Barack Obama Really Is Herbert Hoover

After Barack Obama assumed the presidency in early 2009, it became fashionable to equate him with the 31st president Herbert Hoover (1928-1932). These comparisons were based on the timing of economic events, for back in February and March of 2009, it was not apparent that the economy had bottomed out.

(But in saying that our economic low point occurred in the 1st Quarter of 2009, we have the benefit of keen hindsight. What will we say about 2010 in 2011?)

Even before Obama assumed office, he had appointed New York Fed chief Timothy Geithner as Secretary of the Treasury, had appointed Satan's Favorite Son Larry Summers as director of his National Economic Council, and had assigned financial miscreants whiz kids from Goldman Sachs to various "minor" posts. Current Deputy Secretary of the Treasury Neal Wolin (not ex-Goldman) was typical—

In 1999, Wolin supervised a team of Treasury lawyers that drafted a version of the Gramm-Leach-Bliley (GLB) Act that allowed banks, insurance companies and brokerage firms to merge in what some would deem a major cause of the 2008-2009 financial crisis because such giant, linked firms became "too big to fail".

But since joining the Obama Treasury, Wolin has advocated for tougher federal supervision of the largest and most interconnected banks as part of a major overhaul of the U.S. financial structure, as well as implementing the "Volcker Rule," which would ban significant proprietary trading and hedge-fund activities by the largest banks.

[My note: One would think that a person drafting a version of Gramm-Leach-Bliley would be excluded from further public "service." Apparently, Wolin blows whatever way he thinks the wind is blowing in seeking to undo what he once facilitated. Needless to say, the new Financial "Reform" does not include anything like the Volcker Rule.]

In making these appointments, the President sent us an unmistakable message: it would be business as usual along the cozy Wall Street—Washington corridor. This is a point of utmost importance, because after 30 years of increasing corruption & influence, nine six big banks have come to dominate American society.

The Six Big Banks

The names of the six banking behemoths are no doubt familiar to most Americans. The four largest by assets — Bank of America, JPMorgan Chase, Wells Fargo and Citigroup — hold 39 percent of American's deposits.

The six biggest commercial banks* by deposit:

• Bank of America, $817.9 billion
• JPMorgan Chase Bank $618.1 billion
• Wachovia Bank $394.2 billion
• Wells Fargo Bank $325.4 billion
• Citibank $265.9 billion
• U.S. Bank $151.9 billion

* note: does not include Goldman Sachs, who wouldn't even consider taking deposits from a philistine like you

They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

One could make a good case that the political rise of predatory, parasitic, wasteful Finance over the last three decades is the central reason for the huge wealth & income inequality that exists in the United States, and also the main reason for its sorry economic prospects. I'll leave that question to future historians, but undoubtedly Finance has been a major player in our Decline.

With the passage of Financial "Reform" last Thursday by the Senate, the stage has been set for more of the same. And it was Barack Obama, his minions in the White House & the Treasury, and other "centrist" Democrats in the Senate who accomplished this dubious achievement. I will discuss the new "Reform" later this week, but suffice it to say that the new law, whatever its final form turns out to be, will not bring the joyride on Wall Street to a screeching halt as mental midget (but Senate majority leader) Harry Reid believes.

I will ignore the historical question of whether Herbert Hoover's reputation as a man who fiddled while Rome burned is deserved, but assuming the common view, we can conclude the following—

Not quite identical twins, but still like peas in a pod

I recommend you read Kevin Baker's Barack Hoover Obama: The best and the brightest blow it again (Harpers, July, 2009).

Obama’s failure would be unthinkable. And yet the best indications now are that he will fail, because he will be unable—indeed he will refuse—to seize the radical moment at hand.

The "radical moment" has not been seized. Rather, the Titans of Finance have been appeased. The "unthinkable" has occurred. (Can we, must we, truly say a pipsqueak like Giant Squid CEO Lloyd Blankfein is a Titan of Finance? Oh, my!)

Let me conclude by stating two important historical differences between the early 1930s and now—

• Hoover was followed by Franklin Delano Roosevelt, but nothing like that will (or can) happen this time around.
• The American Century came to fruition after Roosevelt, the Great Depression and World War II. Unfortunately for us, and for reasons too numerous to list here, the 21st century is not the American Century.

So there you have it, a brief summary of our once-promising President's failure and his future historical legacy.

Comments

[Bill Hicks]

Just wanted to add one other reason why this is not the 1930s. At one point during that time not long after the first big East Texas oil strikes, oil prices fell to 2 CENTS a barrel. The U.S. was literally swimming in oil.

It is an understatement to say THAT won't happen again.