Tea Party For Two

Is the Democratic Party obsolete?
That’s the question that keeps nagging me as I watch President Obama and the Democratic leadership fumble away their opportunities to fight for meaningful reform of health care and the financial system.
The president and congressional leaders consistently shy away from fighting for reforms they themselves propose, such as the public option or the consumer financial protection agency.

They obsess over whether someone will accuse them of partisanship, or whether they will spook the markets if they crack down on reckless profligate bankers. They appear to find any excuse to avoid pushing the kinds of fundamental of changes that would challenge the health care and financial industry.

I don’t think you can blame the Republicans, whatever their own faults. They oppose reform. They’re fighting Obama and his policies as a way to regain power. They’re pursuing that opposition determinedly, and they’re betting it will pave their way back to a majority. It’s not the Republicans’ fault if they set traps for the Democrats and the Democrats continually fall for them.

Members of the Democratic leadership have shown profiles in cowardice when it comes to fighting for any reforms opposed by the insurance or financial industries. In the latest display, House and Senate leaders are furiously trying to blame the other for the death of the public option, even though it’s supported by a majority of Americans and even 40 members of the U.S. Senate.

But the insurance companies have fought the public option, which would provide those forced to buy health insurance under reform an alternative to private insurance. So the Democratic leadership has shown determination to find a way to eliminate the provision without leaving their fingerprints on the corpse.

The same with financial reform, where the Democrat leadership has zigged and zagged but hasn't won the fight for strong independent consumer protection or meaningful regulation of the complex investments that blew up in the meltdown. Sen. Chris Dodd, the long-time friend of insurers and financial titans who serves as Senate Banking chair, flirted with a strong reform proposal when he was running in a tough reelection campaign. But he backed off after he decided to retire and now appears ready to resume his traditional role in service to the bankers’ lobby. As an industry publication recently noted, insurance companies will miss Chris Dodd.

The Democratic leadership don’t seem to stand for any strong principles.
The president and Democratic leaders pay only lip service to the deep anger in the country over the erosion of the middle class, and the bank bailout that pumped up Wall Street while leaving Main Street on life support. The Democrats fear that anger because they know that their own Wall Street-friendly policies have helped fuel the series of speculative bubbles that brought prosperity and then a crash that wiped out the financial security of millions of Americans.
The president and his party are banking that the economy will improve enough by later this year, and 2012, to blunt voters’ anger.
If it does, the Democrats will claim credit for setting the economy right without having unduly upset their contributors in the financial and insurance industries. Even better for the Democrats, they will be able to bolster their fundraising by showing how they hung tough against the call for stronger reforms.
The Democrats came into office promising not to “waste a crisis.” But their efforts to reform health care and the financial system and to put Americans back to work have shown a distinct lack of urgency.
Could there be another way?

Obama will face voters on the 100th anniversary of the last presidential election in which a third-party candidate beat a major party candidate. The third-party candidate was a former president, Teddy Roosevelt, running on the progressive Bull Moose ticket promising to bust up the powerful big corporations of the day, known as trusts. Roosevelt was angry that the president who followed him, Republican William Howard Taft, hadn’t followed in his activist political footsteps. The former president was not afraid to show his ire, calling on his followers to launch “a genuine and permanent moral awakening.”
Taft, for his part, favored a laissez-faire policy toward business and regulation that resonates with the era that we’ve been through. “A national government cannot create good times,” Taft said. “It cannot make the rain to fall, the sun to shine, or the crops to grow.” But by meddling, government could “prevent prosperity that might otherwise have taken place.”
Sound familiar?

Roosevelt lost the election to Woodrow Wilson, but he got more votes than hands-off Taft.
Today the tea party is rumbling on the right, threatening revolt against the Republicans. There’s already the beginnings of a coffee party. If the economy doesn’t cooperate with the Democrats, the tea party’s discontent could be just the beginning of the end of the two-party stranglehold on our government.

