On Friday, NewsBusters asked, "When Will Media Blame Economy and Bear Market on Obama?"
Don't expect Bill Clinton's former labor secretary Robert Reich to ever do so, for in an article published at Salon Thursday, the UC-Berkeley professor claimed "every major policy that led to this collapse occurred under George W.'s watch."
Not only that, but the man who recently told Congress that jobs created by the economic stimulus package shouldn't only go to "white male construction workers" also declared, "Angry right-wing populism lurks just below the surface of the terrible American economy, ready to be launched not only at Obama but also at liberals, intellectuals, gays, blacks, Jews, the mainstream media, coastal elites, crypto socialists, and any other potential target of paranoid opportunity."
Readers are warned to proceed with caution before going any further, for Reich was loaded for conservatives and wasn't taking prisoners:
The argument that Obama is somehow responsible for the collapse of Wall Street is absurd. First, every major policy that led to this collapse occurred under George W.'s watch (or, more accurately, his failure to watch). The housing and financial bubbles were created under Bush and exploded under Bush. The stock market began to collapse under Bush.
Astonishing. I guess Reich doesn't believe that the Financial Services Modernization Act of 1999 or the Commodity Futures Modernization Act of 2000 -- both signed into law by his former boss named Clinton! -- had a hand in this crisis.
After all, FSMA removed the last vestiges of the Depression era Glass-Steagall Act requiring a firewall between the services offered by banks, brokerage firms, and insurance companies. This massive deregulation of the financial services industry in November 1999 is very much what led to the current crisis.
The following year CFMA deregulated lending derivatives such as credit default swaps which are at the heart of the problems facing the world's troubled financial institutions.
For Reich to ignore these Acts demonstrates an astounding intellectual dishonesty that is nothing less than deplorable, as does claiming the housing and financial bubbles were created under Bush.
It's been well-documented that the Clinton administration he was a part aggressively encouraged easier lending requirements at Fannie Mae and Freddie Mac to allow lower-income wage earners to qualify for mortgages. Any statement to the contrary is disingenuous.
So is defending this year's stock selloff by claiming it began when Bush was president as it seems quite unlikely Reich would blame the 2001 recession on his former boss despite the first bear market of this decade beginning in March 2000.
But he was just getting warmed up:
Finally, none of the financial wizards who are now charging Obama with leading America into the abyss have offered an alternative plan for getting us out of the mess that, not incidentally, many of these same wizards happily led us into. For years, the Wall Street Journal editorial page and the financial gurus of cable news cheered as Wall Street leveraged its way into oblivion.
This is also not true, for the CEOs of companies that received bailout funds have strongly recommended a number of solutions which the Obama administration has refused to enact. One is that the mark-to-market accounting rule be eliminated.
For those unfamiliar, this requires financial institutions to regularly adjust their balance sheets to reflect today's value on assets they hold. Most analysts and economists believe that this created a domino effect last year exacerbating the financial crisis and leading to the insolvency and eventual failure of numerous institutions.
By removing this requirement now, the remaining banks, brokerage firms, and insurance companies would immediately become "healthier" as their total assets on the books would increase.
Unfortunately, this has not be implemented. Nor has the creation of a so-called "bad bank."
One of the things that led stocks -- including financials -- higher in December and early January was the belief that the Obama administration was going to create a "bad bank" which would take on all of the "toxic" assets currently held by financial institutions. When treasury secretary Timothy Geithner unveiled the White House's plan to save the financial services industry on February 10, and it didn't include such a program, the stock market collapsed and has continued to fall ever since.
As such, it's preposterous for Reich to say that Wall Street hasn't been offering solutions to the problem. But there's still more:
Republicans have made no secret of their wish to blame Obama for the bad economy, and to stir up as much populist rage against his so-called socialist tendencies as politically possible. History shows how effective demagogic ravings can be when a public is stressed economically. Make no mistake: Angry right-wing populism lurks just below the surface of the terrible American economy, ready to be launched not only at Obama but also at liberals, intellectuals, gays, blacks, Jews, the mainstream media, coastal elites, crypto socialists, and any other potential target of paranoid opportunity.
The hypocrisy on display here is astonishing. After all, the left conjured up visions of gloom and doom to try to block Bush's tax cuts in 2001 and 2003. Turns out the Gross Domestic Product rose by 3.6 percent in 2004.
More importantly, team Obama with Reich's assistance economically and financially scared the heck out of Americans last fall in order to defeat McCain-Palin. In fact, these folks are the kings of populist rage.
But Reich wasn't done (emphasis added):
When it turns out that people like Lloyd Blankfein, the CEO of Goldman Sachs, who took home $68 million in 1997, was the only Wall Streeter in a meeting last September at the New York Federal Reserve to discuss the initial AIG bailout with Tim Geithner, then New York Fed chair, among others, at the very time Goldman was AIG's largest trading partner, a distinct scent of self-dealing begins to emanate. When it turns out that Citigroup got a bailout deal last October far more generous than that given to any other distressed bank, when a top Citi executive was advising the Treasury and Fed, the scent increases. Goldman's past CEO was treasury secretary at that time, by the way, and another former Goldman CEO was a top Citi official and also a former treasury secretary.
In this instance, I agree with Reich that something smells. However, he would have been more honest if he named who he was referring to in the bolded sentence, for the former Goldman CEO/top Citi official was none other than Robert Rubin, Bill Clinton's treasury secretary.
Wouldn't want to implicate a former colleague, would you, Bob?
In the end, there's a tremendous amount of blame to go around on both sides of the aisle for our current predicament. In fact, any honest assessment would have to include former President Jimmy Carter's creation of the Community Reinvestment Act which required banks and savings institutions to make loans to folks they normally wouldn't.
That means that this was a crisis over thirty years in the making.
Yet, it seems quite doubtful folks like Reich could possibly look back that far, for in their view, nothing happened in this country before George W. Bush was inaugurated in January 2001.
Maybe more disturbingly, it appears the next symptom of Bush Derangement Syndrome will be to ignore anything subsequent to his departure from the White House as well.
As such, when stocks lose 20 percent of their value after Bush heads back to Crawford, Texas, that's his fault.
When stocks decline after the new treasury secretary unveils the Administration's plans to fix the financial services industry, that's Bush's fault.
When stocks collapse after President Obama gives his first address to Congress, that's Bush's fault.
And, if anyone says anything to the contrary -- like it just might be Obama's fault -- he or she is trying to stoke the "angry right-wing populism" lurking "just below the surface of the terrible American economy, ready to be launched not only at Obama but also at liberals, intellectuals, gays, blacks, Jews, the mainstream media, coastal elites, crypto socialists, and any other potential target of paranoid opportunity."