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What Obama Should Tell Wall Street
Henny Ray Abrams / AP Photo
The president comes to New York for a fundraiser tonight, and Charlie Gasparino says it’s time for him to give the bonus billionaires tough love and end bailouts.
By most press accounts, President Obama’s friends on Wall Street— those brilliant minds who helped him get elected by funneling millions of dollars to his campaign while they were setting the stage for last year’s financial meltdown—are boycotting tonight’s fundraiser in Manhattan.
And who can blame them? It’s not that they don’t have the $30,000 to purchase a table given all the bonus money sloshing around Goldman Sachs and the other big banks this year. But why bother throwing away good money when your guy has already delivered as much as he can anyway?
Our financial titans don't need to give more money to Obama because they already have their man locked down.
After all, Wall Street is Wall Street again. The banks are making money; the bonuses are in the billions.
Amid all of this, why would anyone on Wall Street, except those few brave souls still on the Obama bandwagon, want to listen to what’s destined to be a boring speech about the need for responsibility and restraint in risk taking to prevent another meltdown? That was so yesterday; risk taking is allowing Wall Street to recover.
More than that, our financial titans don't need to give more money to Obama because they already have their man locked down, proof being that amid all the hoopla about those unseemly bonuses at Goldman Sachs and elsewhere, there was barely a peep from the White House about all those subsidies being in danger of disappearing anytime soon.
• Read an exclusive excerpt from Charlie Gasparino’s new bookIt’s a simple fact of life on Wall Street that perhaps Treasury Secretary Tim Geithner or his chief economic policy adviser Larry Summers, who know the Wall Street crowd well, should have explained to their boss early on: When the Street doesn’t need you anymore, or they think they don’t need you anymore, they just ignore you. You become like an old investment banker who loses the perks of his job the minute his best clients go somewhere else.
But alas there's hope for Obama. One of the hallmarks of being a Wall Street executive—or a president, for that matter—is harboring a certain degree of arrogance. Some of these guys have it more than others, but they all have it. And why not? Their arrogance made them think their risk came at no cost—and in the end, they were right.
So here's a way to tell Wall Street there's a cost to being arrogant by putting these guys on notice and feeding following points tonight into his teleprompter and letting it rip as only he know how:
“To my former friends on Wall Street, who somehow forgot that Hope and Change are worthy attributes, I say the following: The bailout days are over. Pay yourself whatever you want; take as much risk as you want, but don’t expect the Federal government to pay for your sins. We’ve been doing that for the last 30 years; each and every time you’ve embraced risk, you expected the government to bail you out, and you were right.
The Right Dumps Carrie
Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
What's Joe's Problem?
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
Geithner's Stock Plummeting
Jeff Madrick is a contributor to the New York Review of Books and a former economics columnist for the New York Times. He is editor of Challenge Magazine, visiting professor of humanities at Cooper Union, and senior fellow at the New School's Schwartz Center for Economic Policy Analysis. He is the author of Taking America, The End of Affluence (Random House) and The Case for Big Government.
The Best Job No One Wants
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Wall Street's Grinch Speaks
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Wall Street Will Walk
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Charlie Gasparino has undergone an intelligence metamorphosis and upgrade. Way to go Charlie!
It now seems that what you were told a year ago (by this commenter) that Stimulus Programs and money to Banks would prove 'a lot less sexy after the fact'...has indeed proven true.
How about a little Bobby Kennedy for you now Mr. Charlie:
"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."
-Bobby Kennedy
Thanks for the Bobby Kennedy reminder magicman..It has been to long since I have read it...
Charlie,
I am an independent candidate for president, and in his own words, this is what Barky Obama should be telling Wall Street. My approach to this issue cannot wait until the next election. It is exactly what we should do, and as you will see, exactly what Obama is incapable of doing.
We used to say, what's good for General Motors was good for America. But today, as America goes, so might go the health of our hemisphere, in not the whole planett. We need to refresh our "cap id a list" structures, and renew our entrepreneurial spirit, else we will be for decades to come, a secondary lender nation, our dollar replaced by other currencies.
Everything hangs in the balance of sense. The president should announce that firstly, we, the people, through our government, are purchasing every mortgage in USA, the good, the bad, and the ugly. Ugly are those mortgages referred to as tock sick.
These residential mortgages can be purchased with Mortgage Savings Bonds, an original innovative financial instrument, not the swap vomit of Wall Streeet or inflationary cold cash, hot off the presses, which we don't have.
