David Stockman, President Reagan's Budget Chief, appeared on Moyers and Company on PBS last night, with host Bill Moyers. Stockman bewailed the failed opportunity to break up the "too-big-to-fail" banks like City Group and the appointment of Treasury Secretary Geitner and former Treasury Secretary Summers by President Obama, two of the same people responsible for the bail-outs of the big financial institutions when THEY failed to manage themselves appropriately in 2008.
As a Republican, Stockman also bemoans his own party's participation in the deregulation of the financial services sector, started under then Treasury Secretary Rubin when Bill Clinton was President.
This slippery slope to what has to be called "financial crisis," not completely separated from two wars that were never budgeted and really never financed, and the government's failed response, could, we believe, be President Obama's Achilles Heel, when he starts to campaign "officially" tomorrow night when he delivers his State of the Union address to Congress.
In that address, according to the talking heads on Sunday morning talk shows from Washington, he is expected to propose measures to create more jobs, to significantly reduce the unemployment figures still hovering around 8+%, at the official level, but in pockets reaching up to 15% or even higher.
Certainly, the domestic scene, the unemployment, the charge from (Newt) Gingrich that Obama is the president who has presided over the greatest increase in food stamps, will hang over both the State of the Union address and the campaign generally.
However, we agree with Stockman, that the President has left unfinished, partly because of an obstinate Republican congressional cadre opposed to anything he puts forward, the business of governance and structure of those big banks. And left to their own devices, as Stockman warns, they will continue to repeat their "greed" and avarice literally without shame.
The close ties between Wall Street and the government of the United States have to be broken; the legislation that would separate the retail banking sector from the financial services sector needs to be drafted, and submitted to Congress, by the President, even if he knows, (as we all do) that it will never be passed by this class of Congressional representatives. The President, in general a quite good one on many fronts, cannot afford to face the exposure of "cronyism" in his efforts to moderate the potential impact of future Wall Street greed, especially on his base, the ordinary American voter of whatever ethnic and racial background.
Even replacing Geitner for the last year of his presidency with someone completely separated from the culture and history of Wall Street would go a long way on perceptions of the White House's being too close to the financial hands that wrought much of the economic crisis in the first place.
We all know that how Europe manages the next several months will play a significant part in determining the shape and size of the curve upwards in the American economic recovery. However, the President in not without steps that he can and must take to begin the process of cleaning up Wall Street, prior to the election.
We know that the Republican party will not move quickly and decisively on this file, even if they win the next election. So, the last best hope to begin the process, and to add to the potential re-election of the current president, is for his administration to put the needed legislation before both houses of Congress, and to tell them it is comin tomorrow night.