The Mystery of Obama and the Banks

I know almost nothing about Henry Blodgett, but this is what he writes about himself on his bio:

Henry worked on Wall Street from 1994-2001. In 2000, he was voted the Street’s top Internet analyst by Institutional Investor and was one of the most-read analysts on Wall Street. After the dotcom crash, Henry had the dubious honor of being the first executive keelhauled by New York Attorney General Eliot Spitzer, in connection with an investigation into conflicts of interest between the research and banking divisions of Wall Street firms.

So those are his credentials. At any rate, he posts often on Huffington Post and today he wrote this, after listing all of the weird behavior of Tim Geithner:

Obama has never explained why he's acting so out of character here, so we have to speculate. The charitable explanation is that Tim Geithner is paralyzed by fear of triggering another post-Lehman credit meltdown and has convinced Obama that that's what will happen if the government holds banks and their bondholders accountable or just comes clean about the shape that banks are in.

As I've said, I disagree with this. No one is arguing for the sort of uncontrolled bankruptcy that Lehman went through. And the seizure, restructuring, and sale of a few major institutions should not be unmanageable, especially if the bondholders are required to pick up the tab.

The more disturbing explanation, meanwhile, is that the Obama administration really is in Wall Street's hip pocket. Jonathan Weil at Bloomberg thinks there's a chance this is the case. And Obama certainly isn't doing anything to discourage this.

By maintaining a double-standard and refusing to address the elephant in the room, Obama is risking his credibility and his reputation for telling it like it is. This behavior, both toward the banks and toward Americans, is a disturbing echo of the Bush administration. It's time for Obama to address it head on.