The Mortgage Savings Bonds couldn't be cashed until the mortgages are paid, but they certainly could be sold or traded by their holder banks on the open market. Savings Bonds are backed by the good faith of the American people; in this case, Mortgage Savings Bonds backed by real properties on which these proposed innovative instruments would be written.
We pay 85 cents on the dollar for the good, 75 cents for the bad, and 55 cents for the ugly; millions of mortgages, refinanced with thirty-year fixed rates, the interest spread, according to the credit worthiness of the mortgagee, running from 3% for triple A, to 7% for sub-prime, late payers rated deadbeat.
This proposed buyout is a reasonable, yes we can do, beneficial refinance program that will rejuvenate our economy!
Retooling these millions of mortgages, a giant job, can be accomplished with a fail-safe do-it-your self, online program. Those without computer literacy can get their numbers entered by income tax preparers, their fee, Uncle Sam guaranteed.
Every homeowner benefits from a restructured fixed 30 years mortgage at a better interest rate. The world's economy will settle into non-inflationary growth from this mortgage solution.
We can tack a non-interest bearing 2nd mortgage on sub-prime homes that swapped and sold for twice their value, tock sick still, after a 60 percent whack, so people can remain in their sub-prime dream, pay down their debt, and eventually, as prices inch up, their mortgage drawn down, see their liens paid off fair and square, with their equity left intact. This is a healthy way to stabilize sub-prime neighborhoods. A foreclosed house devalues the street.
After our Louisiana styled repurchase, the mortgages on every house in America will be divided amongst bank branches in the same zip codes, for servicing. The ex-mortgage holder banks are compensated for collecting our mortgage payments, on behalf of we, the people, the Mortgage Savings Bond backers.
We let the banks hold 'our' money, twelve payments worth, before they have to begin handing over our ducats to Washington. With a year of mortgage money, banks at the branch level will be flush with liquidity for loans, replacing money their central management's blew on swap speculations.
Branches can provide capital to all the capital hungry businesses in their zip codes or hand the money back! There will be interest on the Mortgage Savings Bonds with which all the home mortgages were purchased. There will be interest on 'our' money, which we are allowing the banks to borrow from us expressly to loan out to all the businesses in their neighborhoods that require capital, so interest we accrue from our trillion-dollar mortgage purchase is washed by immediately using the money!
A couple months ago, our Treasury Secretary stated on This Week, With George Stephanopoulos, "A core part of our plan involves making sure banks have enough capital to provide the lending we are going [slur] need to get recovery back on track"
But the banks used our bailout money to purchase other banks instead of loaning the money! And our treasury Secretary is helpless to do anything about it, nor would he care to step on the toes of his super rich associates.
Now to the interest on these millions of mortgages: The interest goes to Washington every month! The monthly interest on all the home mortgages in USA, could total 300 billion dollars. That is possibly the monthly take. All the income tax collected from taxpayers, their taxable earnings up to 125 grand's worth, might also total the same 300 billion dollars per month.
We don't know, but the numbers might be very close.
The interest on all our home mortgages can replace our income tax, up to the first 125 thousand dollars worth of taxable income! Someone who rents benefits with their income tax dollars in their own pocket to do with as they please, pay down credit card debt, save up for a house, a car, the kid's tuition, pizza.
Keeping your own money is a politic rant all of the American people can endorse.
A working homeowner is freed from paying income tax. The interest on his mortgage goes for our public works, replacing the tax on his hands. DC has operating capital to run the government. We keep what is ours.
Apply this same principal to commercial mortgages, where a renter lives, or shops; where a business has offices. The mortgages are seized, not the property. Mortgage Savings Bonds are a great rock solid investment. This buyout is fabulous for commercial mortgage holders because so many are facing default.
When the next round of mortgage defaults begins, the dollar will further tank, gold will jump hundreds of dollars more, and we will be fast heading down the permanent dead end road of a secondary dead beat lender. But we can avoid that sad situation with this innovative approach, applying the e pluribus unum concept of Public Option to the mortgage default crisis.
The commercial property owner's advantage: their property is purchased, the mortgage in the Government's hands, via Mortgage Savings Bonds, letting the owners off the hook, their option, retain property management, which earns them money. The principal of the mortgage payment goes toward retiring the Mortgage Saving Bonds, the interest to cover the rising cost of living, example Medicare, so life is good for all.
The above program provides permanent income tax relief for our citizenry, toxic asset relief for bogus banks, and effective capital replenishment for the government. With this mortgage innovation in place, other countries will be lining up to invest in America.
