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Obama and the ‘Fat Cat’ Bankers (Rant)

By JLP | December 15, 2009

WARNING: This is a rant. If you’re an Obama supporter, you may not want to read this post. You have been warned.

President Obama on 60 Minutes:

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Mr. Obama said in an interview on CBS’s “60 Minutes” program on Sunday.

“They’re still puzzled why is it that people are mad at the banks. Well, let’s see,” he said. “You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it’s gone through in — in decades, and you guys caused the problem. And we’ve got 10% unemployment.”*

And to think that people made fun of the way President Bush spoke…

Although bankers were a large part of the cause for the financial crisis, they DID NOT cause it by themselves as Obama implies. There’s plenty of blame to go around. The Fed kept rates too low for too long. The banks couldn’t have created all those products and lent so much money without the help of cheap money.

Also, the banks couldn’t have made so many loans without the help of people who stupidly bought more house than they could afford and lied on their applications.

Don’t get me wrong. I don’t think bankers have any right to take bonuses during a time when their banks are losing money. I don’t care if the bonuses were promised or not. But, at the same time, shouldn’t government officials be taking pay cuts too since the crisis happened under their watch?

There’s PLENTY of blame to go around and Obama’s only showing his ignorance to focus all his attention on ‘fat cat’ bankers. He also must think that Americans are stupid.

End of rant…

Source: Obama Slams ‘Fat Cat’ Bankers – WSJ

Topics: Rant | 37 Comments »


37 Responses to “Obama and the ‘Fat Cat’ Bankers (Rant)”

  1. tom Says:
    December 15th, 2009 at 2:08 pm

    No… in fact… goverment employees just got a raise in the last spending bill.

  2. BG Says:
    December 15th, 2009 at 2:23 pm

    Are you arguing that it _is_ Obama’s job to help the “fat cat” bankers then?

    Anyhow, I think it is high-time the banks were regulated, and regulated HARD. It was de-regulation that created the environment that allowed the banks and other entities to get us into this mess.

    Regulate, and have uncle same bail you out. Or deregulate, and you are on your own. Apparently the banks want deregulation plus bailouts — which is screwing over Joe-taxpayer.

  3. Lynn Says:
    December 15th, 2009 at 2:23 pm

    I totally agree…

    I still want someone to explain to me how we can spend our way out of a recession…I can’t believe they gave federal employees a 2% pay raise in the bill that was just passed…I just don’t get it.

  4. Mike Says:
    December 15th, 2009 at 2:26 pm

    Unfortunately, most Americans ARE STUPID! They probably believe he is right.

    Obama is either very naive, or just plain stupid; probably a bit of both. He is not a leader and does not know anything about governing. He seems confused, so he resorts to what he does best- blaming others!

    “Fat cat bankers!” It is embarrassing the President must resort to name-calling. The President should be above such childish things. No class!

  5. Geoff Says:
    December 15th, 2009 at 2:39 pm

    Lynn, how else can the economy bounce back? To increase output, you need input. Without input our economy is stagnant. And unfortunately we don’t produce enough to solely prop up our economy by exporting alone.

  6. JLP Says:
    December 15th, 2009 at 3:01 pm

    BG,

    I’m not saying that at all. Obama is simply looking for a scapegoat for the crisis. What better way than to call them ‘fat cat’ bankers?

    I have voiced outrage over the bonuses. I think it’s crazy to get a bonus when the company you work for is losing money. It makes no sense to me.

    As far as the regulations go, we had regulations. They just weren’t enforced.

  7. JT Says:
    December 15th, 2009 at 3:08 pm

    Geoff:

    Ahahahahaha! Good one. If your logic made any sense at all then why don’t we just “stimulate” our current deficit spending x 100? Let’s “input” 100 trillion dollars instead of 1 trillion. Clearly we’ll increase output! That must be the solution! ;)

    Mike:

    Geoff is proof of your point. :D

  8. Geoff Says:
    December 15th, 2009 at 3:35 pm

    JT, don’t wate your time insulting when you don’t understand or make assumptions. Obviously I was using the simplistic view and you couldn’t put that to reality. I never said infinite spending will create infinite output. Rationally there are limits to the amount of spending that will improve the economy and limits to the amount of output that can be produced. However, if you think that the economy in its simple form is more than input and output set to realistic restrictions, then I’d be curious to hear how that works.

  9. Sam Says:
    December 15th, 2009 at 4:13 pm

    JLP, I haven’t watched 60 Minutes for at least a decade. I suggest that you do the same.

  10. JT Says:
    December 15th, 2009 at 4:44 pm

    Geoff,

    So then why make the comment? Your “obviously” simplistic view adds no value to the discussion and only helps to further confuse the correct solution. Seriously, what good does it say to assert that the economy is a closed system?

