The president and the fat cats

Okay – we all enjoyed hearing Obama criticize the fat cat financiers on 60 Minutes last night, but what will happen when he meets with them at the White House today?

CitiGroup is repaying $20 billion of the $45 billion in bailout money that it received — to get out of government restrictions on how many tens of millions in bonuses it can pay to fat cats. Oops. Make that “top executives.” And what about the other $25 billion? We are on the hook for that. Or rather, we paid it for a 34 percent “ownership” stake in CitiGroup. Which apparently is not enough ownership to tell them what to do.

AP reminds us that, “Most of the largest banks, like JPMorgan Chase & Co. and Goldman Sachs Group Inc., quickly paid back the money they received because it carried restrictions such as caps on executive pay and dividends.”

Meanwhile, the House of Representatives barely managed to pass watered-down financial regulations last week. Paul Krugman reminds us that lifting regulations over the past couple of decades got us into the current mess, and that somebody in government needs to grow the backbone to re-regulate the fat cats.

Given this history, you might have expected the emergence of a national consensus in favor of restoring more-effective financial regulation, so as to avoid a repeat performance. But you would have been wrong. …

In part, the prevalence of this narrative reflects the principle enunciated by Upton Sinclair: “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

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