180 million taxpayers will vote for these recession stuffing relief measures in a heartbeat because every taxpayer benefits. President Obama should read this essay. His approach feeds the bureaucracies that fed his campaign by printing trillions of dollars in future debt, Obama's risk: a stick of chewing gum will cost our gum chewing electorate more than one dollar plus tax before the next election, his Nobel Prize, a send-home thanks bye bye after one term.
This innovative program bypasses bureaucracies, the only ego inflated creatures on planet earth that both feed on themselves, and multiply. Can you suck on your toe and create two of you? Bureaucracies can and do. Bureaucracies are rigid, appearing unsinkable, though protected by the president, but they must be "sliminated" for planet health.
We need to rearrange how governments generate money so the funds are available to cleanly reenergize our good ship Mother "Urf." The above program is a major rearrangement, a plank in my independent campaign for president. It is a non-partisan solution.
michaelslevinson.com
If you kept it short, I might actually read it.
You are not the issue. The financial health of our nation is.
If is a riff
I wanna good life,
nod, a good if
"if" you read the essay you might learn something.
michelslevinson.com
Charlie, you nailed it. Now if it only would happen in real life.
To make this occur in Real Life is a simple proposal....it is called H.R. 1586, which has been left to wallow in the US Senate since March of this year. This Bill taxes ALL bonuses by 90% for those firms receiving TARP money, whether they have returned the money or not. Stealing from the US Treasury, as Wall St. has done, should come at a price...and a prosecution, the levers of which are already set in the US Senate. It is time to send a message...WE WANT THE MONEY BACK! Enough with the nonsense. You are putting the American Public at risk for life and limb...Balloon Boys included as parents stretch to make the impossible occur in their own Homes and Communities.
You should be ashamed...but you are shameless...so act accordingly and punish those who are at fault, IN PUBLIC, as a warning to those that might think it a good idea to follow in their footsteps.
Nice article Charlie. It is about time someone got it straight. Thanks for listening.
I ask you...who is the real Conservative? Bobby Kennedy, who supports the Conservative ideal which prospers the understanding that 'Life. Liberty and Property' ought be protected (and in that order), or the Race Baiters who are claiming The Right and have no more claim to it than the KKK themselves? That is not 'Conservative'....it is wreckless and destructive to 'our felicity' so commonly spoken of by our Founding Fathers themselves. And then there is the issue of TREASON, which always crops up when deliberate acts against The People are made to stand...when to do so grossly undermines the 'Conservative Principle', seemingly never espoused by those pundits who neither understand what it means nor how to apply it.
Charlie - Where were you a year ago - when your self - evident remarks might have actually made a difference and rendered housing in New York much more affordable?
He was looting the company that employed him and stealing from it's stockholders like all the rest of the greedy wall street management pigs by creating paper he knew was worthless and a liability rather than an asset and using a tortured system of valuing that toxic crap to claim outlandish bonus cash.
Yay for you Charlie! Unfortunately, I don't know if any amount of brilliant articulation is going to scare Wall Street into behaving well.
High frequency trading is, for the most part, nothing more than front ending. So at some point that will be reined in. As for arrogance, it always ends in tears. On Wall Street; in the Oval Office, in the Pentagon, in Moscow, Beijing, Paris, wherever. Read Shakespeare, or the Greek dramatists. Always. The banksters are all crusin for a brusin, as are their lap dogs, Larry, Tim and Co. George Patton
Meanwhile they laugh all the way to the bank AT YOUR EXPENSE, and get bailed out AT YOUR EXPENSE at each bruisin,,,
"Show me the money!!!!"
"Greed is good, it clenses"
"I am the lord thy god, you shall have no gods before me"
"You ask me if I have a god complex... I am god"
"Luca Brazzi sleeps with the fishes"
@ Baddchild
Or, it could be what Christ himself meant in his teaching "You will know them by their name and by their number." Present company included. Some believe in the 'magic' of life, in the inspired and noble cause....others are simply bad children, while being listed as the 'sixth' commenter on a single page. It is not Luca Brazzi who sleeps with the fishes, it is your local Police Department, wafting off of Stimulus Dollars (soon to disappear *poof*) while bedding down your wife for a cold winter's nap.
Now that's "Change we can all believe in!"
Charlie thank you for pointing out to all the libs that defend Obama Bush, that he is on the take from these companies, and has reformed nothing.
Tough love and fundraising don't mix.
