Mary Bottari's blog

The President took on Wall Street Thursday. Stocks plummeted, consumer activists cheered. Now we are talking.

Obama's throwdown comes hard on the heels of Tuesday's special election in Massachusetts in which public outrage over the bank bailout and the state of the staggering economy played a major role. As we reported yesterday, Republican Scott Brown seized the democratic stronghold by billing himself as a man of the people and using public dismay with the Wall Street bailout to his advantage on the campaign trail. On Thursday, Obama showed he got the message.

For the first time, the President's narrative directly blamed Wall Street for the crisis and proposed a major structural reform to business as usual. After freeing former Federal Reserve Chairman Paul Volcker from the closet he had been stuffed in at the Treasury Department, Obama brought him out to announce new measures long advocated by Volcker.

Massachusetts Attorney General Martha Coakley lost her special-election for the Senate seat vacated by the untimely passing of U.S. Senator Edward Kennedy. Much has been said about the role of health care reform in the race. Apparently everyone in Massachusetts has health care and reasonable doubts about an expensive national plan that might not improve their services.

But in the final days -- lagging in the polls -- the race was less about health care and more about the Wall Street bailout and the state of the economy. Her opponent, Scott Brown, successfully capitalized on the bailout blues and Coakley pulled out the big guns and resorted to a theme she perhaps should have emphasized throughout, bashing the big banks.

On Friday, the Wall Street Journal reported that President Obama's signature financial reform, a Consumer Financial Protection Agency (CFPA), was in trouble in the Senate.

Senate Banking Chairman Chris Dodd (D-Conn.) was considering dropping the idea of creating an independent, stand-alone consumer protection body, empowered to crack down on banking abuses, in order to get a regulatory revamp passed this year with bipartisan support. Dodd is apparently considering shrinking the CFPA into a division of an already existing federal agency (no doubt one with a proven track-record of failing consumers.)

Dodd is faced with a dilemma. Although he introduced a rather strong financial services reform bill in Congress last year, one which creates an independent CFPA, curtails the powers of the Federal Reserve and tackles many Wall Street abuses, it appears his bill is now being chipped away by big bank lobbyists who have spent millions fighting reform.

U.S. Attorney General Eric Holder appeared before the Financial Crisis Inquiry Commission today. He cited his strong statutory authority to go after the firms that had a role in the worst economic disaster since the Great Depression. His team was tackling securities fraud, accounting fraud, financial discrimination and fraud related to the stimulus bill. It was an impressive list, but what was not impressive was the first case he touted – Bernie Madoff.

The top bankers that were called to testify before the independent Financial Inquiry Crisis Commission in Washington today touched on the drama of the September 2008 financial crisis. They complained of nervous anxiety and sleepless nights. They didn't apologize for a thing, but they did -- to a man -- express their deep appreciation to the American taxpayer for saving their hides.

So how are the big banks treating those taxpayers these days? Almost every banker touted his firm's voluntary housing loan modification efforts to help families facing foreclosure. Jamie Dimon of JP Morgan Chase, for instance, cited 570,000 new trial loan modifications and 112,000 permanent modifications.

The independent Financial Crisis Inquiry Commission got underway this morning in Washington. The commission was authorized by Congress to get to the bottom of the causes of the financial crisis and produce an independent report, much like the 9-11 commission.

The Banksters will be testifying under oath in Washington, DC, before the independent Financial Crisis Inquiry Commission. First up, heads of Goldman Sachs, Bank of America, JP Morgan Chase and Morgan Stanley. This testimony can be seen live on the Financial Crisis Inquiry Commission website and at C-Span. Will the Banksters bluster? claim innocence? or apologize for their role in the crisis? Stay tuned.

Today the Washington rumor mill sprang into overdrive as word trickled out that the Obama administration was thinking of applying some sort of fee to banks in order to take back bailout dollars and fund deficit reduction. Here at BanksterUSA we are thrilled that the Obama team has joined our "Repo the Dough" campaign and urge it to apply a financial transaction tax to destructive stock market speculation. A one time tax on bank bonuses simply will not suffice.

All eyes are on Wall Street this week as the big banks get ready to report their earnings and bonuses. Rebounding banks are preparing to pay out bonuses that rival those of the pre-crisis boom years.

During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation.

The Geither to Goldman clock keeps on ticking. New revelations about Secretary Geithner's mishandling of the AIG bailout while head of the New York Fed have once again set his stock plummeting in Washington, DC and fueled talk that Geithner is a liability to the Obama adminstration.