Republicans Criticize President’s Populist Agenda
A movement began, which has been promoted by the news blog The Huffington Post, to transfer money from big banks to small banks. Playing into populist anger at Wall Street, the President is taking the same tactic but on a much larger scale.
“I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat,” President Obama said in his State of the Union address Wednesday night.
Under his proposal, $30 billion of profits from the TARP Wall Street bail out would be redirected to aid struggling community banks, instead of being placed back into the US Treasury.
This is just one of the ideas the President presented in his State of the Union to address the economy and an angry constituency.
But Republicans were quick to criticize his populist appeal.
Senator Bob Corker (R-Tenn) said the President’s latest attempts to “tap into” voter anger has been “very destructive.” Corker said “I think the President needs to act like a president, a leader.” He said, “I think he needs to act like he’s leading America, not Venezuela.”
Senator Mike Johanns (R-Neb), President George W. Bush’s Agriculture Secretary, also condemned the President’s populist rhetoric. “In all due respect, it doesn’t work, I mean, not for the President of the United States. We really want a leader, we want somebody who can articulate a vision and work with us to get the vision accomplished,” Johanns said.
Since the loss of the late Senator Ted Kennedy’s Massachusetts seat, the President has focused his attention on the economy and targeted the wealthy as the dominant benefactor of the American economy.
Senator Patty Murray (D-Wash.) released a similar proposal in December.
Like President Obama’s plan, it would spend $30 billion of TARP funds for community banks. Hers being more specific at this point, the government would buy troubled assets caused by the faulty mortgage market.
Community banks have yet to receive any assistance from the government as most of the attention has been on major Wall Street firms on the brink of crisis.
Community banks are struggling. As of September 30th, more than 500 community banks are on the FDIC’s troubled bank list.
Senator Mary Landrieu (D-La.) said “community banks should benefit from the profits we made from stabilizing Wall Street.” Landrieu said, “Just like we gave big banks a shot, we need to give little banks a shot.”
Republicans are stating their opposition because TARP funds have been used for programs beyond the purchase of troubled assets. TARP funds have been used to purchase American car makers GM and Chrysler and for a mortgage modification program.
Senator Corker (R-Tenn.) says TARP has become a “slush fund” and that “it’s a bad idea.”
Heather McGhee, Washington Director of the liberal think tank Demos says this proposal is significant. “That very lopsided attention to the biggest banks instead of the smallest banks is something that has been a problem for quite some time,” McGhee said.
Because the money would come from the TARP program, it is likely it does not have to be approved by Congress.