- Apr 12, 2008
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- real world
November 8, 2011
How Obama bought off the big banks (and vice versa)
Occasionally the Washington Post does some real reporting. Yesterday Zachery Goldfarb did an analysis of the aggregate profits over the past three years for the major banks and financial institutions as compared to the eight years of the Bush administration. The finding: these firms have accumulated more profit in the three years of the Obama administration than they did in the two terms of George W. Bush.
In an interview with Mr. Goldfarb on NPR when asked what kind of companies and how this happened, replied:
We're talking about banks, the big ones you've heard of, Citigroup, Bank of America. These big banks have done well coming out of the crisis. The Wall Street firms most people haven't heard about, which are either independent companies [such as Goldman Sachs] or the securities arms of big banks [such as Merrill Lynch], have done even better.
Well, there are a couple of reasons [why the profits]. The government, including the Bush administration, as well as other agencies like the Federal Reserve and the FDIC, unveiled policies that were extremely advantageous for banks [and other financial institutions]. For example, government policies basically gave banks nearly free money, loans at zero percent and then turn it around into investments and that obviously is an extreme advantage that nobody else has.
It is a real no-brainer to borrow money from the Fed at near zero percent and then turn around and buy Treasury Bills at 3+% in order to finance the deficits run up by the Obama administration.
Of course it didn't hurt that Wall Street et al were the major financial contributors to the Obama campaign in 2008 and are still flowing contributions to his campaign for 2012 despite his public demonization of Wall Street and tacit alliance with the Occupy Wall Street movement.
The contributions in 2008 broke down as follows between Obama and McCain by Wall Street sector: