On Wall Street, the big banks are still too big to fail and control a larger share of the nation’s deposits than before the crisis. Restrictions on risky bank activities are so vague and far into the future, lobbyists will surely neuter them. The risk oversight board relies on the same officials that failed to foresee the dangers posed by mortgage-back securities, which caused the recent meltdown, and the new consumer protection agency will oversee reforms the Federal Reserve is already implementing.
Ordinary citizens beyond the confines of lower Manhattan don’t sense an economic recovery. Stripping out inventory adjustments, GDP growth since July 2009 comes to about $150 billion. In January, the Wall Street paid out $140 billion in bonuses on $300 billion in new profits. The rest of the country has recovered little.
The 8000 regional banks that finance small and medium-sized businesses are cash starved, because the President did not use the TARP to clean up their balance sheets.
Wall Street giants like Goldman Sachs blocked efforts to create an analog to the Savings and Loan Crisis era Resolution Trust, because it would cut into their workout business. Now, small and medium sized businesses that rely on regional banks for credit can’t add jobs.
Wall Street executives finance Democratic Party campaigns as generously as any demographic group. Along with using TARP money to award generous chunks of GM and Chrysler to the United Autoworkers, President Obama’s industrial policies appear straight from Boss Tweed’s handbook on influence peddling.
Eighteen months in office, President Obama should be evaluated on what he accomplished.
On the President’s watch, unemployment has jumped from 7.7 to 9.5 percent, the jobless count has increased 2.7 million, and 3.4 million more Americans have quit looking for work altogether.
The economic recovery is flagging.
Retails sales are sinking, private jobs creation, after a brief jolt in the first quarter, is tailing off, and big non-financial companies, sitting on nearly $2 trillion in cash, lack confidence to invest or hire new workers.
President Obama is again blaming Republicans for blocking his agenda, but Congress has given him his head.
From nationalizing GM and Chrysler to coddling Wall Street to placing 19 percent of the economy that provides health care into an ineffective regulatory regime, the President has opted for statism and with predictable results—more unemployment.
President Obama’s record speaks poorly for his vision for America, and Democrats seeking reelection to Congress are likely to get a well deserved shellacking for facilitating his agenda.
Peter Morici is a professor at the Smith School of Business, University of Maryland, and former Chief Economist at the U.S. International Trade Commission.