To be sure, President Obama explained that we shouldn't have any more taxpayer bailouts (a no brainer after 2008), why we need greater transparency in markets (who's going to say no to this?), how proposed legislation brings us the strongest consumer financial protections ever (which isn't saying much given the size of the financial loopholes), and the need for a larger voice for shareholders (which, I'm sure, America's CEOs laughed at).
President Obama told us what we already know.
It appeared that President Obama is so confident that the lukewarm pieces of financial legislation currently making their way through Congress will pass that he didn't want to upset the "progress" being made. It was as if President Obama didn't want the Wall Street banksters to collectively get their feelings hurt, and then stand up and say, "We're going to take our ball and go home ... again."
And this is the crux of the problem.
There was absolutely nothing of substance said about banks being too big to fail ...
Look, any time a company - or a group of companies in an industry - get so big that their collapse can threaten the stability of our nation, the claim that there will be no more taxpayer bailouts is simply nonsense (the $50 billion, bank funded, bailout fund in the legislation is for show, while the Volcker Rule reference is a sideshow). If the stability of the system is threatened it would be irresponsible for any government - Democrat or Republican - to allow the country to collapse because of simple stupidity and greed (though there are, no doubt, gun toting Tea Baggers who like sleeping in camouflage pajamas who might disagree).
But what really got me about President Obama's presentation today was how the tone of the speech suggested that, if we just keep playing along, the financial reform bills now making their ways through Congress will do do the job. They won't.
Consider the following.
WALL STREET'S DELUSIONS ...
Banks have been both duplicitous and confused about what needs to be done (depending on what's best for them). In a few words, after years of padding their profits through favorable legislation and very generous regulatory treatment the financial sector still depends on favorable treatment, and can't stand on their own two feet, as they like to claim. Banks of all sizes are still being subsidized in a variety of ways, and benefitting from wealth extracting deals (like computer driven, flash orders) that make the industry a ton of money.
But these innovations have done little to nothing for markets and America's middle class, unless you count the creation of a culture that feeds on gaming the system as a plus.
Then how about the deception and market delusions that continue to dominate Wall Street? These guys don't think they've done anything wrong, are still betting the house, and making a ton of government-escorted profits in the process. What this means is that the banking industry's recovery is little more than smoke & mirrors, built on a pile of hidden guarantees, that you and I underwrite.
MAIN STREET'S FRUSTRATIONS ...
Then we have the even bigger issue of what's happened to Main Street. Main Street is pissed off and wants, and needs, things fixed on our side. If you're like me, you're pissed. And you probably want a pound of flesh too.
So, why didn't President Obama mention Wall Street's role in:
* Damaging state and municipal pensions?
* Contributing to state mandated furlough programs?
* Massive layoffs?
* Prolonging unemployment?
* The number of houses that are underwater?
* Working against homeowner mortgage negotiations?
* Pissing off middle America by giving undeserved bonuses?
There was absolutely nothing said about any of this. Nor was there anything said about Wall Street's responsibility in helping to fix any of this.
How can you tame Wall Street when there's no consequences for bad behavior? How can you tame Wall Street when they don't fear you? How can you tame Wall Street when their size dictates your actions? Watch out. With the exception of the Brown-Kaufman SAFE Banking Act, the reform bills making their way through Congress are palliatives. The next market collapse is around the corner. The only question is when.