Obama Fails to Regulate the Banks

Here is a very sad story of how Paul Volcker tried to work with Obama to control the big banks to prevent another meltdown. But Obama -- who is deeply compromised by his dependence of campaign contributions from Wal Street -- failed to listen to Volcker. So Volcker has quit:

Paul Volcker is riding into the sunset, but it's just as well. Any hope the Obama administration might clean up the financial Wild West faded long ago.

It was around this time last year that Volcker, the former Federal Reserve chief who was a major figure in Obama's 2008 presidential run, reemerged after a year in the policy wilderness. He stood with Obama at a White House lectern and announced a plan to crack down on the risk-addicted banks that helped drive the economy into a ditch.

The birth of the so-called Volcker rule seemed to point to a more aggressive stance by an administration that had mostly supported the banks. Unlike Obama's top economic aides, Tim Geithner and Larry Summers, Volcker seemed to appreciate that the financial industry had grown too big, too greedy and too powerful -- and needed to pay for their many sins.

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But with Volcker's departure, there will be no counterweight to the administration's prop-up-the-banks worldview, which critics see everywhere.

What's more, there is a sense that while financial reform hasn't gone quite as far it might have, even that progress is fragile with Republicans taking over the House.

The great tragedy of Obama is that he refused to take advantage of the meltdown to fix the system. FDR used the Great Depression to put in place laws and regulations that strengthened American democracy and put limits on the powers of corporations and the ultra-rich. This ushered in the golden era of the 1950s and 1960s when the middle class broaden to include many, many people. This was an era of big real wage increases. This was an era of optimism and strength in the economy.