The Obama administration’s decision to step up its assault on banks is alienating many on Wall Street and fiscal moderates who backed up the administration while Republicans brought the government to the brink of default over the summer.
We emailed Former Bush Treasury Department official and Hamilton Place Strategies managing director Tony Fratto for his thoughts on Obama’s strategy. Here’s what he had to say:
For a long time I thought this was all about politics, and probably a lot of it still is — banks are still an easy target. But we’re seeing a pattern of the Obama administration seeking to control prices and profits, most recently by supporting the Durban interchange fees and bashing banks for trying to earn a fee for their services, but also by capping health care provider profits in the health care bill, and by nationalizing the student loan system. It’s clear the Obama administration either doesn’t understand microeconomics, or is simply outrageously populist. Probably a combination of both.
I’ve been as critical of Bank of America as anyone, but the specific trashing of that bank by Secretary Geithner and the President — and [Sen. Dick] Durbin — is dangerous, and not a little bit unseemly. BofA and other banks are simply seeking a price in the open marketplace, from voluntary users of their debit cards and associated services. They’re doing it this way because the government won’t allow them to do it another way. Consumers can vote on the banks’ policies with their checking accounts. And they can assign blame or credit to political leaders when they vote next November.
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