Thursday, May 3, 2012

Frontline on PBS Pt. 2

There is an interesting theme running through the second part of Frontline’s Money, Power and Wall Street. And it is this: Obama, while publicly stating that he wanted to crack down on Wall Street’s excesses, privately did very little to shake the banks down. I don’t know if I agree with this assessment, but it’s a central argument that the filmmakers have honed in on.

During 2008, Obama campaigned hard on the idea that the economy was broken. He held himself up as the candidate that could take on the financial industry. After the election, Obama was immediately faced with the difficult job of picking a treasury secretary. Reformers in Obama’s interim administration pushed for the nomination of Paul Volcker, a known critic of the banking industry and the former head of the Federal Reserve. Instead of picking Volcker, though, Obama picked Tim Geithner, a moderate who viewed financial regulations as outdated but in no real need of restructuring. The pick please The Street, but liberals were seethed by the decision. In another nod to maintaining the status quo, Obama picked Larry Summers, Clinton’s former treasury secretary, to be his chief economic advisor. While Obama made the reasonable argument that he wanted a team of advisors that could hit the ground running, in picking Summers to head his economic roundtable he was hiring one of the people who helped dismantle Glass-Steagall, the depression era law that mandated a separation between investment banks and commercial banks.

According to the documentary, Obama and Geithner developed a strong mutual respect. When Larry Summers, Geithner’s old mentor, urged Obama to break up the nation’s two largest banks, Geithner immediately opposes the idea vehemently. The film recounts an epic six hour death match between Geithner and Summers over the issue. Obama eventually sides with Geithner. Later, Obama aides counsel Obama to push out Ken Lewis (at the time the CEO of BOA), but Geithner successfully convinces Obama that a move like that would scare the market. What is even more surprising is the fact that Geithner was able to persuade the president on these issues at a time when the media was calling for Geithner’s own head.

In a broad sense, the film portrays Obama as campaigning on a message of reform, but when it comes time for decision making, erring on the side of caution by maintaining the status quo. Of course, this portrayal of Obama could be completely inaccurate. It’s certainly not inconceivable that the filmmakers had preconceived notions of who Obama is and made a movie to match those preconceptions!