Robert Kuttner : Has Obama the balls and the nerve to seize Bank of America in case the crisis becomes graver ?? -- Populism is cheap talk but things can evolve for the worst and Obama has to show bravery, leadership and firmness

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If things get worse then Obama can direct his Treasury Secretary to seize the Bank of America, as authorized by the Dodd-Frank Act.

Huffington Post
Obama, Geithner, and the Next Financial Crisis
October 9, 2011

by Robert Kuttner
Robert Kuttner is co-founder and co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.


Obama, Geithner, and the Next Financial Crisis


Some excerpts :

Third scenario: President Obama decides to get other opinions besides Geithner's and to get out ahead of the crisis. If things turn critical, he directs his Treasury Secretary to seize the bank, as authorized by the Dodd-Frank Act. Obama tells the citizenry that the alternative was endless bailouts or a Lehman-style collapse (just imagine the right trying to defend either), and that this way those who caused the crisis will be appropriately removed from their suites and bonuses while the bank is returned to health so that the broad economy can prosper.

Serious consideration of this last approach would take much more of a "pivot" on Obama's part than we have seen to date. I recall, in reading biographies of Presidents Kennedy and Roosevelt, how both leaders sought multiple sources of advice. Kennedy would pick up the phone and speak to a relatively junior desk officer at the State Department to get his own information unfiltered by his gatekeepers. Roosevelt made sure he had direct access to multiple advisers who disagreed with each other. But Geithner has been astute at blocking access to the president for others who have different views, and Obama has been startlingly incurious and compliant. The man needs to get on the phone.

It also happens that Bank of America is headquartered in Charlotte, North Caroline, site of the 2012 Democratic National Convention, and the bank is expected to be one of the convention's top-tier corporate sponsors. Oh, my. Moving to resolve and break up the bank under Dodd-Frank, should it prove to be insolvent, would take uncharacteristic nerve.

In September 2008, the financial collapse fell in on George W. Bush and won the election for Barack Obama. A repeat collapse, if handled badly, would fall in squarely on Obama.

Populist rhetoric when angry people are in the streets demanding accountability for bankers is a start, but talk is cheap. If the banking mess turns critical again, we will see what this president has learned, and what he is made of.

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