still two crises we haven’t dealt with yet. First, there is a credit card crisis looming that could rival the mortgage meltdown, and secondly, there is a significant number of commercial real estate loans that are apparently headed in the same direction as all the sub-prime loans that supposedly were the cause of the present economic crisis. Should that be the case, it appears to me that the government will be out of “bullets” to bail out these banks that seem to have completely lost their “heads” – no pun intended – unfortunately most of their “heads” are still in place – that is, there has to be a limit on how much money the taxpayers can give these guys before we realize they are insolvent. I believe that in the end we’ll find out it would have been cheaper to let them fail, take them over, and once they are functioning again, put them back into private hands – only with new “leaders” and with regulations in place that would prevent a recurrance of their excesses. I’m suspicious of the earnings reported by the banks that suggested they’re making record profits in the middle of this deep recession, and I believe the banking crisis is in no way “behind us.” President Obama would be wise to reconsider having Tim Geithner and Larry Summers on his economic “team.”