Innovation Just Isn't What It Used To Be

When Wall Street wants to get out the big intellectual artillery in the argument against strong financial reform, they haul out innovation.

Regulation will strangle innovation, and we can’t have that, the financial titans contend. Innovation is the strength of America, without it we will lose our competitiveness, yadda yadda yadda.

But over the past several decades financial innovation has focused too much on mathematical models and not enough on a vision of improving the country and people’s lives.

Selling mortgages with exploding balloon payments doesn’t qualify as innovation; it’s a cruel trap.

The recent version of financial innovation, complex investments and gambling vehicles like derivatives and credit default swaps, no doubt made many bankers wildly rich, but these “weapons of mass of financial destruction,” as Warren Buffet labeled them back in 2003, also planted hidden, little-understood land mines of risk that helped create the financial crisis when they blew up.

It’s no longer just the pitchforks that are questioning the value of these innovations. Paul Volcker, the former Fed chief born again as the lone voice for meaningful financial reform in the Obama administration, recently said the only modern innovation that brought real benefit to people was the ATM card.

And the financing of innovation in the rest of the economy isn’t faring any better.

A couple of top economists, including a Nobel Prize winner, weighed in recently with a scathing view of the financial system in the Harvard Business Review.

Edmund S. Phelps (the 2006 economics Nobel winner) and Leo M. Tilman, both of Columbia University, wrote in the January issue [no link]: “The current financial system is choking off funds for innovation...Outdated accounting conventions and inadequate disclosures make it impossible to evaluate the business models and risks of financial firms. Excessive resources are allocated to proprietary trading, to lending to overleveraged consumers, to regulatory arbitrage and to low-value-added financial engineering. Financing the development of innovation takes a back seat.”

To finance opportunities in clean and nanotechnology that the current financial system is ill equipped to serve, the authors propose a government-sponsored bank of innovation.

The bank bailouts have no doubt soured people on the notion of the government in the banking business and rightly so.

But this hasn’t always been the case.

It’s worth remembering that the greatest financial innovation of the past 70 years was a government-sponsored program called the G.I. bill.

I heard about the G.I. bill growing up because it financed my dad’s education after he returned from World War II. Many others got help with home loans.

Ed Humes, an author and former Pulitzer Prize winning investigative newspaper reporter, has written a splendid account of the G.I. bill, “Over Here.” It captures how individual lives as well as the entire nation was shaped by the ambitious program.

The idea of a massive program to help veterans was first articulated by FDR, in part to prevent a reoccurrence of the bitter 1932 Bonus March, when angry World War I veterans and their families descended on Washington, D.C. to demand promised benefits. The government response was a fiasco – soldiers were ordered to fire on the persistent veterans. Nearly 10,000 were driven from the veterans’ encampment; two babies died. The resulting stink helped Roosevelt defeat the sitting president, Herbert Hoover.

I spoke with Humes about the history behind the G.I. bill.

The proposal faced stiff opposition from the financial industry and the education community.

“They argued that the average Joe returning from World War II was capable of being neither a college student nor a homeowner. The bill was basically rammed through over their objections, because of a combination of altruism and fear.”

It didn’t hurt that the bill was created by the American Legion, a conservative veterans’ group.

The G.I. bill was an overwhelming success, not only for the veterans but the college system, the building industry (it helped create the suburbs) the economy at large and the banking industry as well (it created the modern mortgage industry). “For every dollar spent,” Humes said, “seven was returned to the economy.”

Humes draws a direct connection from the G.I. bill to today’s bailouts. “They had a dead housing market, it had never recovered from the Depression. But did they throw money at the banks? No. They encouraged people to buy homes.”

The G.I. bill shows what’s possible when those who are governing possess large vision, heart, will, persistence – and fear. No mathematical model can come close.

Obama to Bailout Cop: Beat It!

The Obama administration, which has increasingly been adopting a can’t do attitude when it comes to putting real teeth into financial regulation, now wants to take out the teeth already in place.