    Speaking of making assumptions, who’s the one assuming the economy will bounce back due to increased input? If anything is obvious, it is that stimulus spending isn’t working. And by definition the stimulus has to stop sometime, at which point we revert to more job losses, defaults, and lowered GDP; however, this time we’ve got additional debt to pay back too!

    Also, if there are rational limits to the amount of spending that will improve the economy, then what are they? Do you know? Does the Bernanke know? Can anyone even know that?

    The problem with your argument is that you expect/want/will/hope/need the economy to bounce back. Sorry to burst your bubble but there is nothing that can be done to get us to bounce back and have it be sustainable. The only way to get back to 2005 levels it pay off or default upon all the debt that has been built up over the past 30 years.

  11. Jason Bontrager Says:
    December 15th, 2009 at 4:55 pm

    Something that might be worth considering in light of the Stimulus’ failure to stimulate:
    http://www.nytimes.com/2009/12/13/business/economy/13view.html?ref=todayspaper

  12. Bobby Says:
    December 15th, 2009 at 7:18 pm

    Thanks for the post, and thanks for the warning before hand.
    In my opinion, we are all at fault. We all got ‘drunk’ and we all did back door dealings. Continuing to find ways to blame is not going to get the Nation back on track.
    One thing I don’t get right now is why is it so hard for people to get loans? people with perfect credit who could use a break and then turn that money around and put it back into the economy.

  13. Kyle Says:
    December 15th, 2009 at 8:50 pm

    I guess I don’t get it. The banks suck because we had to bail them out. Now they are paying it back and thy still suck. Look people these businesses have to compete to get the best tallent. The talent follows the cash and if you are capping bonuses and imposing pay restrictions it affecs their ability to hire for top positions. These guys have always gotten the bonus before and no one complained. The economy sucks yes, should they really get the bonus, maybe not, is there or should there be anything we can do about it? If you are a shareholder feel free otherwise sod off.

  14. Stacey Says:
    December 15th, 2009 at 9:52 pm

    I decided to delete my rant and focus on proactive measures instead.

    My mission for the American people:

    Help to create jobs if you have the power to do so, do a good job at the one you have, don’t have a job? Help someone who needs help. Visit an elderly person, a shut-in, give a caregiver a break. Put yourself in someone else’s shoes.

    Turn down your thermostate, turn off the unneeded lights, combine your errands. Use both sides of a sheet of paper. Yes, I even write my grocery list of the back of used envelopes. And I won’t apologize for it!!

    Motivate the kids you know to do well in school/stay in school; compliment a child; explain why kids should not have kids; create of love of reading in the children you know: put a book in kids’ hands before putting a stupid video game or cell phone in them! Make TIME for your children. Mentor a child or an adult who needs it. You might be the only lifeline they have to a better life.

    Compliment someone, smile, be kind, yes even to bankers/politicians. The world is a rough enough place.

    Don’t abuse drugs and alcohol and gambling–they’re not worth losing yourself.

    Be a solid citizen, friend, spouse, parent, you get the pic…

    Stop buying crap w/your money. Don’t waste your time in front of a computer when you could be spending time w/your family. Facebook won’t care about you when you’re taking your last breath. Hopefully your kids will.

    Wishing all a blessed holiday season w/your family and friends and a magnificent 2010!

  15. Ron Says:
    December 15th, 2009 at 10:13 pm

    As a former banker I can tell you, banks are the most heavily regulated industry on earth. The regulations have letters for names for Pete’s sake. There are even federal regulations dictating how much vacation I had to take.

    Don’t buy the LIE line that regulation (or the lack of it) or even the lack of enforcement was to blame. The blame rest squarely on the shoulders of Congress who insisted that certain components of our population be allowed to participate in the “American Dream” regardless of their ability to pay. The blame rest squarely on the shoulders of the Fed who kept interest rates too low for too long and made money cheap to borrow (for individuals, businesses and governments). The blame rests squarely on the shoulders of the bankers who didn’t cry FOUL when they saw the coming collapse. The blame rests squarely on the shoulders of the public who thought that stocks and real estate never went down in price and insisted that their financial advisers get returns in the high teens and low twenties.

    There’s plenty of blame to go around. Those who live in glass houses shouldn’t throw stones, Mr President.

  16. Don Says:
    December 15th, 2009 at 10:51 pm

    “And by definition the stimulus has to stop sometime, at which point we revert to more job losses, defaults, and lowered GDP; however, this time we’ve got additional debt to pay back too!”

    I don’t think this follows. What causes a recession? That is not easy to say I think. If you think you know, then why did it start last year and not a year before that? Recessions seem to follow from a collective change of attitude.

    They end with a collective change of attitude as well. So there’s no reason to think that once attitude shifts that the stimulus could not be phased out. It’s not reasonable to think that it will need to prop up the economy forever.

