01 April 2009

Revisionism we can believe in

I still have trouble fathoming the thought of being so devoted to a particular ideology or political figure that, no matter what, people will continue to go to the mat for that person or idea.

But so it apparently goes with the president's many approvers. 

Because Barack Obama's hypocrisy passed beyond shameless long ago.

In February, we noted the great divide between Barack Obama's rhetoric and his actions with respect to the treatment of lobbyists in his administration. 

Now, in the wake of the news that Treasury Secretary Tim Geithner has picked Neal Wolin to fill the #2 post at the Treasury Department, the Changemaker's rhetoric against deregulation is worth a second look.

Since virtually the very day he announced his candidacy for president, Obama decried the supposedly failed "right-wing" ideal of market deregulation. Many times, he was quoted as condemning the "philosophy that views even the most common-sense regulations as unwise or unnecessary." 

As a preliminary matter, if anything can be said about our president, it is that he is quite fond of straw men. No one -- save for a few Ron Paul supporters marching around and chanting slogans about how John McCain is a socialist -- actually subscribes to this supposed philosophy. To President Obama, every decision is framed to the public as a choice between his policy and the most extreme, fundamentalist right-wing philosophy that his advisers can concoct. This man is obtuse -- not to mention intellectually lazy and morally arrogant. 

And on this site, we don't deal with intellectual laziness very well. We believe the president is an extraordinarily smart man, so it's quite frustrating to see him simply create forests of straw men and knock them down.

First of all, here's why Obama is substantively wrong:

The alleged deregulation our president so often references was passed in 1999, and repealed the 65-year-old Glass-Steagall Act, which was passed during the Great Depression. As the president has correctly noted, one of the main drafters of this bill was former Texas Sen. Phil Gramm, a close friend and campaign adviser to John McCain. The 1999 legislation was passed with broad bipartisan support, with Clinton administration officials working together with the Republican-controlled Congress to craft new regulations that would allow our financial system to enter the 21st century. 

The bill separated commercial banking from investment banking, bringing American regulations into line with European laws. It allowed for banks to merge more readily with other financial institutions, but in the event of such a merger, the new entity would actually be subject to more stringent regulations from the Federal Reserve. It did not lead to the mess we are currently in, as the president so often claims.  If you dispute this, you need to put down the president's kool-aid. Notable Democrats who confirm that the 1999 bill had positive effects and in no way led to the current crisis include President Clinton and his Treasury Secretary, Robert Rubin. In fact, the bill had the exact opposite effect, allowing Bear Stearns and Lehman Bros. to take up refuge as holding companies, and allowed Bank of America to buy out Merrill Lynch when the crisis hit.

Here's what the 1999 bill didn't do: It did not lower mortgage underwriting standards. Lowered underwriting standards allowed, of course, for otherwise unqualified borrowers to qualify for mortgages. If you don't believe this caused the economic collapse, read this. Whether you think predatory lending practices contributed to the crisis is another matter entirely, but even conceding such an argument, that still in no way bears on the "deregulation" President Obama rails against.

Additionally, as early as 2003, the Bush administration was pushing for stricter regulation of Fannie Mae and Freddie Mac, including the creation of an entirely new regulatory body to oversee its lending practices. But guess who resisted? Congressional Democrats, led by Chris Dodd and Barney Frank. And get this -- in 2004,  when the Bush administration renewed its call for stricter regulation, Frank accused the president of creating an artificial issue. "People tend to pay their mortgages," he so presciently said. "I don't think we're in any real danger here." In 2005, Sen. McCain was one of three Republicans who renewed the push for stricter oversight of Fannie and Freddie, but congressional Democrats again rebuffed the GOP's efforts.

Readers know I am no great defender of the GOP, but any suggestion that the GOP's policies are to blame for the present crisis -- which took place while a Republican administration pushed for stricter controls over the very industry whose collapse caused the crisis, only to be stymied time and again by congressional Democrats -- is preposterous.

I have never heard President Obama provide a detailed explanation as to how the 1999 bill led to the economic collapse, because I'm convinced that he either simply doesn't understand the fundamentals of economics, or the truth is too inconvenient.

Second, not only is the president wrong, he's a complete hypocrite.

One of the chief architects of this allegedly tyrannical 1999 regulation was Neal Wolin, who served as general counsel at the Treasury Department under President Clinton. Coincidentally, that's the very same Neal Wolin that the Obama administration has tapped to be the #2 man at the Treasury. 

Barack Obama ran an entire campaign on crucifying the idea of deregulation.

Now that he's in the White House, the man whom he has nominated to be the second most powerful monetary policymaker in the country ... was directly responsible for crafting the very regulations he spent his entire campaign decrying.

This is the height of hypocrisy, but it's far from new.

I can't ever remember observing another politician who is such a blatant hypocrite. It's like the president assumes that the country has a collective long-term memory deficiency.

Really, Mr. President. Do you think I'm that dumb?

And, to the president's admirers: Is this change you can believe in?

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