Thursday, September 24, 2009
Citigroup to scale back U.S. footprint; limit lending to wealthy
There is perhaps no greater trend emerging from the Obama Administration than the trend of wealth flowing to the top.
For a president that promised change and more equity for working people, this development is truly astonishing.
From Tarp to the forced bankruptcy of U.S. automakers to tariffs on tire imports from China to the Public Private Partnership initiative and above all...the complete absence of any middle class tax cut, this Administration has, either deliberately or unwittingly, engineered one of the greatest wealth transfers from the lower classes to the most wealthy.
This Citigroup story is just another example. The beleagured bank is being forced to pare back its mighty U.S. presence, where it served tens of millions of everyday Americans, including many small businesses, and now focus on lending money to the only ones who have any left: the wealthy.
Because the Administration, including the Federal Reserve, failed to understand the very nature of our own banking system--that commerical banks are already public/private partnerships and quasi-agents of the goverment--they were given support with huge strings attached when there shouldn't have been any. Moreover, because the government has failed in its obligation to sustain employment and output (yes...OBLIGATION!) banks have no choice but to go where the money is.
This is a terrible, terrible, abrogation of government's responsibility and worse, a weak and cowardly act by the president by going back on his promise to help working people.
There is plenty of history to show that large doses of government spending--broad and actual spending--are necessary to avoid economic collapse and, indeed, to sow the seeds for future long-term economic growth. A real leader would have overridden the wrong-headed advice of his political advisors and done what was necessary to restore jobs, incomes and a decent standard of living for all Americans, as promised, and not just the 1% at the top.