  17. glinka Says:
    December 16th, 2009 at 12:36 am

    I’d give bankers a B+ grade

  18. BG Says:
    December 16th, 2009 at 9:09 am

    #14) Ron, what is the name of the federal regulation for mortgage origination?

    ….

    There is none — don’t give me this BS that banks are regulated too much.

  19. BD Says:
    December 16th, 2009 at 9:44 am

    I’m an Obama supporter, I read this post, and I am only offended by the implication that Bush was a better public speaker!

    Have you read the Nobel acceptance speech? I think you’d like it. It defines American foreign policy in a way that does not supplicate the Europeans who awarded him the prize. It’s eloquent, shows American mettle, and explains why war is necessary.

  20. JT Says:
    December 16th, 2009 at 9:49 am

    Ron,

    I absolutely think you are correct when stating that the collective psychology moves the markets. I don’t disagree on that point at all; nor did I intend to state otherwise. However, consumer attitudes don’t just change on a whim. There has to be a meaningful reason for them to change.

    Our current recession/depression was caused by a massive debt bubble; thus, it makes sense for consumer attitudes to change when they have gone through the process of deleveraging. Until then, the simple fact is people just won’t spend.

    The sad part is that we have only begun to deleverage. There is much, much more debt that has to disappear from the average Joe’s balance sheet. Take a look here.

    As Mish so insightfully points out, both peak credit, and with it peak debt, are in. Look for a Japanese style lost decade coming to a town near you!

  21. JLP Says:
    December 16th, 2009 at 9:54 am

    Haha…BD! I wasn’t implying that Bush was a better speaker. I was just saying Obama’s grammar could use some work. We could tell he wasn’t using a teleprompter…lol.

  22. JimmyDaGeek Says:
    December 16th, 2009 at 4:28 pm

    Sorry to burst your bubble, but the last 40-50 years have created American SHEEPLE that only give lip service to liberty and freedom of choice. When push comes to shove, they want the government to something about it so they don’t have to get of their duff to do something or do without.

    For example, I heard this morning about complaints that people have about commercials being too loud. So what is the solution? Complain to Congress so that Congress tells the FCC to regulate the industry. Heaven forbid that these SHEEPLE might complain to the advertising companies or the television companies and stop watching television. Oh no, free television is a right. (I am not going to get into the public airways discussion, but what about cable/satellite people? What’s their excuse? They can always cancel their service.)

  23. Financial Samurai Says:
    December 17th, 2009 at 2:19 am

    Wait, are you saying you don’t support the government today FORGIVING Citigroup from paying billions in taxes? :)

  24. Gone Says:
    December 17th, 2009 at 10:47 am

    http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout

    A long read but excellent.

  25. JT Says:
    December 17th, 2009 at 10:48 am

    JimmyDaGeek,

    I find it incredibly amusing that our nation can be held hostage by bankers yet half of American does not bat an eye, much less do anything about it. However, take away a man’s television (or in this case, make the commercials too loud) and he’ll be on the phone complaining about it.

    Where are people’s priorities when they have the time to b*tch about the TV but not fight for their constitution rights or that justice be served to all the fraudsters on Wall Street and in the Gov?

  26. EZ Says:
    December 18th, 2009 at 10:06 am

    If anyone doubts the culpapbility of Congress, they need to study the effects of the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act and the 1977 Community Reinvestment Act (CRA). Congress, helped by ACORN, pushed Fannie Mae and Freddie Mac to make more and more bad loans to folks who could not afford them. The banks had to follow suit. There is plenty of blame to go around, but I do not see how Congress writing more legislation can help fix the problem since Congress helped make the problem. My simple solution is to vote ALL incumbents out.

  27. John Says:
    December 18th, 2009 at 10:45 am

    What does the federal employees getting a 2% raise in 2010 have to do with the government’s failure to regulate the banks and wall street? The employees getting the raises, have nothing to do with setting policy and directing the agencies they work for. As far as the banks go, we should follow England and France and tax the banks 50% on all the bonuses they pay. After taking money to save their businesses, they are now acting like nothing has happened, and are once again doing business as usual.

  28. kitty Says:
    December 18th, 2009 at 5:49 pm

    “I guess I don’t get it. The banks suck because we had to bail them out. Now they are paying it back and thy still suck.”

    Not only that, banks paid quite a nice interest on the money, to the tune of annualized 20% if you include stock warrants. And as of today, all of the major banks either have repaid TARP or about to do it shortly. This was one of the very few government programs on which government actually made money.

    If I lent somebody money then got it back with annualized 20% interest, I’d not complained. As to blame, there is plenty of it to go around.

