Words for Main Street
The banks won’t get it. But maybe more of the American people will.
President Barack Obama’s young administration has barely muddled through the murky banking crisis this past month, sending a message of indecision to financial markets that detest uncertainty. The financial industry heard nothing from the president in his speech to a joint session of Congress that gives it the details it demands of his plan to stabilize the financial system and possibly nationalize (Obama determinedly avoided the word) some very big but very weak banks.
Wall Street cannot be satisfied with a presidential speech that is meant to be heard and understood on Main Street -- nor should it be. But perhaps Obama made some progress in blunting the populist fury over billions in bank bailouts and, yes, his own controversial formula for helping homeowners with mortgages they can’t afford to pay.
For the first time, the president took a teachable moment on the banking crisis and used the instructional time fairly well. He told the nation that the flow of credit is the “lifeblood of our economy,” that without the ability to get a car loan, a student loan or a mortgage -- and without lending to business that allows for companies to “stock their shelves, farms to buy equipment and businesses to make payroll” then the recession will be deeper and longer than anyone can now imagine.
All true, but for one lapse: The president described the bad loans that are clogging bank balance sheets as having “made their way onto the books of too many banks.” Well, not quite. The loans didn’t “make their way” onto balance sheets on their own. The banks willingly lent the money and Wall Street investment houses purchased the risky debt, re-packaged as securities that were questionable because of the shaky mortgages stuffed inside.
But why quibble? At least Obama prepared the ground for what we can only hope will be a stronger performance by Treasury Secretary Timothy Geithner when he does give more details on the administration’s bank rescue plan.
Posted by: sellingpencils | February 24, 2009 11:38 PM | Report abuse
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