Pschoanalyzing one of America's most Dysfunctional Relationships
John Heilemann - 31 May 2010
Good Relationships with Wall Street
- In the early days of the Obama campaign, Wall Street was more important than his grass roots fundraising.
- By election day, Goldman Sachs, Citigroup, JP Morgan were three of the top seven institutions that funded him.
- February 2009 - Geithner's stabilization scheme wasn't meant to punish Wall Street, but to save them by pouring money and restoring confidence with them.
- A bigger question was whether to nationalize the weakest banks which were thought by many to be insolvent.
- As Paul Krugman said, there's a good case for nationalizing, but it will cost trillions and you have to guarantee everything--Obama went with Geithner's plan instead.
- By the spring, big banks had paid back almost all the TARP money they received, and the cost to taxpayers was less than the S&L crisis from the nineties.
Good Relationships with Wall Street go Bad
- After the AIG bonus announcements in March 2009, Obama summoned the banks and laid out conditions for passing the stress test, raising funds to bolster the balance sheet, and showing restraint on bonuses.
- Once the banks recovered, Obama made a speech that Wall Street must remember the debt it owes to taxpayers, but he didn't feel that Wall Street was thankful enough.
- On 60 Minutes, Obama unveiled a tax on the biggest banks that would raise 90 billion over 10 years to cover bailout losses.
- Wall Street feels like they paid back their debt and should be left alone.
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