March 2, 2015

JOEL KOTKIN: The Empire Strikes Back.

In his first six years in office, President Obama has performed well for those who wrote those checks. He brought in Wall Street insiders such as Timothy Geithner and Larry Summers to concoct his economic policy, which brought a recovery to the financial plutocracy before virtually anyone else. Wall Street was back by 2009; the rest of us have had to wait for 2015.

Obama and the Democrats in Congress also handed the big banks a nice gift in the form of the Dodd-Frank Bill which helped them achieve that “too big to fail” status and has accelerated the growing consolidation of the American financial system. Indeed, since Dodd-Frank was passed smaller banks’ share of banking assets has dropped twice as quickly as before, notes a recent Harvard Kennedy School of Government study. Smaller and community banks – historically more likely to loan to small businesses – have seen a 50 percent drop in their share of lending while the the five largest banks now control over 40 percent of lending, twice their share 20 years ago.

The big banks were saved as well by Attorney General Eric Holder’s decision not to engage in tough prosecutions of Wall Street’s biggest malefactors, in part, he explained, due to their enormous size.

Essentially, he has argued the giant banks, nurtured by the government, are too big to not only fail but see their executives placed in the docket.

To be sure, President Obama’s occasional populist rhetoric did offend many on Wall Street, which in 2012 shifted much of its support to former Massachusetts Gov. Mitt Romney, who, after all, was one of their own. Obama still did fairly well on Wall Street. In his two campaigns he ended up raising almost twice as much from Wall Street as his predecessor, George W. Bush.

Now that there are no new campaigns to fund, Holder is beginning to discuss prosecutions of grandees again, no doubt unsettling some on Wall Street and its associated hangers-on. But, even so, Treasury remains under the thumb of yet another insider, former Citibank executive Jacob Lew.

Yeah, if you want the big banks controlled, you’re better off voting for a non-establishment Republican.

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