Does Bill Clinton still not grasp that the current economic crisis
is in large measure his legacy? Obviously that’s the case, or he
wouldn’t have had the temerity to write a 14-point memo for Newsweek on
how to fix the economy that never once refers to the home mortgage
collapse and other manifestations of Wall Street greed that he enabled
Endorsing the Republican agenda of financial industry deregulation,
reversing New Deal safeguards, President Clinton pursued policies that
in the long run created more damage to the American economy than any
other president since Herbert Hoover, whose tenure is linked to the
Great Depression. Now, in his Newsweek piece, Clinton has the effrontery
to once again revive his 1992 campaign mantra, “It’s the economy,
stupid,” as the article’s title without any sense of irony, let alone
accountability. But that has always been the man’s special gift—to rise
above, and indeed benefit from, the messes he created.
His list of safe nostrums—painting tar-surface roofs white and
seeking more efficient solar and battery production—to be featured at
his lavishly funded Clinton Global Initiative conference in Chicago next
week is vintage Clinton hype. All of those solutions are of the win/win
sort that he loved to ballyhoo as president; who in his or her right
mind would be against green job creation? But that hardly speaks to a
crisis in which, as was reported Tuesday, the housing meltdown continues
unabated as the toxic mortgages sold and packaged by the leading banks
and investment houses clog the real estate market, destroying consumer
confidence and hobbling job creation.
Conceding that the bailed-out banks are sitting on $2 trillion that
they won’t lend, Clinton offers not a word about mortgage relief for
swindled homeowners. With an all-time high of 44 million Americans
living below the poverty line, Clinton once again brags of his success
in ending the federal welfare program.
There is only a one-sentence reference in the Clinton article to the
era of financial greed: “The real thing that has killed us in the last
10 years is that too much of our dealmaking creativity has been devoted
to expanding the financial sector in ways that don’t create new
businesses and more jobs and to persuading people to take on excessive
debt loads to make up for the fact that their incomes are stagnant.” Now
that’s a clear description of the consequence of President Clinton’s
policy of radical deregulation of the financial industry, but he writes
as if that outcome has nothing to do with him.
Clinton signed off on the reversal of the Glass-Steagall Act, the
legislative jewel of the Franklin Roosevelt administration designed to
prevent financial institutions from getting too big to fail. In signing
the Financial Services Modernization Act, which broke down the barrier
between high-rolling Wall Street investment firms and consumer banks
carrying the deposits of ordinary folk, Clinton gushed in 1999, “Over
the [past] seven years we have tried to modernize the economy. … And
today what we are doing is modernizing the financial services industry,
tearing down those antiquated laws and granting banks significant new
The first beneficiary of that legislation was Citigroup, a
corporation that resulted from a merger that would have been banned by
Glass-Steagall. Upon signing the law, Clinton handed one of the pens he
used to a beaming Sandy Weill, Citigroup CEO and a close friend and
financial supporter of the president. Clinton’s treasury secretary,
Robert Rubin, then went off to be a $15-million-a-year exec at Citigroup
and was in a key position there when the bank made those toxic
derivative packages that would have forced it into bankruptcy had U.S.
taxpayers not bailed the bank out.
So much for the “modernizing” that Clinton had bragged about.
A year later a variation of that same word appeared in the title of
the Commodity Futures Modernization Act, which Clinton signed and which
exempted from government regulation all of the collateralized debt
obligations and credit default swaps that would later prove so toxic.
That legislation led to the explosion of the market in unregulated
mortgage-based securities, the key source of the financial-sector
“dealmaking” that Clinton now bemoans.
In his memoir Clinton pays tribute to Rubin as “the best and most
important treasury secretary since Alexander Hamilton.” He wrote that
line in 2004, when Rubin, who had come to Clinton from a top job at
Goldman Sachs and later left for Citigroup, was already clearly defined
as someone who profited mightily from the very bills that he had pushed
through while working for Clinton.
As with so much in the Clinton record, the former president remains
in deep denial over having any culpability for his misdeeds. In his
thousand-page memoir there is no reference to the above-mentioned
radical deregulation of the economy that he presided over. As evidenced
by his Newsweek article, the man has long been convinced that there is
no problem or contradiction of his that cannot be simply plastered over
with blather. Sadly, he may be right.
Copyright © 2011 Truthdig, L.L.C.
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