Treasury officials are signaling they’d rather not have the same aggressive special inspector general overseeing the $700 billion federal bailout anywhere near their new $30 billion bank subsidy to encourage lending to small business.

I wrote about that inspector general, Neil Barofsky, a couple of weeks ago, suggesting he was one of the few public officials actually trying to protect our money rather than just acting as a rubber stamp for Wall Street’s raid on the U.S. Treasury.

Barofsky has issued a series of scathing reports raising questions about federal officials’ handling of the Troubled Asset Relief Program.

Treasury officials contend that although the $30 billion would come from unspent TARP funds, it’s technically not TARP. So Barofsky should butt out. Their real reason for not wanting Barofsky around is simple: the banks don’t like him looking over their shoulders.

You can’t blame the banks for that. No doubt it’s a lot more fun to spend your federal handout without some nosy former federal prosecutor scrutinizing every move you make.

But for the Obama administration to go along with it is troubling and baffling. The president promised an unprecedented level of accountability, understanding that openness would go a long way toward restoring credibility in the financial system and the government’s ability to oversee it.

But Treasury officials appear to be more concerned with keeping the bankers happy than they are with keeping them honest.

The news about Barofsky surfaced as the administration appeared to be backing away from its recent embrace of former Fed chief Paul Volcker, who favors limits on bank size and risky financial trading. Predictably, the financial titans were balking at the proposals.

The administration’s move against Barofsky is both bad policy and bad politics. It seems designed to hand live ammunition to the mistrustful antigovernment troops of the Tea Party.

Meanwhile, Congressional Democrats have been quiet on the issue. The president and the Democrats have accomplished what at one time would have been seen as a nearly impossible task: handing the mantle of accountability and openness over to Republicans, who are howling with outrage over the idea of keeping Barofsky away from the small-business lending subsidy.

Rep. Darrell Issa, R-Ca., said earlier this week: “Denying SIGTARP the ability to defend taxpayers sends a chilling message that IGs who conduct real oversight will be punished for holding this Administration accountable.”

At the very least, the administration needs to come to its senses and regain its commitment to transparency. Let Barofsky do his job. The administration should be paying better attention to his criticisms, not trying to get rid of him.

Strong Financial Consumer Protection Not Optional

While a key Democrat has been wobbling in his support for an agency to protect financial consumers, President Obama and members of his administration have recently come out strongly in support.

But will they fight for it in the face of relentless opposition from bank lobbyists, Republicans and Blue Dog Democrats?

The Obama administration’s abandonment of the public option in the health care debate provides a grim omen for the financial reform battle.

Some have compared the public option to the Consumer Financial Protection Agency. Both enjoyed broad public support but have been fiercely opposed by the businesses they would challenge: insurance companies fought hard against the public option while financial institutions fiercely oppose the consumer protection agency.

Aside from industry opposition, the public option and the CFPA shared the potential to provide a shield for consumers against abuses.

At various times, the president also supported the public option. Today his spokesman said the public option just didn’t have the votes. But that assessment was something of a self-fulfilling prophecy. There’s little evidence that President Obama put much pressure on legislators in support of the public option, and his ambiguity in public didn’t help it, either.

After initially supporting the public option, the president signaled it was not a crucial aspect of health-care reform.

But the public option offered the only potential check on the insurance companies, which are about to get a glut of new customers forced to buy policies from them. Democrats are suggesting a tepid combination of subsidies and insurance cooperatives that won’t provide meaningful accountability for the insurance companies.

Now Republicans are digging in their heels in opposition to the CFPA, with the usual rhetoric about wasteful government bureaucracy. It’s nothing but a thinly disguised fundraising pitch to woo the financial industry back from Democrats. Chris Dodd, soon to be retired head of the Senate Banking Committee, has suggested the consumer protection function might co-exist within some other agency. That’s a very bad idea. Just look at how much consumer protection the Federal Reserve, Treasury Department and other agencies accomplished in the housing bubble and its aftermath.

