FT: White House is "Seized With Political Panic"

How High's the Water, Mama?

"Obama erects a Maginot line" is the title of the Financial Times Saturday morning commentary on the President's sudden demagoguing of deposit banks and applying a "Volcker Rule" denying these banks the ability to make proprietary investments for profit or hedge their riskier portfolio "punts." The FT also points out putting the 7 foot Dr. Volcker front and center during the announcement while wee tiny Timmy the Tax Cheat Geithner was off to one side was a singular slap in the chops for the Sec. Treasury.

But Obama's ridiculous attack on the big banks makes even Chris Dodd, Senate Chair of the Banking and Finance Cte, cringe and demur. And now Ben Bernanke is under attack by financial genius Barbara Boxer, herself in a close Senate race for re-election this year against Carly Fiorina [nee Sneed].

A circus sideshow would have fewer amazing attractions and the only thing missing is li'l Rahm-bo Emanuel, who is hiding under his desk or perhaps emulating Gov. Sanford with a quick side-trip to Buenos Aires. The Financial Times sums up the whole debacle in no uncertain terms.

Being cut off from trading securities for their own book will not stop banks from putting insured deposits at risk. Their inventiveness in finding ways to lose money knows no bounds, and the most time-honoured money-loser of all – making bad loans – remains available. While it is bad to subsidise banks’ bets on mortgage-backed securities, is it worse than backing their bets on plain old mortgages?

So the “Volcker rule” will not end the subsidies for the (many more) risks deposit-taking banks remain authorised to take. If it also prevents them from hedging those risks, it may make the banking system less, not more stable......This “shadow banking system” was the epicentre of the financial crisis. In the Lehman Brothers and AIG meltdowns, the equivalent of bank runs afflicted money market funds, repo markets and securities lending: panicked lenders withdrew or refused to roll over the short-term funds that financed financial groups’ long-term assets.

FT ponts out that Obama ignored the step-by-step snail's pace of a regulatory reform program had been inching its way through the corridors of Congress.

For all its warts, a genuine effort at regulatory reform was wriggling its way through Congress – and at least a modicum of attention was being paid to co-ordinating such reforms at a global level. All this has now been blown out of the water by a White House seized by political panic. The result is that no one knows what will happen. A return to radical insecurity was the last thing we needed.

The untest young man voted in as POTUS in '08 appears to be living down to my personal expectations. And when crunch time comes and he loses a super-majority in the Senate [thank God for Al Franken bringing how crooked US elections are when they are thrown into courts!!] and he sees his Health Care [which exit polls in '08 election showed were the concern of less than 5% of the electorate] flounder, what does the Golden Boy and presumed Messiah do who was going to distribute his stash to all those "communities" he was organizing?

He reverts to the socialist/anarchist Saul Alinsky playbook and tries to demonize the enemy.

But the BIG Banks are not perceived by the American people as the Enemy, Barack-o!

You and your BIG GOVERNMENT socialist nonsense---that's the enemy of the American people!