[R-G] [BillTottenWeblog] Sucking Up to the Bankers

Mon Aug 25 06:38:20 MDT 2008

A Bipartisan Lovefest

by Robert Scheer

Truthdig (July 29 2008)

This is a time to condemn the bankers, not to embrace them. They are the
scoundrels who got us into the biggest economic mess since the Great
Depression, lining their own pockets while destroying the life savings
of those who trusted them. Yet both of our leading presidential
candidates are scrambling to enlist not only the big-dollar
contributions but, more frighteningly, the "expertise" of the very folks
who advocated the financial industry deregulations at the heart of this
meltdown.

Republican candidate John McCain even appointed as his campaign
co-chairman Phil Gramm, who went from being chairman of the Senate
Banking Committee, where he sponsored disastrous legislation that
empowered the banking bandits, to becoming one of them at UBS Warburg.
Gramm was forced to resign from McCain's campaign only after he went
public with his contempt for the financial concerns of ordinary
Americans, calling them "whiners" and perpetrators of a "mental recession".

But Gramm and the Republicans couldn't have done it without the support
of leading Democrats. The most egregious of Gramm's legislative favors
to the financiers took the form of legislation named in part after him -
the Gramm-Leach-Bliley Act, which became law only after then-Treasury
Secretary Robert Rubin prevailed upon President Clinton to sign the
bill. The bill's immediate major effect was to legitimize the
long-sought merger between Citibank and insurance giant Travelers.
Rubin's critical support for the bill was rewarded with an appointment,
within days of its passage, to a top job at Citibank (later Citigroup)
paying more than $15 million a year.

That is the same Rubin with whom Democratic candidate Barack Obama met,
along with other influential advisers, on Tuesday to figure out what to
do about the sorry state of our economy. But what in the world did he
expect to learn from Rubin? And why did he appoint Rubin's protégé,
Jason Furman, who ran the Rubin-funded Hamilton Project, to be the Obama
campaign's economic director? Hopefully, during their encounter Tuesday,
Rubin offered himself as a contrite model of everything that the
candidate of change needs to change.

After all, Goldman Sachs, where Rubin spent 25 years of his business
career before entering the Clinton administration, has been one of the
prime corporate villains in the financial shenanigans that led to the
subprime mortgage scandal. As co-chairman of the firm, surely he had
knowledge of the financial hanky-panky that would prove so disastrous
down the road. Indeed, as Treasury secretary, he favored an extension of
the deregulation that enabled this explosion of banking avarice. Not
surprisingly, the current Treasury secretary, Henry Paulson, also
previously headed Goldman.

When Rubin assumed a top position at Citibank after his stint at the
Treasury, he was not above influencing his former employees in the
government. In one notorious instance during the fall of 2001, when
Enron was going down the tubes Rubin telephoned a Treasury
undersecretary and asked him to consider intervening with credit-rating
agencies to hold off downgrading Enron's ratings. When the story was
leaked, some media accounts noted the possibility of a conflict of
interest because Enron owed Citibank $750 million, which it could not
pay if bankrupt.

Despite his skills and his vaunted position as Citibank's chairman,
Rubin was not spared the disastrous consequences of Citibank's own wild
financial manipulations, which, if anything, exceeded those of Enron.
Tens of billions in bad mortgage and credit card debt placed the bank at
the forefront of the current economic crisis, and so it is weird that
Obama would now turn to Rubin for advice.

It's even weirder that the presumptive Democratic nominee would pick
Rubin's man Furman as his campaign economic director at a time when
cleaning up the mess left by the bankers is the highest priority. Furman
hardly distinguished himself four years ago in that role in John Kerry's
failed presidential campaign, with its muffled economic message that
could not be blamed on the candidate's stiff style alone.

The bigger problem is that folks such as Rubin and Furman, perhaps best
known as an economist for his bold but woefully misguided defense of the
Wal-Mart business model, clearly do not feel the pain of the voters who
are losing their homes.

But then again, why should Rubin, or Gramm on the Republican side, be
expected to care when he has made so many millions off the suffering of
those voters? Not good at a time when we need a presidential candidate
who sticks it to the bankers instead of sucking up to them.

_____

Robert Scheer is author of a new book, The Pornography of Power: How
Defense Hawks Hijacked 9/11 and Weakened America (2008).

A Progressive Journal of News and Opinion.

Editor, Robert Scheer. Publisher, Zuade Kaufman.

http://www.truthdig.com/report/item/20080729_sucking_up_to_the_bankers/

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