If that’s not enough to convince you, look at the recent shenanigans by banks and credit card companies piling on new fees.

The New York Times reported this morning how banks are getting ever more aggressive in socking their customers with higher over-draft protection fees. Credit card companies, even in the face of new regulations, are finding new ways to gouge their customers, charging fees for paying off your card on time, or even charging fees for not using a card.

There’s nothing stopping the Treasury and the Fed from using their bully pulpits to rail against these continuing abuses now. But they don’t. They ignored warnings about predatory lending during the housing bubble and have shown no stomach for protecting consumers since the economic collapse.

Dodd is supposed to unveil his latest version of financial reform this week. Let President Obama and your senators know that you won’t be fooled by financial reform in name only. Whether President Obama is capable of staying the course we don’t know. But we do know we need a strong, independent Consumer Financial Protection Agency.

Good Riddance to a Bipartisan

Let's take a closer look at one of the most overhyped buzzwords in politicspeak: bipartisanship.

Especially as it relates to the battle for financial reform, the call for bipartisanship threatens to drown the entire debate in meaningless twaddle.

Take for example the retirement announcement by Evan Bayh, who said he was calling it quits because he just couldn’t take how politically divided the Senate had become. Nearly the entirely Washington establishment, including the press corps went into a mad swoon over Bayh, lamenting the sad lack of bipartisanship.

I shed no tears for Bayh, a member of the Senate Banking Committee who was MIA in the debate over financial reform, and was among those moderate Democrats who was expected to oppose one of the most important proposals: creation of a stand-alone financial consumer protection agency.

Bayh did lead a group of Democrats whose idea of leadership was compromising with Republicans during the Bush Administration. What really got Bayh’s juices going was fiscal discipline and budget-cutting. Now that the Republicans have shown that they have no interest in reciprocating Bayh’s spirit of compromise, he’s got no one to play with in the Senate.

It was left to the astute cable TV comedian, Bill Maher, and a lone blogger on the Huffington Post to identify Bayh, for what he really is: A Democrat who represents corporate interests in the U.S. Senate.

During his 20-year political career, Bayh was a fundraising juggernaut. As far as I can tell, no one in the mainstream media dwelled on the $26.6 million in campaign contributions Bayh garnered, as reported by the Center for Responsive Politics. His top contributor was not from Indiana. That would be the financial giant Goldman-Sachs, which ponied up more than $165,000, edging out the drug company Eli Lily for the top spot. The third top contributor was Indiana-based Conseco Inc. an insurance company. Another bailout beneficiary, Morgan Stanley, was right up there too, with more than $81,000 in contributions.

Finance and securities was the second largest industry in contributions to Bayh, outdone only by corporate law firms.

Freed from the constraints of politics, Bayh’s first act after announcing he wouldn’t run again was to stick up for one of his beleaguered constituents – the student loan industry. The administration is proposing to stop subsidizing that industry and loan directly to students. Bayh’s against that, concerned that Indiana-based student loan servicer Sallie Mae will lose jobs.

If this is bipartisanship, it’s exactly what’s wrong with the Senate, where health care and financial reform are now gasping for life, in the stranglehold of supposed centrists like Bayh and another retiring Democratic senator, Chris Dodd of Connecticut. Dodd is also a top recipient of contributions from the financial sector. You have to wonder whether Bayh and Dodd’s next stop will be top lobbying firms, where they can continue to earn top dollar from Wall Street.

We don’t need more compromise with Goldman-Sachs and Sallie Mae under the guise of bipartisanship. Let’s retire all the blather about it along with Bayh. We don’t need more senators like him who do Goldman Sach’s bidding and then piously whine about the poisonous atmosphere in Washington. We need real reform and we shouldn’t settle for politicians who don’t have the guts to fight for it.

Obama Strikes Out

That didn’t take long.