Wow Gasparino. Well done and objectively stated. Have you gone independent on us?
Bring it on...
Those on the right, the Becks and the Limbaughs have bemoaned and whined that Obama is a socialist, a communist. Such a notion, to those of us who know what such creatures truly are, is laughable. A socialist would have used the Wall Street meltdown to wrestle control of the banks away from the capitalists and nationalize them, as should have been done. A communist would have put the CEO's and their minions on trial for treason, had them shot, and then nationalize the banks.
I suspect that had he done the latter, Obama would be more popular.
What will he say to Wall Street?
he'll walk up to the podium, he'll look down at the teleprompter,
TOTUS
he'll stand there smile, wave and nod,
TOTUS
waiting.....
TOTUS
"We're all... going to sing" 0bama
TOTUS
"Follow the bouncing ball on the screen behind me" 0bama
... and the crowd breaks out in joyous song....
"Barak Hussein 0bama"
"Mmm, Mmm, Mmm"
"Barak Hussein 0bama"
"Mmm, Mmm, Mmm"......
TOTUS
"Please leave a check on the way out" 0bama
TOTUS
"Goodnight 0bama" 0bama
baaaaaadddchild that was very bad! Look at his eyes. He is wearing eye shadow. Barky Obama wears eye shadow.
Street corner male prostitute, or transvestite. Maybe. POTUS? Nyet!
michaelslevinson.com
wow, sorry, that did not print as it was written
let's try again...
_____________________________________________________
What will he say to Wall Street?
he'll walk up to the podium, he'll look down at the teleprompter (TOTUS)...
(stand there smile, wave and nod) TOTUS
0bama stands there smile, wave and nod
(wait for applause to die down) TOTUS
waiting.....
(We are all going to sing) TOTUS
"We're all... going to sing" 0bama
(Follow the bouncing ball on the screen behind me) TOTUS
"Follow the bouncing ball on the screen behind me" 0bama
... and the crowd breaks out in joyous song....
"Barak Hussein 0bama"
"Mmm, Mmm, Mmm"
"Barak Hussein 0bama"
"Mmm, Mmm, Mmm"......
(Please leave a check on the way out) TOTUS
"Please leave a check on the way out" 0bama
(Say goodnight 0bama) TOTUS
"Goodnight 0bama" 0bama
Charlie,
Maybe I missed it. But I didn't see anything in your OGT (Obama Gets Tough) speech about clawing back the hundreds of billions that have already been given away as bonuses? And threatening to prosecute any other bonus babies until the nation's unemployed get jobs?
Is that a little too tough for even you?
http://www.buythecover.com
At no time prior to last year's awful market, did anyone on wall street depend or use "too big to fail" as part of any business plan. What they did do is rely on the fact they are the best salespeople in the world. The story that was sold was if there is no bailout, then real armageddon, not just financial armageddon, would ensue. Government bought it hook, line, and sinker.
But is it just a story to be sold? No one really knows... Bailouts have happened before. No one knows what the consequences of not doing one would be. Actually, not bailing out Lehman triggered a massive melt down so large that the next day the AIG was bailed out to the tune of 80 billion... its now up to several hundred billion... just for AIG!!
Bailouts are not planned for or expected by anyone, certainly not wall street. If that was the case, then credit to all be free flowing again as it was prior. But that is obviously not the case. Even if Obama or any world leader or any legislative body had the guts to lay it out in actual legislation to ban future bailouts, I'd give next to zero chance of passing. They aren't that foolish so as to completely eliminate a possible solution to future unknown unforeseen problems.
And even if it was somehow passed, I guarantee that there would be a loophole or an easy way out. Seriously, the story sells itself: do you want to see armageddon happen on your watch? didn't think so.
30,000 tickets.Wow who says we are in a Depression. !!Us suckers, working paying our debts,our credit cards and now with Healthcare we are afraid the middleclass will not fit iinto the gov budget,and will be left out in the cold .We wont be able to afford anything they will tripple. us.And there is a fundraising to Rebuild Iraq.!!!Get ahold of that. We are dying here, cannot get 10,000 dollar credit loans to buy merchandise and we are Rebuilding Iraq. and religion tells you to be happy.money is not everything. Ofcourse,but it helps and gives power,opportunity,socializing and free rides.!!We are all turning the new of till Sun. We dont want to hear about it.
Sorry, Charlie, I don't really trust you. I've seen you on CNBC with Joe Kiernan (bad company).
Let me hear you say, "call in the loans".
