I agree that the banks have no one to blame for their actions but themselves, but you can’t deny that their actions only came after decades of deregulation of the finance industry, which made much of what they did legal.
The administration responded by re-regulating the sector.
And Dodd-Frank reform has had an impact: Systemically large (“too big to fail”) financial entities are facing greater scrutiny, banks must meet higher reserve ratios, pass stress tests, and make out ‘living wills’ in the event of their failure, the Volcker Rule limits proprietary trading by banks, and a consumer financial protection bureau roots out fraud and abuse.
And Dodd-Frank regulates not just the commercial banks but the entire financial sector. It is one reason why General Electric is selling its financial arm – GE Capital – to avoid the scrutiny and tighter regulations imposed on Too Big To Fail institutions.
And it’s why Metropolitan Life Insurance – Metlife, with the cute commercial featuring Snoopy – is fighting its designation as a Too Big To Fail institution by the federal government.
So, you can credit Obama for ‘breaking up’ GE’s huge $200 billion financial conglomerate – which does not even include their credit card division, which will also be sold for additional billions – and for putting the pressure on the financial powerhouse Metlife.
And that’s the idea behind the Dodd-Frank stealth sledgehammer: the larger the bank, the more stringent the regulations. Instead of busting them up, we’ll encourage them to separate. Some mega-banks are already considering spinning off divisions to get out from under the scrutiny.
You can also credit Obama for squeezing more than $150 billion in fines and penalties from the banks, and for squeezing Fannie Mae and Freddie Mac for more than $200 billion.
Lehman Brothers’ collapse, and the failures of Wachovia, Washington Mutual, and Countryside – among the most active sellers of exploitative sub-prime mortgages, and none of them in the Top 10 – led to a panic which resulted in the Crash. When these firms collapsed, the government prevailed upon the biggest banks to absorb them so as to contain some of the damage caused by a systemic failure – which partly accounts for the fact that some of the largest financial institutions are now larger than they were in 2008.
Yes, what JFK did with the steel companies was brave, and in the same vein of what President Obama did in the aftermath of the Gulf oil spill: call for a multi-billion damage pool to avoid a replay of the Exxon Valdez aftermath, which dragged on in court for 20 years after which a judge decimated the initial damage award.
Also brave was getting the U.S. auto firms to double fuel economy in their cars and trucks over the next decade, and issuing regulations limiting emissions in coal-powered electric power plants.
The state exchanges are for the purchase of private insurance and are separate from Mediaid, which is a true single-payer system for the poor and working poor. And for what it’s worth, several Republican-led states have agreed to expand Medicaid.