Tales from the Trail

Obama compromised by Wall Street contributions, conservative group alleges

President Obama is too closely tied to Wall Street, claims a new web video that takes the tone of Occupy Wall Street, though it was produced by a conservative group.

The video, released by the American Future Fund, an Iowa-based organization designed to be “a voice for conservative principles” and “free market ideals,” alleges that raising tens of millions of dollars from Wall Street gave Obama reason to let (presumably culpable) Wall Street executives off easy:

“Nearly four years after America’s financial collapse, not a single senior Wall Street executive has been charged with a crime. Not one. Why? Could it be because Obama raised $49 million from Wall Street – more than any candidate in history? He rewarded top Wall Street donors and supporters with senior jobs. His chief of staff made millions from Wall Street — after Wall Street received billions in bailout money.”

The ad names Jon Corzine, the former Democratic senator and New Jersey governor who headed MF Global until it filed for Chapter 11 bankruptcy last fall, as a particular example. Corzine “lost $1.6 billion in customers’ money but hasn’t been charged” the narrator says.

“Under Obama, Wall Street keeps winning, and Obama keeps taking their cash. Tell Obama to stop protecting his Wall Street donors.”

Washington Extra – Special Day

CHINA/Before heading off to enjoy your weekend, I would encourage you to take a look at Emily Kaiser’s special report on income inequality in the United States, and a growing body of opinion that links high levels of income inequality with financial crises.

It may not be a coincidence, many economists believe, that income inequality in 2007, just before the latest crisis hit, reached its highest level since before the Great Depression. Read on.

And in other news, as they say in the business, Dan Quayle’s son can spell potato.  Ben is vying to represent the Third Congressional District in Arizona, where he has come under fire for being too young and inexperienced to hold office. But as our blog reports, at least he passed the spell test. 

Washington Extra – Deja vu all over again

The Justice Department has stepped into the fray today over reports that the country’s largest mortgage lenders may have evicted tens of thousands of borrowers from their homes with little or no scrutiny of their documents.  The lenders are accused of using “robo-signers” to approve foreclosures en masse, like GMAC official Jeffrey Stephan, who has testified to signing some 10,000 documents a month. USA/

The number of foreclosures has slowed significantly since state officials began investigations into the practice in recent weeks, but this may be of scant comfort to the housing market as long as the uncertainty lingers, with a possible backlog of pending foreclosures hanging over the market.

The practice raises yet more questions about regulation of the financial industry, and plays into the narrative of inadequate oversight of greedy bankers undermining the economy, a narrative which lay behind the administration’s reform of financial regulation. But it also highlights the failure of the White House and Dodd-Frank to properly address one of the biggest issues behind the economic collapse, namely the housing market and reform of Fannie Mae and Freddie Mac.

First Draft: White House “victory garden”

USA/Spring blew into Washington this morning and the signs are everywhere: the cherry blossoms are starting to come out, magnolia trees are budding and at the White House, workers are digging up the lawn.

Um, what?

As it turns out, the Obamas are part of the local food movement and plan to grow veggies in a patch of lawn on the executive mansion grounds. This was front page news in The New York Times, and a big headline in The Washington Post’s well-read Style section.

Calling up memories of the “victory gardens” of World War II, when Americans were encouraged to grow their own produce to help the war effort, the White House garden is not a brand new idea. John Adams and Eleanor Roosevelt had gardens, while Woodrow Wilson had a flock of sheep and the Clintons grew some vegetables in pots on the White House roof.

Obama as stockbroker in chief?

President Barack Obama is wearing many hats these days — commander in chief, head of state, father — so what about stock broker?
 
The new president, who has spent the first weeks of his administration working on proposals to boost the economy, lifted eyebrows and, at least briefly, stocks on Tuesday when he suggested that battered shares were a potentially a good investment at low prices they are currently touching.
OBAMA-BRITAIN/ 
Speaking in the Oval Office with visiting British Prime Minister Gordon Brown, Obama said it was natural that markets would be suffering from bad economic news.
 
But then he weighed in with this observation:
 
“What you’re now seeing is — is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.”
 
