Thankfully, the rest of the speech was filled with real substance, and set the stage for how Geithner, Romer, and I are going take over . . . everything!
You know what’s funny? No matter how hard I slam these fat cats, they still keep writing checks to the DNC!
The administration also uses TARP to exert influence through “pay czar” Kenneth Feinberg. Once a matter left to bosses, shareholders, and review boards, private sector salaries at TARP-recipient firms are now regulated by the Treasury Department. Feinberg’s first round of cuts came in October 2009. Slashing wages by an average of 90 percent, Obama’s payroll overlord targeted 175 employees. Many complained, arguing their companies were being disadvantaged against non-TARP recipients. As if Democrats hadn’t already thought of that!
Senator Charles Schumer, Representative Barney Frank, and a few other Democratic undesirables are currently incubating plans to broaden Feinberg’s domain to include all publicly traded companies—TARP recipients or not. And Feinberg actually viewed his mandate as far more expansive than just micromanaging employees’ pay. He also insisted that, henceforth, chairmen and CEOs shall be separate positions, boards shall be required to create “risk committees,” and the process of “staggering” board elections would hereafter be banned.
But Obama’s TARP mayhem was just getting started. Initially a tool for “saving” big financial institutions, Obama found TARP even more useful as a club to bash the banking industry. Thus Obama positioned himself on the side of “Main Street,” and against Wall Street. This, he believed, would help convince the American people that a stronger federal hand was needed. (Read: more taxes, fees, and regulations).
Obama claims that he never wanted to micromanage the internal operations of private banks. However unpleasant the undertaking, he contends it was necessary in order to protect the larger economy from another financial crisis. According to Politico, the president laid down his demands to CEOs of finance during a White House gathering in April 2009. His approach was Chicago-style:
“These are complicated companies,” one CEO said. Another offered: “We’re competing for talent on an international market.” But President Barack Obama wasn’t in a mood to hear them out. “Be careful how you make those statements, gentlemen,” the president intoned. “The public isn’t buying that. . . . My Administration is the only thing between you and the pitchforks.”
In a January 2010 radio address, Obama got down to business: “We have now recovered most of the [TARP] money we provided to the banks. That’s good news, but as far as I’m concerned, it’s not good enough. We want the taxpayers’ money back, and we’re going to collect every dime.”
Whether banks actually took TARP money made no difference. Obama proposed a tax targeting any financial firm with at least $50 billion in assets: “This week, I proposed a new fee on major financial firms to compensate the American people for the extraordinary assistance they provided to the financial industry.”
Left unmentioned is why TARP lost money. The banks paid off their loans. Yet the companies now under federal control—GM, Chrysler, Fannie Mae, and Freddie Mac—failed to pay up. For this, they were rewarded by President Obama with exemptions from his proposed “Financial Crisis Responsibility Fee.”
Obama used TARP to garner new tax revenue, a billion-dollar slush fund for political boosters, and increased power over private companies. Not bad for a single government program. And when the plan was winding down, Senate Democrats proposed a “Wall Street reform” bill to make permanent their favorite parts of TARP.
Riding a populist wave of anti-Wall Street sentiment, Team Obama pushed their financial reform package through the Senate in spring 2010. To galvanize public support and overcome a Republican filibuster, Democrats orchestrated a bit of political theater on April 27. They hauled Goldman Sachs executives before a Senate subcommittee, subjecting them to eleven hours of grilling. The intention was clearly to paint the financial services industry as a dragon in need of a government slaying.
THE DIARY OF PRESIDENT BARACK OBAMA
THE WHITE HOUSE
April 26, 2010
If we want to take over Wall Street and pass financial regulatory reform, we’ve got to set the stage. Tomorrow Carl Levin is dragging a gaggle of Goldman fat cats before his Senate Subcommittee on Investigations. He’s got to make piñatas of these boys! The only hang-up is that Levin and Claire McCaskill (the Democrat leads on the committee) know squat about finance. I had Larry Summers come in today to give them a little finance and investment (for dummies) tutorial.
This all reminds me of my days as a community organizer. If we’re going to control Wall Street, we need an inciting incident, some drama to draw attention to our cause and expose the enemy investors for what they are. It’s all up to Levin and McCaskill. Problem is, those two are about as exciting as a C-SPAN 3 weekend special on Mark Twain.
But I have to say, when I dropped in on them earlier, they were responding very well to Larry’s coaching. They’ll knock it out of the ballpark—and for some extra insurance, I’ll hold a few rallies to let my people know who the real enemy is.
THE DIARY OF DIRECTOR OF
THE WHITE HOUSE ECONOMIC COUNCIL
LARRY SUMMERS
WASHINGTON, D.C.
April 27, 2010
These people are in way over their heads—idiots from top to bottom. The hearing today was a total bust. I didn’t think it was possible, but Levin and McCaskill actually made Goldman Sachs look good. If it wouldn’t send the markets into a tailspin, I would go public with what I know.
