President Obama used his weekly radio address on Saturday to attack what he called Republican plans to loosen controls on Wall Street, and “take the country backwards” by reinstating “the broken [regulatory] system” that brought about the Great Recession.
It’s not hard to guess the Republican counter-attack. GOP spin-meisters might point out how, for example, 139 US banks have failed to date in 2010, all on President Obama’s watch. In 2009, in comparison, 140 banks failed, while just 25 failed in 2008.
“Who is this President to smear us for alleged economic mismanagement, when he himself hasn’t been able to staunch the flow of bank failures?” Republicans will sneer.
There’s a time and a place for this sort of typical Washington intramural gamesmanship and rhetoric-mongering. The bank failure file is too important an issue, however, for it to become a mere political football. Preservation of recession-ravaged banks (particularly community banks) is vital to American economic recovery.
Unfortunately, that’s what may well happen later this coming Friday, if the Federal Deposit Insurance Corporation (FDIC) has to close additional banks. That would push the number of failed banks for 2010 past 2009’s total.
That’s a grim economic milestone for the Obama Administration. If it comes, President Obama (or at least his spokespeople and advisors) can expect to be pressed to comment and to provide insight on what is being done to slow down the rate of failures.
Democrats may not like it, but it’s not being unfair to the President to give him a low grade for his silence on the bank failure file. For one thing, he shouldn’t have left all the talking about bank failures to FDIC chief Sheila Bair or the Financial Crisis Inquiry Commission.
He’d be in a much stronger position on this issue if, earlier on in his tenure at the White House, he’d pressed Congress harder on holding public hearings on bank failures The House of Representatives’ Financial Institutions and Consumer Credit subcommittee would have been the perfect venue for this.
The President could have urged Congress to call CEOs, senior executives and board members with links to failed banks to testify, to explain how and why so many US financial institutions of all sizes plunged into risky real estate loans to developers.
A good public grilling of greedy bank executives for playing fast and loose with the health of so many American banks is long overdue.
More than this – the President could also have pushed Congress to take testimony from the small investors who have lost money due to community bank failures, plus the bank employees left jobless.
By pushing for hearings on this scale, President Obama would truly have harnessed the “bully pulpit” of the Presidency to one of the top economic issues of the hour. No one could accuse him of indifference, or trying to sweep bad news under the rug.
The President could have done this, but he didn’t. (Maybe he went along with lousy advice from some dim-bulb economic advisor.) Now he has to get ready to face the music, perhaps as early as this Friday — when the FDIC usually announces the latest bank failures, and the questions start to come in.
