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But the high noon speech could have been an opportunity for the president to make steadfast demands of his audience. As is too often the case with Obama, he instead chose a sullen rejoinder for everyone to get along.
That’s unlikely to happen. Obama’s address came as his administration attempts to pass its first major legislative accomplishment without a filibuster-proof 60-vote supermajority in the Senate, and Republicans this week have shown little willingness to engage in the legislative process at all. Senate Minority Leader Mitch McConnell has spuriously claimed that the legislation would lead to more government bailouts – a claim so beyond the pale that even Republican Senator Bob Corker has repudiated it.
McConnell’s maneuvering is cynical politics at its worst, a speculative bet that voters will reflexively oppose new government regulation of any kind, not because they oppose a crackdown on Wall Street (they support it), but because they’ve been trained into intrinsic skepticism of government itself. You can’t blame them, what with this sort of routine poisoning of the debate, which makes it all but impossible for transparent information to guide rational policy-making.
Republicans are selling short: betting against the Democratic majorities in Congress in 2010, against President Obama in 2012, and maneuvering on the inside to make sure their bets pay off. So they’re taking their historically unprecedented hijacking of the filibuster even further than they already have, unanimously refusing to even allow legislative debate to begin – a ratcheted-up extension of their usual tactic to prevent debate from ever ending in a vote. And they’re repackaging their bets to the witless public, claiming they’re interested in a real reform compromise, selling us on their good faith by destroying public discourse’s ability to impose transparent accountability.
All of this short-term opportunism might be easier to swallow if it wasn’t exactly the same strategy Wall Street’s biggest bank deployed at the height of the housing crisis to plunge the economy into the greatest disaster since the Great Depression. Republicans are proving to have no better analogue than bankers, and it’s hard to tell which group is more deserving of our contempt.
Obama’s Cooper Union address came just days after the Securities and Exchange Commission announced a landmark lawsuit against Goldman Sachs, the bank that perfected the scheme. Goldman packaged toxic mortgages into collateralized securities that it knew would go south, according to the SEC’s suit, and took out insurance policies (credit default swaps) to minimize their losses when they did. Meanwhile, they continued to sell the securities to clueless clients, frequently pension funds, allowing the housing bubble to continue to grow. Knowing it would pop, the company’s insurance policies were designed to not only minimize losses, but profit.
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And profit it did. Goldman’s primary insurance provider, AIG, was duped in large part by credit rating agencies which assured the company that the securities were not only safe, but AAA safe – as reliable as treasury bonds. Those agencies’ inability to keep the market honestly transparent nearly sunk AIG when the policies came due. Indeed it would have, had the federal government not extended the company a $180 billion bailout.
But how can our political system’s credit rating agencies function properly amid the cynical misinformation and obstruction of Republican leadership? And who will bail out American democracy when citizen AIGs realize they’ve been left with the bill for Republican politicians who never intended to govern in the first place?
Lloyd Blankfein, Goldman’s CEO, sat in the audience as Obama spoke. His attendance was a shrewd move. This week his company suggested that the SEC’s lawsuit was politically coordinated with the White House to gin up moment for the reform legislation, an allegation which the president “categorically denied” Wednesday. For an under-fire CEO, his attendance was a way of appearing apolitical amid an onslaught of what in the company’s view are over-dramatized charges.
His playing the victim might be more convincing if Obama had shown any willingness to confront the bankers who created the crisis – or, for that matter, the Republicans who have been so aptly simulating it. Instead, he’s been steadfastly determined to extend olive branches, craft compromises, and legislate earnestly.
"I urge all of you to join me, to join those who are seeking to pass these commonsense reforms," he said Wednesday. "And for those of you in the financial industry, I urge you to join me not only because it is in the interest of your industry, but also because it’s in the interest of your country."
It’s an argument that will play no better with Senate Republicans than it does bankers. If it’s not in the immediate interest of their party, they’ve calculated, it cannot be in the interest of the country.
Obama’s forgotten that the Republicans long ago bet short. Their investment is designed for him to fail.
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