Just a couple of days after the New York Times reported that Wall Street was unhappy with the return on its massive investment in the Democratic Party; President Obama softens his rhetoric on the big bankers. He told Business Week he didn’t “begrudge” bailed-out too big to fail bankers their bonuses, benignly comparing them to all the top baseball players who earn fat salaries yet don’t make it to the World Series.

“That’s part of the free-market system,” Obama opined.

Obama knows some of the bankers personally, he tells Business Week, and finds them “savvy businessmen.”

Before the bankers complained publicly about their lack of return on campaign contributions to Obama and the Democrats, the president had recently been trying out a tougher stance: suggesting “too big to fail” banks, their risky behavior and the fat bonuses that fuel it should be reined in.

President Obama has been consistently inconsistent in the fight over financial reform. He’ll make strong proposals one day (judicial cram-downs to help homeowners in foreclosure, for example) and then leave them to die without his support in Congress under withering assault by bank lobbyists. He’ll blast the bankers’ bonuses one day and cozy up to them the next. It was less than a month ago that the president labeled the bonuses “obscene” and pledged to tax them.

By contrast, the bankers have been relentless and shrewd in their fight to delay, confuse, stymie and water down attempts at reform. They have fought in the back rooms, in the media and the floors of Congress, using checkbooks and rhetoric.

The president is spot on, however, when he refers to the remaining big bankers as savvy. After they wrecked the economy, they didn’t waste the financial crisis. They’ve come back bigger and stronger than ever, with fewer competitors, with a firm grasp on a steady pipeline of cash from the federal treasury.

For a more clear-eyed view of the bankers, what they’ve been up to and what they have to do, we have Elizabeth Warren, the Harvard Law professor and congressionally appointed bailout monitor. “This generation of Wall Street CEOs could be the ones to forfeit America’s trust,” she wrote Monday in the Wall Street Journal [no link]. “When the history of the Great Recession is written, they can be singled out as the bonus babies who were so short-sighted that they put the economy at risk and contributed to the destruction of their own companies. Or they can acknowledge how Americans’ trust has been lost and take the first steps to earn it back.”

With his wish-washy approach, the president is in his own real danger of losing America’s trust as a champion of reform. Making lame comparisons between ruthless bank CEOS and clueless overpaid athletes doesn’t help the president’s credibility any.

Even the analysts on ESPN Sports Center know that.

Contact the president yourself and let him know what you think of the bailed-out bankers’ bonuses.

Bailout Beat Might Be His Last

Most of official Washington operates in a state of slow-mo lethargy when it comes to working on financial reform.

Not Neil Barofsky, who is saddled with the cumbersome acronym SIGTARP.

That stands for Special Inspector General of the Troubled Asset Relief Program, also known as the federal bailout.

He’s a one-time federal prosecutor who in his former life prosecuted Colombian drug gangs and white-collar criminals.

As one Republican senator told him when Barofsky got the inspector general’s job, if he did his job properly, he’d never be able to get another.

Barofsky seems to have taken it to heart.

Last week, along with New York Attorney General Andrew Cuomo, he filed suit against former top Bank of America officials, charging them with fraud for concealing how bad Merrill-Lynch’s losses were from B of A’s own stockholders while B of A was in the process of acquiring Merrill during the melt-down.

Barofsky also recently launched an investigation into the shady federal bailout of AIG and its counterparties, including Goldman-Sachs.

Meanwhile his regular quarterly reports to Congress continue to pack a punch. He has consistently warned against the administration’s rosy predictions of how taxpayers will benefit from TARP.

He’s focused instead on the continuing dangers of doing nothing to rewrite the rigged rules of the financial game that favor bankers’ bonuses and betting with taxpayers’ money over the interests of consumers and homeowners.

“Even if TARP saved our financial system from driving off a cliff back in 2008,” Barofsky wrote in his most recent report, “absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.”

