The Credit Rating Hoax

Obama is setting himself up to fashion another “grand compromise” with the right. He will explain this is the “adult” thing to do. But his supporters may once again see betrayal. As the polls keep reporting, the populace is overwhelmingly opposed to any political deal-making that punishes them again for a catastrophe they did not cause. People seem to know it is wrong to dump more pain on them while the real malefactors are not held accountable for their sins.

This is an outrageous conflict of interest at the very heart of the financial system. Congress should have had the nerve to outlaw the practice in unambivalent terms. Instead, Congress turned the question over to federal regulatory agencies and asked them to devise a remedy. But the regulators were also among the see-no-evil accomplices that led to the crash. Senator Levin’s final report includes six recommendations urging the regulatory agencies to get tough with the inflated credit ratings, but don’t hold your breath. What’s required is a serious law that either changes the status of the rating agencies or shuts them down. Otherwise, the temptations for more deception and false assurances will be too strong to resist.

The deficit panic is itself bogus—poor-mouthing America to avoid raising taxes on the folks who got the money. Naturally, this reactionary approach was first promoted by Republicans, but has been tacitly embraced by the Democratic president and Congressional Democrats. No more talk from them about jobs, jobs, jobs or doing anything real to save millions of families from home foreclosures. Barack Obama promises to do the blood-letting more delicately than barbaric Republicans, protecting Social Security and Medicare and other much-loved programs. But can people believe him? They have been burned before by vague good talk.

If you listen closely, Obama is setting himself up to fashion another “grand compromise” with the right. He will explain this is the “adult” thing to do. But his supporters may once again see betrayal. As the polls keep reporting, the populace is overwhelmingly opposed to any political deal-making that punishes them again for a catastrophe they did not cause. People seem to know it is wrong to dump more pain on them while the real malefactors are not held accountable for their sins.

WILLIAM GREIDER is a veteran political analyst and journalist.

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