Abject Failure to Reform Wall Street

Obama will be mostly remembered, I predict, for his failure to reform the financial system when he had the chance. The window of opportunity has now closed for that, it seems to me, and so the die is cast for another financial/economic crisis, only probably worse, somewhere down the line. Obama failed primarily because of the advisors he chose: Summers and Geithner. From the beginning, it was very clear they weren't going to seriously pursue reform. Anyone with half a brain could see that.

Robert Reich details the abject failures of the Obama administration:

As he attempted to do with health care reform last week, the President is
trying to breathe new life into financial reform. He's using the anniversary of
the death of Lehman Brothers and the near-death experience of the rest of the
Street, culminating with a $600 billion taxpayer financed bailout, to summon the
political will for change. Yet the prospects seem dubious. As with health care
reform, he has stood on the sidelines for months and allowed vested interests to
frame the debate. Nor has he come up with a sufficiently bold or coherent set of
reforms likely to change the way the Street does business, even if
enacted.

Let's be clear: The Street today is up to the same tricks it was
playing before its near-death experience. Derivatives, derivatives of
derivatives, fancy-dance trading schemes, high-risk bets. "Our model really
never changed, we've said very consistently that our business model remained the
same," says Goldman Sach's chief financial officer.

The only difference now is that the Street's biggest banks know for
sure they'll be bailed out by the federal government if their bets turn sour --
which means even bigger bets and bigger bucks.
Meanwhile, the banks' gigantic
pile of non-performing loans is also growing bigger, as more and more jobless
Americans can't pay their mortgages, credit card bills, and car loans. So forget
any new lending to Main Street. Small businesses still can't get loans. Even
credit-worthy borrowers are having a hard time getting new mortgages.

The mega-bailout of Wall Street accomplished little. The only big
winners have been top bank executives and traders, whose pay packages are once
again in the stratosphere. Banks have been so eager to lure and keep top deal
makers and traders they've even revived the practice of offering ironclad,
multimillion-dollar payments -- guaranteed no matter how the employee performs.
Goldman Sachs is on course to hand out bonuses that could rival its record
pre-meltdown paydays. In the second quarter this year it posted its fattest
quarterly profit in its 140-year history, and earmarked $11.4 billion to
compensate its happy campers. Which translates into about $770,000 per Goldman
employee on average, just about what they earned at height of boom. Of course,
top executives and traders will pocket much more.