  29. jason Says:
    December 20th, 2009 at 6:20 pm

    Now don’t get me wrong I did vote for Obama in the last election, but that doesn’t mean I agree with everyhting he says. The problem with his thinking is that you can’t blame only bankers for the crisis it was a combination of banks, easy loans people couldn’t pay back, and low fed rates. Besides complaining about bankers raises doesn’t make sense we don’t pay for their raises investors pay for them not the people who have money in the bank.

  30. Stacey Says:
    December 21st, 2009 at 11:37 pm

    Jason, your interest income could be higher/your interest expense could be lower. Of course you’re paying for them.

  31. Sandy in MO Says:
    December 31st, 2009 at 12:48 pm

    There are more layers to the whole mess. Why doesn’t anyone point a finger at the appraisers? Many properties were purchased at more than actual value based on appraisals. Maybe some borrowers were stupid, but a better word would probably be naive. If the banker approves more than they can afford, they believe the ‘expert’ lender knows. Realtors made nice commissions, appraisers made nice fees, bankers were paid fees, incentives — ultimately, as usual the consumer suffers, many ended up losing their homes & still we bail out the big banks. People should be more aware of their budget & finances, but as a former lender at a community bank (10 yrs ago) I know many people don’t understand, don’t know the formulas, don’t plan ahead.

  32. Sandy in MO Says:
    December 31st, 2009 at 12:53 pm

    PS…..Banks are heavily regulated — there are regulations in place, but not uniformly enforced. Regulators are also human. However, I restate my opinion that the spotlight is on the banks & it should include other professions.

  33. Sandy in MO Says:
    December 31st, 2009 at 12:55 pm

    By the way ‘Ron’, the regulations weren’t so much how much vacation you took as to how much time bank employees have to be out of the bank so that emblezzlement & illegal activities would surface.

  34. Miguel Says:
    January 1st, 2010 at 10:07 pm

    I think Ron said it best – there is already a lot of regulation for banks. And now, all of the I-banks fall under the same regs (vs being split btwn Fed and SEC regulated). So, already, the current system is more regulated.

    The thing to keep in mind is that the fin’l system is comprised of many powerful players outside this U.S. regulatory framework – hundreds of big foreign banks, thousands of hedge funds, investment houses, private equity, structured vehicles, offshore funds, etc. that are not highly regulated. It is also a global market – squeeze this industry in one jurisdiction and the activity just moves on to another.

    The solutions are not simple, and they are not quick. And that is the problem – the American people want results – today. The pols can only think one election at a time. And the MSM press, god help them, could not debate their way out of paper bag on these topics.

    Obama’s rhetoric is not helping in the least. The banks are going to have to be part of the solution – alienating and bullying this crowd is not going to get him very far.

  35. Stacey Says:
    January 2nd, 2010 at 12:19 am

    Happy New Year, Miguel. You’ve been missed!

  36. David Price Says:
    January 2nd, 2010 at 7:03 am

    For those who read this post, here’s an observation many days later:

    The most interesting facet of this conversation is the reactive nature of the comments. The simple fact is, we all want to understand what happened. Being able to assign blame creates the framework for that understanding. The financial crisis ultimately exposed the divisions within the U.S. right now. I see it as “Greed” versus “Grace.” Unfortunately greed outweighs grace. The situation moved from exploitation of a lax regulatory system and easy money to legalized fraud and predation.

  37. Miguel Says:
    January 2nd, 2010 at 9:06 am

    Stacey – thanks – you are the kindest of souls!!! I miss being able to jump into the debate. Unfortunately, I can no longer comment from work, and I am rarely home. I’ve been laid up with the flu, so makes it easier to puddle around the keyboard.

    David – You start out sounding like you might have a nuanced appreciation for the topic by commenting on the “reactive” nature of the comments, but then you end up with another tired sound bite “greed” vs “grace”. Oh give me a break already.

    Again, the need to assign blame. Don’t get me wrong – I think there were a lot of irresponsible actors in this situation who deserve to go to some form of hell – one where they are striped of their ill-gotten gains and banished to poverty. Notice, nowhere did I use the word “illegal”. Most of these folks operated within gray areas of the prevailing laws and regs, and had every incentive to act as they did, like kids in a candy store with a blind proprietor. Want to place blame – figure out who was responsible for monitoring the industry and protecting the public from the “greed” inherent in any system of power and influence.

    What we have had in our fin’l mkts these past few decades was something akin to legalized prostitution – and now you want to go back and hang the prostitutes for slutty and immoral behavior. Other than a couple of examples paraded out for public consumption, not really going to happen. Why? Because the blame is so widespread, it would be impossible to hang anyone, without implicating the finger pointers themselves. Besides, nobody meant any real harm at the time – the mass stupidity defense.

    Kidding aside, I think that what we have is a global system of extraordinary complexity. I’m really not so sure reigning it in is a viable option. But, creating global regulators capable of keeping pace with the technology would be a good beginning.

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