Neo-Hooverites Waiting In The Wings

by digby

If you need any more proof that the American “conservatives” are a unique breed, this would probably do it:

Conservatives on one side of the Atlantic love President Barack Obama’s bank plan, unveiled on Thursday, but on the other side of the pond, not so much.

The harshly critical response of U.S. Republicans to the president’s proposals to reduce bank risk-taking contrasted sharply with the reaction of UK Conservatives, who praised them.

Republican Study Committee Chairman Tom Price, a congressman from Georgia, blasted Obama, saying “Americans are sick of his big-government solutions …”

“It is folly to believe that Washington can decide what represents the proper amount of risk in the private sector.”

But George Osborne, finance spokesman for the UK Conservative Party, said, “This is a welcome move by President Obama that accords very much with our thinking.

“I have said consistently that we should look at separating retail banking from activities like large scale propriety trading and that this was best done internationally.”

Real conservatives, you see, are conservative. They like rules governing everything.

American conservatives are not conservative: they only like rules governing other people’s pleasure.

Here’s another example: Representative Scottt Garret responding to Tim Geithner’s interview about the new banking regulations on the Lehrer News Hour. Now you might assume that Geithner was a bozo, and he sounds remarkably dull and slow for a presumably smart fellow. But this is from another planet:

JUDY WOODRUFF: And now, for another view, we turn to Representative Scott Garrett of New Jersey. He’s a leading Republican on the House Financial Services Committee. He’s helped draft many of his party’s alternative recommendations for financial regulatory reform.

Congressman Garrett, thank you for being with us. Tell us, overall, your take on the president’s proposals today.

REP. SCOTT GARRETT, R-N.J.: Before I do that, I would just say that was a fascinating interview. I appreciated some of the questions that you posited and the lack of answers on the other side of it.

And, also, just one other comment. You know, I was thinking, your lead-in to this story talked about the fact that the — the stock market tanked today. You know, when the former Fed chairman was in, Alan Greenspan was in, there was a saying back in those days that you called the “Greenspan put.” Any time the treasury secretary — for the Fed chairman said something, the market saw that as good news and it took off.

We have just the opposite with this administration. Any time this administration comes out and says something about what they plan to do in the future, the market tanks. And I think — and it tanks not only for Wall Street, but it tanks for the rest of America as well. And I think that’s very telling as to where this administration is going to bring us with Wall Street and the economy as well.

[…]

JUDY WOODRUFF: But let me ask you about one-half of this, at least, and that…

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: … is ensuring no bank owns, invests in or has any sponsorship of a hedge fund or private equity fund. What about that part of the proposal?

REP. SCOTT GARRETT: Well, that would put — obviously, put the reins in on the current Fed chairman and this administration with what they used in order to try to get us out of the situation that we’re in right now, right?

I mean, in other words, had their rules been put in place a year ago, they wouldn’t have been able to try to push for some of the mergers that we did see on Wall Street to try to bring us out of this situation. So, that’s one real question that we have to put back to the administration. What will they do next time?

And the second major point is this. If we want the banks to lend — and we all do — if we want the economy to expand — and we all do — do you really want to start confining the banks in their ability to make profits in order to generate more capital to lend out to the people? And that’s what these constrictions will now do.

[…]

JUDY WOODRUFF: So, going forward, would you and other Republicans support the idea of making sure a bank does not own — have the ability any longer to own a private equity fund or a hedge fund?

REP. SCOTT GARRETT: No, no, we wouldn’t. We wouldn’t. And we wouldn’t see the need for it because we wouldn’t support the idea of that institution being totally bailed out again by the — by the taxpayer.

JUDY WOODRUFF: And then the other half of this is the idea of…

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: … limiting consolidation, putting limits on the size that any bank would be allowed, the large bank, would be allowed to grow to.

REP. SCOTT GARRETT: Yes.

You know, years ago, and not too long ago, the United States had some of the — the majority of the largest financial institutions in world. Now we have gone down to the point we only have — you can count them on one hand. And where’s the rest of the large financial institutions? Elsewhere in the world.

If what this administration says is, we’re going to tie the hands even more, so that we’re going to put a limit on them, the secretary answered your question by saying, do you want to dismantle them? Effectively, he should have said yes, because that’s what their legislation allows them, the administration, to do, to dismantle them when they get larger than they want them to be.

We will be uncompetitive with the rest of the financial markets in the world, as we continue to be so with this — policies they have enacted so far — or tried to enact, I should say.

That’s what they have to offer.

His entire argument basically came down to this prescription for a banking crisis:

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people …

In other words, let the banks do whatever they want and if they destroy the economy, let the whole world pay the price. It’ll be character building for the parasites and there will be lots of opportunities for the Masters of the Universe. What’s the problem?

Update: And then there’s this

BLOCK: You’re saying that this ruling affects the average citizen
expressing his or her voice, as opposed to corporations being allowed
to spend freely.

Mr. GINGRICH: Im saying that it allows you to have a middle-class
candidate go out and find allies and supporters who are able to help
them match the rich. And able to help them match the incumbent.
Remember, incumbents run with millions of dollars in congressional
staff, congressional franking, congressional travel. And they have all
the advantages of being able to issue statements from their incumbent
office. And the challenger – the person out there who’s the citizen
who’s rebelling, who wants to change things – is at an enormous
disadvantage in taking on incumbents.

This will, in fact, level the playing field and allow middle-class
candidates to begin to have an opportunity to raise the resources to
take on the powerful and the rich

Right. Any middle class person can just sell him or herself to the highest corporate bidder and compete with an incumbent. What could be more democratic?

Update II: Fire.Him.

Treasury Secretary Tim Geithner has reservations about President Obama’s new proposal to limit the size and scope of the nation’s banks, sources tell ABC News.

Specifically, the sources say, Geithner is worried that the proposed limits could damage the competitiveness of US firms with their global competitors.

“It needs to be done right,” one source close to Geithner told ABC News. “How it gets implemented and how it gets defined is absolutely critical. We don’t want to disrupt the ability of banks to lend.”

Another source in the financial industry says that the Treasury boss fears that political fears may now be overriding economic considerations.

I suppose he might be sending a message to the bankers that he feels their pain, but he’s also sending a message to the country that crackpots like Garrett are right.

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