First, the president calls me in the other day to get my views on “shorting” in the financial sector. True to form, I could tell he had his own fixed opinions on the matter before I ever opened my mouth. I tried to explain to him that these large institutions routinely short their investments to hedge against losses. Had they not done so, the economic tumult would have been even more severe. “Larry,” he says, “I don t need a lecture on hedging. The Park Service does that every day right outside that window. Save the undergraduate seminar for the senators. That’s when he brought in Levin and McCaskill.
For the next two hours, I tried to familiarize them with the basics of investment and finance. I knew when McCaskill started drawing stick figures with dollar-sign faces that we were in trouble. I give up. These people wouldn’t know a derivative from a security if Charles Schwab himself broke it down for them. And this crowd is going to run the financial services industry?!
On April 28, the president took to the road to sell his financial regulatory overhaul, telling a crowd in Quincy, Illinois, “I want to be clear; we’re not trying to push financial reform because we begrudge success that’s fairly earned. I mean, I do think at a certain point you’ve made enough money.” Demonizing wealth creators is a cute trick for a man who made $5 million in 2009. I wonder if that was “enough money” for him and Michelle?
By the end of April, Obama had worn down Republican resistance, and they allowed his financial services power grab to proceed unimpeded.
THE DIARY OF PRESIDENT BARACK OBAMA
THE WHITE HOUSE
April 29, 2010
Suckers! I can’t believe these Republicans McConnell and Shelby fell for a “bipartisan” compromise on financial regulatory reform. Don’t they know how we operate?
We now control cars, health care, banks, and soon the entire financial services industry. Next stop: the global market! I really should have transferred from Harvard Law School to the Business School. Who would have imagined that a community organizer would someday be a captain of every industry?
I just got off the phone with Holder. We’ve got to keep the pressure on Goldman Sachs if we’re going to pass this bill. Holder’s announcing a major criminal fraud investigation tomorrow, examining Goldman’s investing practices. We had to do something after Levin failed to draw any blood during that loooong hearing the other day. But it’s all right—Barack is back on the scene. After we take down
Goldman, I’m thinking we can reconstitute it as “Obama Sachs.” That’s one firm that is absolutely too big to fail!
FIAT-IFYING THE AUTO INDUSTRY
By 2007, General Motors and Chrysler were hemorrhaging money—GM alone had lost $38.7 billion, and another $30.9 billion in 2008. Both companies entered bankruptcy in spring 2009, but instead of allowing the normal process to play out, Obama seized the moment to assert federal control.
“We are acting as reluctant shareholders—because that is the only way to help GM succeed,” said Obama, as he excitedly snatched control of the company. “What we are not doing—what I have no interest in doing—is running GM.” For that he had someone else in mind. Obama turned to his friends, the United Auto Workers. The UAW was given 55 percent ownership of Chrysler and 17.5 percent of GM. This was obvious payback for the $24 million the UAW contributed to Democrats between 2000 and 2008. (By comparison Republicans received less than $200, 000.)
This act of brazen crony capitalism had severe repercussions. Delphi, the Troy, New York–based auto parts maker that entered bankruptcy when GM failed, was just one casualty. In November 2009, Delphi dumped its pension plan on the federal Pension Benefit Guarantee Corporation as part of its restructuring, which typically means reducing pension checks.
Luckily, Obama saved the day. Sort of. With GM under his thumb, Obama forced the automaker (which once owned Delphi) to absorb Delphi’s 46, 000 union employees, so that their pay and pensions would be preserved. As for Delphi’s nonunion workers? They were out of luck.
“I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars,” Obama heroically proclaimed on March 31, 2008. But why should “clean” cars be Detroit’s number-one focus? What about the novel concept of building cars Americans actually want to buy and drive?
Dumb questions, I am sure. Obama knows best. In his first speech before Congress, Obama claimed, “Everyone recognizes that years of bad decision-making”—i.e., building too many trucks and SUVs—“pushed our automakers to the brink.” He brokered a deal with Fiat so that Americans could learn how to build those tiny death boxes so popular in Europe, proudly announcing: “Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to build—building new fuel-efficient cars and engines right here in the United States.” No matter that in 2008, eleven of GM’s twenty top-selling cars were pickups and SUVs. In 2009, the top two best-selling cars in America were the Ford F Series and the Chevy Silverado pickup trucks.
To help advance his eco-friendly vision for GM, Obama replaced the company’s chairman with Edward Whitacre, Jr., who memorably remarked, “I don’t know anything about cars.” Perfect, neither does Obama. But he did know how to convene yet another government study group—the “Auto Task Force.” Its mission was to produce a report detailing why GM failed and how it should operate in the future. The report was a slapdown of Obama’s dream for a new green American auto industry. “[GM had] little margin for error” and its turnaround would be “very difficult,” it concluded. The report went on to highlight how GM’s bottom line would suffer tremendously if higher Corporate Average Fuel Economy (CAFE) standards were mandated. Less than a year later, Obama’s EPA announced the most stringent CAFE standards ever.
Let them drive clown cars!
