Obama and the Credit Crisis

Illinois senator Barrack Obama spoke today on the recent collapse of financial giant Lehman Holdings Inc., in front of a crowd of political supporters. The Presidential hopeful was asked to react to the bankruptcy, and share his feelings on the role of government in this situation. I found Obama’s comments to be of mixed quality.

In regard to the federal credit bailout of the financial institution, Obama warned that shareholders should not expect the government to provide that kind of safety net. I was glad to hear this, it’s easy for me to imagine a democrat with an FDR like approach to this.

However, the freshman senator proposed a solution involving much tighter federal regulation of the credit market in general, and specifically for odd-credit organizations that have taken some of the hardest hits in recent months. This concept is not as appealing.

Barrack Obama is essentially proposing that the federal government be responsible for much of the decision-making capability of private financial institutions, but have no responsibility when bad decisions cost the shareholder. Hmm..

Also, an attendant of the speech asked Obama to comment on House Financial Services Committee Chairman Barney Frank’s idea to establish an agency responsible for buying-out failing institutions and their credit. Obama was careful not to directly support the idea, but he suggested that such a thing would be more likely given a new congress and President.



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2 CommentsLeave a comment

  1. […] Original bluesman51 […]

  2. I think Senator Obama left out one important element of the problem: individual demand. government can put as many regulations and controls over the banking and financial industry as Senator Obama wants. However that’s just half of the equation of supply and demand. The other half is at the hands of all of us, demand for cheap loans and credits. Irresponsible personal financial decisions were made so that many people can live beyond their means. MR. Obama was a former community organizer, and he should know better.

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