In fact, the whole focus on whether taxpayers are getting “paid back” is a smokescreen for TARP’s failures. While the administration has touted banks’ repayments of their TARP money, the repayments are backfiring on the administration, giving it less leverage over the banks. Released from their TARP obligations, the banks are free to return to lavishly rewarding their employees for risky trades that rack up short-term profits.

Barofsky, writing in plain language that consumers and concerned citizens can understand, states that while the TARP program stabilized the financial system, it hasn’t met most of its other goals. “Lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury,” Barofsky wrote in the January 30 report. “The TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation.”

Barofsky was appointed by Congress to monitor TARP. Yet Congress has done nothing to hold the current administration accountable for the bailout’s failures. Meanwhile the Senate continues to pursue what appears to be its quest to squelch reform, in direct contradiction of what a majority of Americans want. Specifically Sen. Christopher Dodd appears to be on the brink of negotiating away a stand-alone Consumer Financial Protection Agency, a linchpin of President Obama’s reform plan. The financial industry fiercely opposes such an agency.

Contact your representative and senator today and let them know you support Barofsky’s strong work on TARP. While you’re at it, let your senator know you’re paying attention to the battle over financial reform, and that they should start paying attention to the will of the majority instead of the bank lobbyists.

Less Kabuki, More Reform

Does the president get it yet on financial reform?

Or is his tougher stance toward the bankers part of a kabuki performed for the public while real reform is compromised away backstage?

The politics around the battle for a Consumer Financial Protection Agency are thick with intrigue and shifting positions.

A separate agency is a crucial aspect of any reform because the present regulators have done such a dismal job of protecting consumers’ interests.

We have every right to be suspicious of the president and the Democrats, based on their timidity in fighting for stronger regulation and holding accountable those responsible for the crisis.

The latest cause for doubts stems from the unsavory spectacle of Democrats and Republicans falling over themselves to reassure Wall Street that they are the bankers’ best bet to represent the interests of the financial industry.

Meanwhile, the president appears be jawboning the key Senate author of reform, Chris Dodd. A long-time recipient of Wall Street largesse, Dodd was facing a tough reelection campaign, based on some of his more unsavory dealings with Wall Street. In the midst of that campaign last November, he came out with a tough reform proposal, including an independent Consumer Financial Protection Agency.

But as his campaign looked increasingly hopeless, Dodd decided to retire. Since then he’s been signaling that he wants to back off the independent consumer agency.  President Obama met with Dodd last month and insisted that the independent agency is “non-negotiable.”

President Obama has his own changing political calculations. He originally supported a milder version of bank reform passed by the House. After the Democrats lost Ted Kennedy’s Massachusetts Senate seat several weeks ago, the president all of a sudden decided to haul out his lone financial adviser who has advocated breaking up big banks, former Fed chief Paul Volcker. (Previously Obama had been ignoring him, letting a cast of Wall Street insiders run his handling of the banking crisis.)

Obama, with Volcker by his side, voiced support for breaking up the largest big banks as well as placing some new limits for some of the banks’ riskier activities.

Earlier this week at a Senate hearing, Dodd aimed unusual criticism at the president, questioning the timing of his announcement, labeling the president’s embrace of Volcker’s ideas “transparently political.”

Dodd didn’t stop there: he suggested that the president’s proposals to get tough on the big banks threatened the process of crafting a reform proposal that would get bipartisan support.

Key Republicans have already indicated what that would mean – no independent consumer financial protection agency, for one thing.

The Democrats are caught: The bankers who fund their campaigns are demanding watered-down reform that will ensure business as usual. Angry voters are demanding robust regulation and accountability.

The president has to demonstrate that his embrace of Volcker’s ideas isn’t just a gimmick. He’s got to flesh his proposals out with details and fight for them in public and not compromise them away in the back rooms.

Contact the president and let him know what you think. Let your senator know, too, that you’re tired of political theater. It’s past time for real reform.

