The Obama Bank Shakedown- "It has nothing to do with justice or restitution"

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The Obama Bank Shakedown
by Larry Kudlow
22 Aug 2014

The $16.65 billion settlement by Bank of America over financial-crisis-era mortgage securities "highlights a pattern of the government extorting the banks," Dick Kovacevich said on CNBC this week. Kovacevich is the former Wells Fargo chairman and CEO. I've known him for years. He ran a great bank. He kept Wells Fargo clean during the credit meltdown. And unusual for a big-bank CEO, he strongly supports free-market principles.

Kovacevich went on to say, "It's definitely politics. It has nothing to do with justice or restitution to the innocent victims. In fact, more of the money is going to the coffers of the states and various departments than the victims." He then concluded, "Why are we charging the stockholders instead of going after the people who did wrong? Corporations don't engage in criminal behavior. People do."

Kovacevich is right on target. These huge bank settlements are election-year ATMs for the Obama administration. It was $12 billion for JP Morgan, another $7 billion for Citigroup, and on and on. It's a real shakedown.

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As The Wall Street Journal editorial page has pointed out, a lot of money has gone to states run by Democratic governors.

And in the $7 billion Citibank settlement, there's a section explaining how $2.5 billion goes to "community reinvestment and neighborhood stabilization." What's that mean?

All this sounds suspiciously like the housing version of the Acorn electioneering operations. In other words, community organizers. In other words, left-wing groups who had absolutely nothing to do with the credit crisis.

But this shakedown isn't isolated to banks. In spirit, it extends to all businesses. It's the Team Obama way.

A few days before the BofA settlement, The Hill ran a story on how the White House's midterm strategy is going to revolve around "economic populism and so-called economic patriotism." That's interesting. Democratic strategist Jamal Simmons said, "There is still a great amount of discomfort in the American electorate around the economy, and particularly anger with Wall Street and corporate chieftains."

Out campaigning in Texas last month, Obama said, "Let's rally around an economic patriotism, which says, instead of giving more tax breaks to millionaires, let's give tax breaks to working families to help pay for child care or college."

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