How Team Obama-Bernanke Oppresses the Poor

Connect the dots, fool!

If you’re truly a defender of the “1%” and indifferent to the plight of the poor in American society, don’t waste your vote on Mitt Romney. Barack Obama is your man. While the president proposes addressing society’s unequal distribution of income by raising tax rates on the wealthy, his administration stealthily enriches the rich and oppresses the poor. Under the Obama administration, the plight of the poor has gone from bad to worse.

In 2010 U.S. household income fell to its lowest level in sixteen years and poverty rose to a 17-year high, reports Bloomberg today. Median household income decline 2.3% and the percentage of people in poverty climbed to 15.1%. Median income is the lowest since 1996!

So, what is the policy response of the United States? More quantitative easing! Yesterday Federal Reserve Board Chairman Ben Bernanke announced that the Fed would purchase $40 billion in mortgage-backed securities every month until the economy improves. The Dow Jones Industrial Average promptly jumped 206 points, padding the pockets of the “1%” who own the lion’s share of the nation’s stock market equities.

While the Romney campaign predictably dissed Bernanke’s latest move as a politically motivated maneuver to prop up the economy before the election, the Obama administration has blessed Fed policy through its silence. Obama has blamed former President George W. Bush, lashed out against Congressional Republicans and denigrated “millionaires and billionaires” for the nation’s woes. But in 2010 he defended quantitative easing as good for the economy. And he has refused since then to join the growing chorus of the Fed’s critics.

So far, the Obama-Bernanke version of “trickle down economics” hasn’t done much to benefit the poor, whose numbers have grown steadily after more than  three years of tepid economic recovery.

Meanwhile, Obama’s fellow anti-poverty warriors are decrying the growth of the payday lender industry. In a recent Richmond Federal Reserve Bank seminar on economic inclusion, various do-gooders assembled to hear Gary Rivlin, author of “Broke, USA,” a book that purports to explain the multi-billion dollar payday lending industry. In case you haven’t been paying attention, liberals and progressives excoriate payday lending because they charge “predatory” fees and interest rates.

Payday lending to the poor has become big business, noted Rivlin. One important reason is that many low-income families do not have access to traditional banking services. Writes John Reid Blackwell who covered the event for the Times-Dispatch:

A survey by the Federal Deposit Insurance Corp. also showed about 821,000 U.S. households lost access to basic banking services between January 2009 and June 2011. Roughly 10 million U.S. households, or 8.2 percent, have no access to bank accounts, according to the survey.

The survey shows that one-quarter of U.S. households have used at least one alternative financial service, such as non-bank check-cashing or payday lending loans, in the past year.

Why would that be? Could it have something to do with the fact that Bernanke’s zero-interest policy has sucked the profitability out of small bank accounts? Well, let’s see what the Wall Street Journal had to say in a March article, “Big Bank Weights Fee Revamp.”

Banks often lose money on accounts like basic checking that they use in part to lure younger customers. They offer the accounts in part because they hope to retain customers as they grow more affluent and use services such as mortgage and business loans and credit cards.

Many banks have already eliminated the free checking accounts that had been in place since the 1980s and dismantled rewards programs for debit cards. Bank of America currently charges a wide range of monthly fees for checking accounts, unless customers meet certain requirements, but the new plans being tested could change the amounts being charged and the triggers for fees.

Thus, not only is the Obama-Bernanke easy money policy hurting the elderly, whose income is plummeting on CDs, money market funds and other financial instruments, it is oppressing the poor. When short-term interest rates hit zero, banks lose money on small checking accounts. When banks lose money on small checking accounts, they stop marketing them, raise penalties and fees, and add restrictions. When poor people can’t afford basic banking services, they go to payday lenders.

Liberals, progressives and other good-government types, too obtuse to understand Economics 101, try to shut down the last remaining source of legal credit for the poor. What will happen when they run the payday lenders out of Virginia?

Hmmm. The goo-goos are a bit fuzzy. Participants in the Federal Reserve Bank seminar suggested creating alternate services, “which might include institutions such as credit unions.” Of course, starting credit unions is difficult and, in the words of Nancy Pierce, field coach for the National Credit Union Foundation, “they are not located on every street corner and they have to serve a defined field of membership.”

Never fear, when the Obamoids, Bernanke-ites and goo-goos screw up one part of the economy through their misguided government programs and initiatives, they can always concoct another program to fix it, even if that means screwing up something else. In the meantime, the poor will just have to suck it up while the brilliant know-it-alls who “manage” the economy figure out what to do next.

