From the ArcaMax Publishing, Politics Newsletter:
http://www.arcamax.com/news/politics/s-614958-775857
Listening to President Obama's heartfelt, well-intentioned, but
ultimately naive speech Monday on financial reform, my mind kept
flashing on a story I heard the last time Washington, in the wake of
the
The story came from a friend who took a family trip on a cruise ship.
Her 10-year-old son kept pestering the crew, begging for a chance to
drive the massive ocean liner. The captain finally invited the family
up to the bridge, whereupon the boy grabbed hold of the wheel and
began vigorously turning it. My friend panicked -- until the captain
leaned over and told her not to worry, that the ship was on autopilot,
and that her son's maneuvers would have no effect.
And that's the way it is with our leaders. They stand on the bridge
making theatrical gestures they claim will steer us in a new direction
while, down in the control room, the autopilot, programmed by
politicians in the pocket of special interests, continues to guide the
ship of state along its predetermined course.
Standing on the deck at historic Federal Hall, the president said all
the right things, eloquently pointing out how American taxpayers had
"shouldered the burden of the bailout" and are "still bearing the
burden of the fallout -- in lost jobs, lost homes and lost
opportunities."
And I don't dispute for a minute that his heart is in the right place,
and that he means it when he says "the old ways that led to this
crisis cannot stand" and touts "the need for change and change now."
But we've been hearing similarly great sentiments for months now --
and they've had the same impact as my friend's 10-year-old yanking on
the cruise ship wheel. None. President Obama won't be able to change
the course our financial system is on unless he goes down into the
boiler room and disengages the autopilot -- which means taking on the
bankers and their hordes of lobbyists who continue to dictate policy
in D.C.
To do that, the president will have to do more than deliver great
speeches. He'll need to stand firm when the lobbyists, working behind
the scenes, work to gut real reform, leaving only the appearance of
reform in its place.
This is exactly what he failed to do when the banking lobbying killed
cramdown legislation back in April that would have imposed mortgage
reorganization plans over lender objections.
But instead of telling the Wall Street power players watching him
Monday that he was going to insist on making cramdown a part of his
financial reform package, he tried to appeal to their better angels,
reminding them that they didn't have to wait for Congress to pass new
laws . . . they could just start acting better on their own.
It was shockingly naive. Wall Street has been spending hundreds of
millions of dollars, doing everything in its power to kill things like
cramdown legislation, derivatives regulation, and the proposed
Consumer Financial Protection Agency, and the president is asking them
to be nicer people. That's like tossing a wounded seal into the middle
of a school of great white sharks and hoping the beasts will nurse it
back to health.
There was a moment in the speech that spoke volumes about the high
hurdle financial reform is facing.
The White House had sent a copy of the president's remarks to
reporters and I was underlining key parts of it as he spoke. Near the
end of the speech, Obama movingly exhorted his audience to demonstrate
that they have taken to heart their obligation to help "families who
need their mortgages modified," "small business owners who desperately
need loans," and "communities that would benefit from the financing
(they) could provide." In the speech as written, he was supposed to
end this run by calling on Wall Street "to embrace serious financial
reform, not fight it."
But when the president actually delivered the line, he edited it,
saying instead that Wall Street should "embrace serious reform, not
resist it."
That one-word change says everything you need to know about why all
the president's well-intentioned pronouncements won't actually lead to
fundamental reform. The president is utterly misreading the opponents
of reform. They are not passively resisting; they are aggressively
fighting against reform with every weapon they have in their extremely
well-funded arsenal.
As a result, Obama's rhetoric has not been matched by reality. In his
speech, the president claimed that the actions of his administration
have "spurred lending" and "helped responsible homeowners refinance to
stem the tide of lost homes and lost home values."
But, in truth, credit for Main Street is still very hard to come by,
and only 12 percent of eligible homeowners have had their mortgages
modified by the president's home ownership plan. Meanwhile cramdown
legislation remains lobbyist roadkill (though Barney Frank is vowing
to revive it this fall) and mandatory mediation between homeowners and
lenders prior to foreclosure is going nowhere on a national level.
That's why I could picture all the heads of the big banks sitting
there Monday, listening to Obama and smiling -- knowing that, in the
end, his claim that his administration is "proposing the most
ambitious overhaul of the financial system since the Great Depression"
won't mean anything as long as Wall Street's relentless lobbying and
contributing continue to hold sway in the control room of the S.S.
America.
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Arianna Huffington's e-mail address is arianna@huffingtonpost.com.