If passed as it is, the financial reform bill winding its way through Congress will create a "permanent bailout mechanism," and will give complete control over future bailouts to the White House, says columnist Matt Taibbi.
In a video preview of an upcoming Rolling Stone article, Taibbi explained how the Obama administration started selling out to Wall Street interests almost as soon as the 2008 election was over.
"The really big thing that's in these bills that's really, really scary is that it kind of outlines a permanent bailout mechanism," Taibbi said. "If it survives in the way that it was originally conceived, it's basically going to formalize an arrangement whereby the government is expected to bail out the top 20 to 25 largest financial companies. ... It will be entirely up to the White House to determine whether or not these companies are in trouble in the future, so there won't be any congressional role in deciding when and when not to give a bailout."
Taibbi's words echoed the concerns of some in Congress that, far from ensuring that America's financial system will be healthy, the financial reform being proposed will make Wall Street more dependent on taxpayers than it is already.
US House Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee, said in October that the financial reform plan would create a "permanent bailout authority." And Paul Volcker, the Jimmy Carter-appointed former head of the Federal Reserve who is widely credited with successfully fighting off inflation in the 1980s, said the Obama administration's proposed financial reform would maintain the "too-big-to-fail" mentality and could lead to further bailouts.
Taibbi also said that President Barack Obama gave key economic positions away to Wall Street insiders instead of keeping on progressive voices from his presidential campaign.
During the campaign, Obama was primarily advised by people like Austan Goolsbee from University of Chicago and Karen Kornbluh who is a well known progressive economist. Obama gets elected, the very day he gets elected those people are basically off the team and he brings in a whole bunch of people from Wall Street.
Primarily he brings in his former college buddy Michael Froman who is a Harvard classmate of Obama's. Froman was a high-ranking Citigroup executive. He puts Froman in charge on November 5th of running the economic transition team. He was in charge of hiring people for the White House to run economic policy.
Froman also brought in Jamie Rubin to be his number two. Rubin is the son of Bob Rubin who is a big Citigroup executive as well.
Rubin probably more than any other person -- single person -- was responsible for the financial crisis by deregulating the economy in the White House. He also had a major role in helping to destroy one of the world's biggest companies. You know, Citigroup. He has like one of the worst track records you can possible find in the country and yet he was the guy who was basically the architect of the entire Obama policy. Obama put him in charge of everything. The crew that's running the policy in the White House is basically all tied to Bob Rubin.
A couple of weeks after he hires these Citigroup people to run all those hires, they announced the Citigroup bailout which is a massive $300 billion giveaway to Citigroup...
Watch all of Matt Taibbi's comments below. His full story is expected in the January edition of Rolling Stone.
This video is from Rolling Stone, broadcast Dec. 1, 2009.