Sound like cheerleading at all?
 
Stocks inched upward in response to his words, but his spokesman, Robert Gibbs, played down the comments later, saying they were in line with Obama’s previous statements on the economy.
 
Tell us what you think. Is the president encouraging Americans to buy stocks? And is that good advice?
 
For more Reuters political news, click here.

Photo credit: Reuters/Jason Reed (Obama and Brown at the White House)

Bold budget boosts bailout

USA-OBAMA/How do you buy $750 billion of toxic bank assets with only $250 billion of taxpayer money?

If you know to play U.S. budget rules like a violin.

President Barack Obama told Congress in passing this week he might need more money than lawmakers have already approved to stabilize banks and pull the economy out of the ditch. 

How much? His budget virtuoso Peter Orszag said on Thursday he could support buying up to $750 billion in bad assets but only needed to set aside $250 billion to do it.

Fed staff in trouble, but cited for raise, too

USA/It’s not just U.S. stocks that are on a roller coaster ride in reaction to congressional testimony by Federal Reserve Chairman Ben Bernanke and other top officials.

Fed staff stock plunged on Wednesday when they put their boss in an awkward position during Bernanke’s testimony before Congress on the financial bailout and efforts to stabilize the swooning economy.

Rep. Scott Garrett testily reminded Bernanke that he was still waiting for answers for a letter he sent in December.

When is a housing crisis like venereal disease?

If you’re among those upset that your taxpayer dollars may be spent in volume to rescue people who — for whatever reason — can’t make their mortgage payments, Federal Financial Analytics analyst Karen Shaw Petrou recommends thinking about it this way:

“Preventing foreclosures has a lot in common with treating syphilis. In both cases, you help some who are undeserving, but – in an economic collapse or a public-health emergency – one acts nonetheless. ”

Just as in an serious epidemic, you’d take care of the problem and leave moral judgements to others, the right course of action is to take action to halt the housing crisis and leave the debate about moral hazard to economists, she wrote in a note to clients on Friday.

Obama says housing help just for ‘responsible’ homeowners

MESA, Ariz. – Memo to U.S. homeowners who bought places they couldn’t really afford: don’t expect assistance from President Barack Obama.  
foreclose

 Obama unveiled a housing plan on Wednesday that aims to stem home foreclosures and draw a line under a problem that sparked the nation’s financial crisis. 

But the assistance the president outlined had a caveat – only “responsible” homeowners need apply. 

The First Draft, Wednesday, Dec. 10

There’s nothing like a sexy political sleaze story, especially one ridden with “f—ing” expletives, to distract from the plight of the United States’ ailing auto industry.
 
A $15 billion rescue package for the industry may be voted on in the House of Representatives today after the White House and congressional Democrats reached an agreement in principle late on Tuesday night.
 
But morning TV shows paid the bailout scant attention as they replayed U.S. Attorney Patrick J. Fitzgerald’s news conference announcing that he was charging Illinois Gov. Rod Blagojevich with corruption over, among other things, an alleged plan to sell the Senate seat vacated by President-elect Barack Obama.
 
Not surprisingly Blagojevich’s use of expletives in conversations taped by the FBI featured prominently, “Bleep ‘em,” Fitzgerald quoted the governor as saying in one conversation. “And the word ‘bleep’ was not the word he used,” he added helpfully, just in case there was any doubt.
 
Back in Washington, the House of Representatives Financial Service Committee will hold a hearing at 10 a.m. EST on how the Treasury Department has handled the $700 billion Troubled Assets Relief Program, or TARP.
 
The Wall Street Journal reported that a congressionally appointed panel that oversees TARP is expected to release a report highly critical of how it has been handled.
 
Acting Comptroller General Gene Dodaro of the Government Accountability Office and Neel Kashkari, the Treasury Department point man on the financial rescue package, will testify.
 
Wall Street is seen opening higher, with shares of automakers expected to remain in focus. But there was more grim econmic news. A new survey said the economy was likely to shrink 1.1 percent next year as job losses mount.

For more Reuters political news, click here.