Not content with his shabby treatment of J.P. Morgan, Attorney General Eric Holder has now set his sights on Bank of America.
During the 2008 crisis, as an alternative to bankruptcy, the administration asked the bank to take over ailing Countrywide Financial. Five years later, believing no good deed should go unpunished, Holder is suing the bank for the sins of the same Countrywide Financial.
Taking his actions together with his inflammatory speeches, it is difficult to resist the conclusion that he is conducting a war on the nation’s largest banks.
President Obama said recently, “I have a pen, and I have a phone. I will use them to benefit the American people.”
The phone could be used to give his attorney general a tongue lashing for impeding the economic recovery. The pen could serve to sign a unilateral cease-fire in Holder’s war. In so doing, he would certainly benefit the American people.
Responding to the financial meltdown in 2008, the Federal Reserve engineered an increase in the money supply. In normal times this would flow through the banking system, stimulating economic recovery. These are not normal times.
Shellshocked by the legal assault, constrained by the regulators, the banks are hunkered down, waiting for more propitious times. Excess money is channeled into the stock market. This is good in that pension funds, 401k plans and IRAs have recouped the losses experienced in the market collapse of 2008, but it has also enhanced the wealth of owners of large stock portfolios, exacerbating income inequality.
By ending the war, by easing up on excessive regulation, the banks would be encouraged to lend again, stimulating economic growth, increasing the demand for labor, and reducing unemployment. Once full employment is reached, wages would rise, generating more taxes, reducing the deficit.
A vibrant economy means a bull market in stocks, making wealthy individuals even wealthier, but, unlike the current situation, the less wealthy would benefit as well.
If the president really wants to demonstrate he can act without consulting Congress, here is a golden opportunity. Not only does it solve most of our economic problems, it does so without offending the Constitution.