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A piece I came across today brings up again Obama’s continued failure to stand up against the investment banks and firms. Apparently, he truly believes that the well-being of our country depends on the prosperity of the big financial institutions – reminiscent of an earlier era when Charlie Wilson, Secretary of Defense under Eisenhower, declared that what was good for GM was good for the country. Perhaps less apparently, Obama feels that it is politically inexpedient or impractical to cross the biggest political donors in the country. Either way, it is not good news for our country.

I and many other informed, intelligent people believe that the outsized financial sector, with it concomitant political power, is a major source of the downward course of our country – a trajectory that began long before the current catastrophe (at least for those who have been caught in the wheels of the financial implosion).

Here’s excerpts fro the piece on Tech Ticker that caught my attention, together with a link to the video on which it is based and to the full article:

Another Missed Opportunity: Obama Retreats on Wall St. Compensation

Posted Jun 10, 2009 10:18am EDT by Aaron Task in Newsmakers, Banking

News the Obama administration plans to back away from dictating compensation for all of Wall Street is a victory for those who worry about overzealous government meddling and the dangers of wage controls.

But it’s also another missed opportunity by the administration to take advantage of the crisis to materially change behavior on Wall Street, which is becoming something of a hallmark of the Obama administration. Obama’s Chief of Staff Rahm Emanuel has said "you never want a serious crisis to go to waste," but that’s exactly what’s happening when it comes to the issue of reforming Wall Street.

…

This backtrack on compensation reform should not be viewed as a one-off event but as part of a pattern of behavior from the new president.

From day one in office (even during the post-election transition), Obama has talked tough about changing the culture of Wall Street and railed against excessive greed and egregious pay packages. But talk is cheap and his actions tell a different story:

• Most notably when it came to the TARP program, the Obama administration has maintained the policies of its predecessor. Even avid Obama supporters like George Soros and Paul Krugman expressed frustration with this missed opportunity to hit the "restart" button on how the government deals with struggling financial firms.
• Under the guise of preventing "systemic risk", counterparties to Wall Street firms, even those surviving on government bailouts, were made whole via TARP funds. That’s in stark contrast to how the automakers’ creditors were treated. Similarly, the Obama team hid behind the "sanctity of contract law" amid the uproar over AIG bonuses but felt no compunction in redoing contracts between Chrysler, GM and their creditors; in the process, the administration overturned the way secured vs. unsecured creditors have historically been treated in bankruptcies.
• After a lot of proposals about how to reregulate Wall Street, including discussions about creating a new uber-regulator and/or merging some existing regulators, the administration has backed away from the reform agenda, "suggesting the current alphabet-soup of regulators will remain mostly intact," The Wall Street Journal reported. Most notably, the push to regulate derivatives has slowed, which critics say is the result of heavy lobbying by the industry’s largest player, JPMorgan. (As an aside, I’d much rather see the government focus on getting the right regulatory regime and let Wall Street firms do what they want on compensation within those confines.)

With big banks repaying TARP funds and the market in rally mode, the acute stage of the crisis appears over and the zeal to reform Wall Street is fading. But if the regulatory regime remains largely unchanged and bonuses restrictions only apply to a handful of firms still under TARP, what’s really changed after all the sturm and drang?

Anyone out there who believes the industry’s "near-death experience" last fall and nine months in the government penalty box is going to materially change the culture and (more importantly) the actions of those on Wall Street, please raise your hand. I have a bridge I’d like to sell you….