I guess that it should come as no surprise, in the aftermath of the election in Massachusetts, that the Obama Administration’s message should turn into “bankers are BAD!” But when it comes to the financial service reforms that the Obama Administration puts out, the issue is a bit more complicated than the President likes to portray it as being:
President Barack Obama’s demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.
It’s a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.
“The American people will not be served by a financial system that comprises just a few massive firms,” the president said.
But Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city’s economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded “L” word.
“If that’s the case then we’ll have to lay off people because it will really hurt our industry,” Bloomberg said.
The mayor was so upset about the move — and a suggestion that Wall Street bonuses be put in escrow, which means the money wouldn’t be spent here, wouldn’t help the city economy — he responded with a proposal of his own for members of Congress.
“Maybe we should hold back their salaries for a decade or so and see whether the laws they pass work out,” Bloomberg said.
Lots of people in New York either work in the financial services industry, or know someone who does. Those people will see their careers and livelihoods harmed by the Obama Administration’s plans–never mind the effect that it will have on the overall economy to have business placed under siege by the government. I would love to see how the Obama Administration will explain away their soon-to-be falling poll numbers in the New York area.
Of course, New Yorkers are not the only ones concerned:
U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources.
The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks’ trading and size could impact U.S. firms’ global competitiveness.
He also has concerns that limits on proprietary trading do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.
We are informed by the story that despite his doubts, Geithner is on board with the Obama plan. But one cannot read the story without thinking that the Treasury Secretary ought to get closely and seriously questioned as to his actual attitude and beliefs. After all, as the story makes clear, Geithner is not the only one with potential concerns regarding the proposed reforms.
In related news, shocker:
U.S. investors overwhelmingly see President Barack Obama as anti-business and question his ability to manage a financial crisis, according to a Bloomberg survey.
The global quarterly poll of investors and analysts who are Bloomberg subscribers finds that 77 percent of U.S. respondents believe Obama is too anti-business and four-out-of-five are only somewhat confident or not confident of his ability to handle a financial emergency.
The poll also finds a decline in Obama’s overall favorability rating one year after taking office. He is viewed favorably by 27 percent of U.S. investors. In an October poll, 32 percent in the U.S. held a positive impression.
“Investors no longer feel they can trust their instincts to take risks,” said poll respondent David Young, a managing director for a broker dealer in New York. Young cited Obama’s efforts to trim bonuses and earnings, make health care his top priority over jobs and plans to tax “the rich or advantaged.”
Carlos Vadillo, a fixed-income analyst at Wells Fargo Securities LLC in San Francisco, said Obama has been in a “constant war” with the banking system, using “fat-cat bankers and other misnomers to describe a business model which supports a large portion of America.”
Are we actually supposed to believe that the burgeoning war between the Obama Administration and the business community will somehow be helpful to the country, during an ongoing period of economic turmoil?