Smith Faculty Opinion Article

Peter Morici By Dr. Peter Morici, Professor of International Business
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December 14, 2009 

Obama Talks Tough but Kowtow to Bankers

You got to admit President Obama obfuscates embarrassing facts and pays off his supporters as well as any politician since Huey Long.

He slams health insurance companies, while endorsing heath care reforms that would compel thirty more million Americans to buy their policies or face a poll tax.

Now he slams the bankers for paying themselves $140 billion in bonuses.

Those bonuses were "earned" trading derivatives and other engineered products with the more than $2 trillion in cheap credit provided by the Federal Reserve, TARP and other Washington largess. Meanwhile, bankers denied worthy homeowners opportunities to refinance mortgages and solid small businesses credit.

How much is $140 billion?

The U.S. economy grew at a $89 billion annualized rate in the third quarter. That was the first growth since the second quarter of 2008 and came to $22 billion in actual growth in the third quarter.

The bankers, after causing the greatest economic calamity since the Great Depression, are rewarded with six times the growth accomplished so far in the much heralded "economic recovery."

Meanwhile, seven million families face foreclosure and 25 million Americans can't find full time work.

White House economist Christina Romer says we are still suffering the fallout of the recession, but with those bonuses, it will be tough to find pain on Wall Street this holiday season

In Britain, the Prime Minister is imposing a special one-time claw back tax that will take 50 percent of bankers bonuses.

In America, the bankers get a scolding from President Obama.

It is no accident that these same bankers are among the largest contributors to Democratic congressional and presidential campaigns.

Hey, the bankers know how to invest, and the president knows how to take care of his friends.

Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.