By: Chris Wessling
Author Peter Schweizer says as a young lawyer in Chicago, Barack Obama played an important role in shifting the balance of power away from free-market forces – actions that continue to reverberate today.
“A lot of people are familiar with Barack Obama as a community activist, but people don’t realize that he was very involved in litigation against banks,” said Schweizer, a best-selling author whose latest book is “Architects of Ruin: How Big Government Liberals Wrecked The Global Economy – And How They Will Do It Again If No One Stops Them.”
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Schweizer, a research fellow at the Hoover Institution, told Newmax.TV’s Ashley Martella that in 1994, Obama “sued Citibank on behalf of several African-Americans who said that they had been denied mortgages by Citibank because of racism. Now, they freely admitted that they all had poor credit, but they argued that they were denied the credit – the home mortgages, in this case – because of racial discrimination. Barack Obama and two other attorneys filed suit, claiming that Citibank not only violated the Free Credit Act, but also violated the 13th Amendment to the Constitution, which was the constitutional amendment that abolished slavery.
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“This was just one act that was replicated thousands of times by other lawyers and other activists who were convinced that the banking system was racist and we had to force them to, in effect, engage in affirmative action lending in order to bring equity to the financial system.”
Schweizer also agreed that big business has been all too willing to see government intervention grow, as long as profits are protected or enhanced. He said this corporate complicity is a big part of the problem.
“Oh absolutely. There’s no question. The Nobel-winning economist Milton Friedman once said there’s a huge difference between being pro-business and pro-free market. What you’ve seen in American government policy toward Wall Street is pro-big business, pro the big Wall Street investment houses. So you have right now the Obama administration pushing legislation that will make it clear that certain investment houses are too big to fail; that we will bail them out if they get into trouble.
“The problem is, it’s a little bit like if your teenage son comes home and has been arrested for DWI and you bail him out and you give him the keys to the car and you throw a couple six-packs in the back seat. What do you think he’s going to do? If he has not been held responsible for what he’s done, he’s going to engage in more risky behavior. That’s what we have on Wall Street, and you have this collaboration between the big firms on Wall Street and big government in Washington. They reinforce each other, and the American taxpayer – that’s you and me – are required to foot the bill for all this speculation.”
But Schweizer offers a solution to end what he calls the corruption of government-sponsored capitalism.
“I think the first thing you have to do is, the federal government in Washington has to take the position [that] nobody is too big to fail, and they have to make clear that if you speculate and you lose, you’re going to lose shirt; we are not going to bail you out. Until Wall Street learns that they’re going to continue to be as speculative as they have been. Capitalism should be about profit and loss. You profit if you make good investments, make wise choices and even speculate and are right. But if you’re wrong, you over-leverage yourself, you take unnecessary risks, you’re going to lose your shirt and we are not going to bail you out. Until that changes, we’re going to continue to have these kind of financial bubbles in the future.”
Schweizer also sees a parallel between the Beltway attitudes that led to America’s financial meltdown, the current healthcare debate, and the looming insolvency of Medicare and Medicaid and Social Security.
“I think there’s a huge parallel on a couple levels. First of all, you have people in Washington who believe they’re very smart and that they can social engineer and fix very complex problems by simply passing some bills. And these are bills so complicated that they haven’t even read them, they don’t even understand them. The problem is, when you engage in this kind of social engineering, taking a complex problem like housing or healthcare, and say the government is going to fix it, you have all kinds of unintended consequences. And that is surely going to happen here. So there are enormous parallels. … We’re going to continue to have these problems, and American prosperity and our economic choices are going to suffer.”
Asked about his opinion of Treasury Secretary Timothy Geithner, Schweizer was blunt.
“Well, the treasury secretary is really more of the same. I actually talk about it in ‘Architects of Ruin’ because those bailouts in the 1990s … Tim Geithner was involved in those as a Treasury Department official at the time and was a big supporter of them. So he embraces this mentality. So do other senior people in the Obama administration who have the same view, which is that you have to have this collaboration of big business and big government; they need to reinforce each other and they need to protect each other. So it’s more of the same, and I think that the change that people thought might happen with the Obama administration on the financial front is not there. It’s more of the same, and we can expect more of these financial bubbles in the future.”