THE DIARY OF PRESIDENT BARACK OBAMA
THE WHITE HOUSE
June 4, 2009
Some of these so-called businessmen are getting on my nerves. They keep insisting that I don’t understand the way the car industry “operates.” They keep whining that Americans don’t want to buy tiny “clown cars.” “Americans want big cars, fast cars,” they keep telling me. Listening to these guys, you’d swear the whole country just bought front-row seats at a truck and tractor pull! You know what I told those fat cats? Some things are more important than what Americans want to buy. Things like community and climate change and that episode of Entourage where Drama thinks he has no friends until the guys throw him a big surprise party at the end. We have to be concerned about each other and buy things that advance the common good. (I’ve always identified with Vinny on Entourage, though I can relate to Drama, too. People don’t always recognize talent at first glance, but in time they learn to appreciate it.)
To make sure those car nuts got the message, I had the EPA write up some new rules to ensure that, in short order, every American will be driving one of those European-style golf carts. I love those little things. Who said automobile CEOs were all powerful?!
I think of bailouts the way I think of charity. Sure, giving away five bucks to someone on the street might make you feel good about yourself, but are you really helping anyone in the long term? Have you ever seen someone with a “will work for food” sign and actually tried to give the person food? I tried this once with an old woman sitting on the curb outside a Starbucks. She was rattling her empty Caramel Macchiato plastic cup. When I attempted to give her my untouched cinnamon scone, you might have thought I had thrown acid on her! She started screaming, “Take it away! Take it awaaaaay!” It was such a scene that other patrons thought I was harassing her. Frankly, I have more respect for the smelly panhandler I ran across in New York recently, who was holding a piece of cardboard that read: “Actually, I just want a beer.”
If only the Obama administration had been this candid about the true objectives of the auto bailout and the union influences that shaped it. The Auto Task Force conveniently neglected labor costs as a contributing factor to GM’s downfall (the first step on the road to recovery is admitting you have a problem!). But Americans knew better. In April 2009, Gallup found that 72 percent of Republicans, 66 percent of independents, and 42 percent of Democrats opposed the auto bailouts. Who, besides Democrats, enjoys subsidizing failure?
By propping up organized labor at the expense of smart business, taxpayers aren’t the only losers here; the core American principle of honoring valid contracts has also suffered a bruising defeat. In 2007, investors shelled out $6.9 billion to purchase Chrysler bonds that they expected would produce a decent return. The bond agreement contained a stipulation that once Chrysler returned to profitability, these investors would be repaid first. Obama did not think twice about disregarding the contract, dismissing them as “a small group of speculators.” (The group actually included public teachers, pensioners, and retirees.) “I don’t stand with those who held out when everyone else is making sacrifices,” Obama argued. He claimed their pleas amounted to “an unjustified taxpayer-funded bailout.” In the end, Obama tossed the bondholders just under one-third of their original investment: $2 billion.
This one episode should terrify every American who has ever made an investment in any U.S. company. In an effort to “save” a company or an industry, Obama has no qualms about trampling the contractual rights of American citizens.
THE DIARY OF PRESIDENT BARACK OBAMA
THE OVAL OFFICE
May 7, 2009
A measure of a man is whether he stands up for his friends when the world is against them. When the chips were down for Barack Obama during the primaries, the union bosses were there for me. Now it’s time to return the favor—Obamastyle! Some in the press are trying to paint the UAW as the bad guys, while making the CEO profit-mongers out to be America’s white knights! They just don’t get it.
This morning, I read a column by that sourpuss paleocon George Will that made light of my bold plans to restore balance to the UAW contract talks. Captain Bow Tie had the nerve to write: “The UAW will own 55 percent of Chrysler, so perhaps the union will sit on both sides of the table in negotiations. They should go smoothly, although the UAW may think it has made sufficient concessions, such as the one that says henceforth overtime pay will not begin until the worker has toiled 40 hours in a week.”
Will just doesn’t get it. It’s not like I won’t be there representin
g the American people in all negotiations. As I told UAW chief Ron Gettelfinger the other day, “With you and Barack Obama on both sides of the negotiating table, the UAW will get anything it wants. Let’s melt these big boys down and help the worker for a change, shall we?” And I meant it, too, because these labor organizers have suffered for years and they could not be sweeter guys.
Case in point: this afternoon, after weeks of haggling with the corporate overlords about how much of their companies they’ll be allowed to retain, Gettelfinger dropped in for a visit. Would you believe that this man actually took time out to review every word of my plans for the auto industry! He even pitched in and added a few lines of his own. That’s sacrificing for America. The man’s a patriot. Not only is the UAW offering to help finish writing up the plan, they’re actually willing to take the reins and run these companies on my behalf! These guys are saints!
Meanwhile, as Obama wrapped his tentacles around everything from health care to automobiles, the real issues the federal government should be handling—such as immigration enforcement—are treated as an afterthought. While his Homeland Security Department has carried out some high-profile workplace raids, the president has generally failed to take border enforcement seriously. President Obama might as well say what we already know: enforcing the federal immigration laws (i.e., removing those here illegally) is an impediment to achieving one of his top priorities—his reelection. In the undocumented-alien population Democrats see millions of potential new voters who will be reliable supporters of their big-government agenda. Every deported alien is one less vote for Obama in 2012.
The Obama Diaries Page 14