Posted by WARREN MOSLER on January 24th, 2010
Jan. 22 (AP) —President Barack Obama said on Friday that regulatory oversight of the country’s banks might now be erring too much on the side of caution, potentially hindering the flow of credit to small businesses.
This is definitely the case. It’s called regulatory overreach, as previously discussed on my website.
“The banks feel as if regulators are looking over their shoulder, discouraging them from lending,” Obama told a town-hall style meeting in Elyira, Ohio during a trip to promote his jobs and health care policies.
Obama said it was not his intention to interfere with bank supervision. But he had told Treasury Secretary Timothy Geithner to make sure that the country has not “seen the pendulum swing too far”, with regulators now being too tough after being too slack in the past.
Including the risk weight rules that require non senior impaired securities to functionally be marked at 0.
On other issues, it was a combative Obama that exhorted Congress to pass a new job-creation bill, taking a populist appeal to America’s recession-racked Rust Belt in an effort to recapture the excitement of his campaign.
Obama weaved us-against-them rhetoric into his appearances, telling a town hall audience that he “will never stop fighting” for an economy that works for the hard-working, not just those already well off.
He said a jobs bill emerging in Congress must include tax breaks for small business hiring and for people trying to make their homes more energy efficient — two proposals he wasn’t able to get into a bill the House passed last month.
He also pitched fiscal responsibility and deficit reduction. Not sure how he proposes to do both, as below.
And he used the word “fight” or some variation of it over a dozen times. The House-passed $174 billion stimulus package faces a stern test in the Senate, in part because it is financed with deficit spending.
He strongly defended unpopular actions he has taken to bail out banks and insurers and to rescue automakers from collapse. Such measures have not gone over well in many quarters, and have been derided as moves that expanded government intervention and swelled the deficit.
The measures were seen as a helping hand for Wall Street while many on Main Street walked the unemployment lines.
Obama said that propping up the financial industry was as much about regular Americans as wealthy bankers. “If the financial system had gone down, it would have taken the entire economy and millions more families and businesses with it,” he argued.
As before, he states his belief in a top down solution.
Similarly, allowing GM and Chrysler to go under might have satisfied calls to force businesses to reap the consequences of bad decisions.
Cleaning up Chrysler to hand it over to Fiat to import Fiats to compete with GM seems a confused strategy to me.
But he also said, “Hundreds of thousands of Americans would have been hurt, not just at those companies themselves, but at other auto companies and at their suppliers and dealers, here in Ohio, up in Michigan, and all across this country.”
Missing the macro benefits by seeing only the very micro results in sub optimal solutions.
“He’s done a lot, but they are all negative things,” said Ray Angell, 65, of Twinsburg, Ohio, a conservative active in the anti-tax Tea Party movement, mentioning the stimulus package and climate change proposals.