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  1. DJRippert Avatar

    QE(Whatever) = Building an asset bubble.

    All bubbles burst.

    From Greenspan forward, the artificially low interest rates have been building bubbles that burst. dot com, telecom, consumer debt, real estate.

    Where is the next bubble building?

  2. reed fawell Avatar
    reed fawell

    It’s Classic Nonsensical Hubris: this idea that Bureaucrats, no matter how Technically brilliant or Terminally stupid, can manipulate an ever more dysfunctional and abused American Economy into a strong vibrant one.

  3. How long has the US had a central bank that performed manipulation of the money supply ? How many central banks are there around the world in major industrialized countries that do the same,

    This is just more right-wing blather that is pointed at Obama despite the truth that Bernanke is doing what people in his position have traditionally done ever since the central bank was created.

    You have to sort out the right wing narrative here from the realities of central banks.

    Instead of arguing that central banks and how they operate are wrong – the criticism is pointed at one President – part of the ongoing personal attacks against the man rather that policies that have been in place decades before this man became President.

    Why are these attacks personal ? What can Obama actually do or not do with the Fed Chairman? and yet the attacks go right at the President. Ronald Reagan had a Fed Chairman, so did Carter, Clinton and Bush and how many of those Presidents were personally attacked as a result of Fed Bank policies.

    It’s time to call out the people who are really criticizing the President by using proxies.

    It’s dishonest and hypocritical.

  4. DJRippert Avatar

    LarryG – Please reread Jim’s post –

    “In 2010 U.S. household income fell to its lowest level in sixteen years and poverty rose to a 17-year high, reports Bloomberg today. Median household income decline 2.3% and the percentage of people in poverty climbed to 15.1%. Median income is the lowest since 1996!”.

    All presidents in recent memory have dealt with the Fed. However, few have managed this level of economic collapse.

    We are headed toward four years of Obama and he has done three quantitative easings.

    It’s not working.

  5. DJRippert Avatar

    Rumors abound that the US credit rating will be lowered again this afternoon.

  6. DJRippert Avatar

    Blame Bush.

    Blame Europe.

    Blame Congress.

    Blame a YouTube video.

    Blame Bernanke.

    It’s time to end the blame game. Time for Obama to go.

  7. If Obama were not partly of African ancestry, the Democrats would have run candidates against him in the primaries and caucuses. The incumbent has failed on domestic policy across the board.
    Non-interest rates are paid for to a significant degree in commodities prices, which, in turn, are dragging down the economy even further.

  8. For those who are actually interested in the facts, this has been once of the most damaged economies in the history of the country.

    For instance, did Obama cause the significant damage to people’s 401K’s? Did Obama cause the housing market to collapse? Did Obama cause the Banks and the Auto companies to collapse? Did Obama cause the lowest tax revenues in 60 years?

    re: “it’s time to end the blame game” – yep.. that really rings true coming from the blamer in chief here in BR! 🙂

    Clinton was pretty clear – No one could have fixed this economy in 3 years – No one.

    But I go back to what DJ is doing here by attempting to link Bernanke to Obama which is pure right-wing red meat – all over the media and internet but it’s totally false. The attack is really aimed at Obama claiming that he is, in fact, the one who is behind QE.

    It’s, as I said before – it’s an attack on the man and in terms of racism, there has been and continue to be a taint in the issue – some of which are clearly borderline racist – and what is Romney doing? Instead of disavowing them, he engages in them also.

    What can you say about a prospective leader that plays regularly in the right wing cesspool, blame Obama for the deficit and economy and when you ask him what his plan is – he talks about cutting taxes even more and increasing the DOD budget.

    this is the guy ya’ll support? I think ya’ll have that weapon aimed at your own behinds!

  9. It’s also pretty clear that all the Bush Neocons have now infested the Romney campaign. Lord help us.

    DJ says forget Bush. How can you when virtually every Neocon except Cheney are now advising Romney and essentially advocating for the US to put boots on the ground and kick ass… to show whose boss.

    We had our fill of this during Bush’s term. Not only two wars, but two wars that were not paid for and now we have the same people who advised Bush now advising Romney.

    At some point, I expect DJ to come to his senses. I do not expect him to support Obama but surely he realizes what a disaster Romney is.

  10. Jim – What is a goo-goo? I’m not up-to-date on the latest right-wing terminology.

    1. Goo-goo is derived “good-government.” It applies to high-minded people who seek government solutions to social problems.

      The phrase has a long history of usage. See the Wikipedia entry here, dating back to the Chicago columnist Mike Royko.

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