Urgent Challenges, Modest Responses

The good thing about President Obama’s state of the union speech is that he acknowledged the public’s anger over the financial crisis.

The bad thing is that he appears to reject it. “Look,” he said. “I’m not interested in punishing banks.”

As expected, the president put the rhetorical focus on jobs and the economy in his state of the union. But the actual proposals, a combination of tax cuts and subsidies were relatively modest. But the combination of his proposed freeze on most discretionary spending and continuing Republican opposition make the possibility of dramatic improvement in jobs and the economy unlikely. The speech didn’t contain the kind of dramatic response that 18 percent real unemployment and a continuing foreclosure crisis demand.

President Obama insisted he would veto any financial reform that wasn’t real. But he didn’t spell out what that might mean. Does that mean he’ll veto financial reform that doesn’t contain a Consumer Financial Protection Agency or meaningful derivatives regulation? The president didn’t say. He also didn’t pledge to fight for any specific reforms in Congress. The only specific he mentioned was his proposed bank fee to recoup costs of the bailouts.

President Obama blames his legislative frustrations on his own inability to fully explain his policies. But the president who has repeatedly promised no more business as usual remains afraid to tap into, and act on, the public’s honest passion for real change.

Obama's 'Hostage' Crisis

Tonight’s state of the union speech will be the least important of President Barack Obama's political career. No doubt it will be a dazzling performance, as the president pivots from pugilistic to professorial, from left to right. We know the president comes through with the rhetoric in the clutch. But the true test of his presidency is no longer what he says he will do or how he says it.

The test is whether Obama and his team wage a credible and effective fight for financial reform and economy recovery for Main Street, with the same vigor and urgency they threw into the Wall Street bailout. That will take more than a speech or even a series of speeches. It will take a real self-critical assessment of the president's strategy up til now and a tough, savvy and sustained political battle plan in the face of significant obstacles.

Both have been lacking in the president's approach so far. That’s the real pivot he needs to make now, and it has only partly to do with oratorical skills.

Obama’s credibility is suffering because he and his team keep suggesting that they have overseen a recovery that most people aren’t enjoying. They helped engineer a bailout that they say was absolutely necessary that helped the financial sector but left out the rest of us. Obama and his team don’t have credibility because they’re working Capitol Hill as hard as they can, not to create jobs for millions of out of work Americans, but to save the job of one of the few Americans who could have helped forestall both the financial crisis and the Wall Street –friendly bailout but didn’t, Ben Bernanke, head of the Federal Reserve.

Sen. Tom Harkin summed up what many people are feeling in reacting to comments from Tim Geithner, Obama’s treasury secretary who had warned that the stock market would tumble if Bernanke were not confirmed.

Geithner was just acting as a messenger boy for Wall Street, Harkin suggested. “How long will our economic policy be held hostage to Wall Street who threaten us that there’ll be total collapse if we don’t do everything they want?  Wall Street wants Bernanke,” Harkin said. “They’re sending all these signals there’ll be this total collapse if he’s not approved. You know, I’m tired of being held hostage by Wall Street.”

Wall Street doesn’t like key planks of the president’s financial reform plan, like the Consumer Financial Protection Agency and his recently announced plan to separate some of the largest bank’s risky business from its more traditional functions. The Senate’s banking committee chair, Christopher Dodd has signaled he’s ready to surrender on the consumer protection agency. Will the president announce tonight how he and his team plan to win that fight when congressional leaders are giving up? Or will the president treat the consumer protection agency and bank size as just details that should be left up to Congress, as he did in the battle over crucial aspects of health care reform?

A different kind of hostage crisis helped bring down a previous Democratic president. All Jimmy Carter had to grapple with were a bunch of Iranian revolutionaries holding 53 Americans in an embassy in Tehran. President Obama’s challenge is much tougher – 250 million people and our entire political process held hostage by some of the world’s wealthiest corporations and individuals. Carter’s hands were tied. Are Obama’s?