Great speech Charlie, but about a year too late. Not only that, does anyone really take Obama's threats very seriously?
In the words of Leonard Cohen:
everybody knows the fight was fixed,
the poor stay poor, the rich get rich,
that's how it goes, everybody knows"
Nice article,but if all the usual elite Wall Street scum is avoiding President Obama's fundraiser that must mean that those who do pay the $30 grand "donation" are the new ,up-and-coming crop of scum that are looking to buy influence for scumbag financial moves they hope to pull off in the future.What a scam,the whole thing,top to bottom.He'll never be hard on wall street,he is wall street! I say lock them all up while we got them in one room! It'll save us all a lot of grief in the future.
Obama's presidency:
1. Imitates Jimmy Carters embrace of dictators and enemies to america
2. Imitates Richard Nixon by picking fights and trying to bully opposing media and other US institutions
3. Imitates George Bush by continuing corrupt crony capitalist regime
It would be wonderful, but it's not gonna happen. Maybe the first thing everyday "real" Americans should do is take all of their money out of big banks and put them in Savings & Loans and Credit Unions. Deprive the banks of working capital and see what happens to them.
It was really nice post. And must say that you written it really well as you got so strong response. I had seen some other blogs also on the same topic but the content are o rich here. I am really impressed. Keep it up.fitflops
Tuesday evening (10/20) I watched Frontline on PBS. The Warning.
I know you have seen many articles on the meltdown but this one will startle you more than the others.
Apparently, at one time, back in the nineties (when this really all started) there was estimated to be seven Trillion dollars (I do mean Trillion) in what they called a "black hole" in other words no one in this country knew where the money was.
The first hedgefund went in the toilet in 1997.
It was called LTCM ( Long Term Capital Management). This was the beginning of the end and it was ten years ago.
This was talked about as an ominous situtation by people in this country who were watching what was happening... way back in 1993 but no one listened to them.
Rubin told one such person that she was an idiot for even suggesting there was anything amiss.
This woman called Born. She and others like her who were in a places where they could be heard were eventually railroaded out of the Financial business.
I always thought that Greenspan was a madman, I was glad to see this program verified my conclusions.
You might want to check the below site out.
You can watch the program on line as well as others that have been aired in the last few months.
PBS never has a dog in the fight, they are excellent because they just report facts.
PBS is dependent on a certain amount of funding from the goverment and the government (both parties) are always threatening to cut the funding because PBS is such a thorn in their sides.
I am distressed with the way Barack Obama has been dealing with the Financial centers in this country.
I voted for the guy and I hope he succeeds in his work but I think all those wolves in the chicken house are going to finish leading this country into the abyss.
Wall Street is handing out billions in bonuses these days and a friend of mine who has worked for thirty years has lost ninety-seven thousand dollars in his 401-K. He is fifty-eight and thinking about retiring in a few years.
Geithner, Summers, and of course Paulson who Bush had such confidence in, who is still on the sidelines. And many others.
These are just a few I think Obama should fire and get some honest people in their place.
These same old, same olds should be a million miles away from the White House with their "advice" Jeez... it was their works and advice that caused the meltdown in the first place.
A lot of these people should be in the penitentiary... not advising the President.
Barack Obama apparently either cannot see this or is acting very stupidly. If there are any of you that can make a move work.... please do so. I sit here and twist in my chair and feel so helpless just doing the same old same old "call your represntative") who, of course, are playing golf)
Too big to fail is correct. There was a bruhaha when Citi sold have of itself to that Prince in Dubai,
and according to all that is coming out now is that there were at least nine Saudi Princes who were standing on the sideline waiting to b uy up still more of our financial institutions.
When you think about all this and also realize what a great security problem this is for our country... it will make keep you awake nights.
The wolves on Wall Street are an outrageous risk for all of us. And now the regulations endeavors have been completely stalled.
Think about it... the Wolves will go on doing what they have been doing for years.
That should keep you awake at night.....
I know there are those of you who will complain about this long post. Well, just mosey down, maybe someone with an attention span longer than yours is will pay attention. I hope.
Click here: FRONTLINE: home | PBS
The Warning
Oct. 20, 2009
In the devastating aftermath of the financial meltdown, FRONTLINE uncovers important clues about why it happened -- and who could have prevented it.
Click here: FRONTLINE: home | PBS
The Warning
Oct. 20, 2009
In the devastating aftermath of the financial meltdown, FRONTLINE uncovers important clues about why it happened -- and who could have prevented it.
Thank you.
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