President Barack Obama has announced the appointment of Jeremiah Norton, a JP Morgan Chase & Co. executive, to the five-member board of the Federal Deposit Insurance Corp. once again putting an insider in a position to protect the banks at the expense of tax payers. The announcement was made late Friday in the usual news dump but this is not new except that Norton is now the “official” nominee.
Jeremiah O. Norton, 34, who is an executive director in the bank’s JPMorgan Securities unit, previously served as a policy adviser in the U.S. Treasury Department during the administration of President George W. Bush. Before that, he was an aide to a Republican congressman, Edward Royce of California.
Norton joins two Democrats and a fellow Republican whose confirmations to FDIC leadership posts have been delayed by Senate Republicans who have complained that Obama used a recess appointment to install Richard Cordray, a former Ohio attorney general, as director of the Consumer Financial Protection Bureau without formal Senate approval. Cordray, in his role as consumer bureau director, also has a seat on the five-member FDIC board.
Oh, and in case you had any question on what side of the 1%/99% divide Barack Obama and his Administration are on, yet another answer was given today with the announcement of their proposed selection for the critical “independent” seat on the Federal Deposit Insurance Corporation (FDIC):
The Obama administration is considering nominating Jeremiah Norton, an executive director for JPMorgan Chase’s investment bank, to sit on the FDIC’s board of directors.
Who is Jeremiah Norton? Well, as this quote states, he executive director of the investment banking shop and one of Obama’s buddy, Jamie Dimon’s, right hand men. Oh, and before that, Norton was former Goldman Sachs honcho Henry Paulson’s right hand man in the Bush Treasury Department and assisted Paulson in getting Goldman Sachs a backdoor bailout through AIG.
Norton was one of the chief architects of TARP who helped convince Paulson that the banks were “Too Big To Fail” and “helped craft the takeover of Fannie and Freddie” and he isn’t without opposition form the right:
Norton himself had initial doubts about the plan. “This is crazy,” he reportedly said at the time. But ultimately he and Jester sold Paulson on TARP, (Andrew Ross) Sorkin explains. “Based on the work of Jester, Norton, and assistant secretary for financial institutions David] Nason, [Paulson] wanted to forge ahead and invest $250 billion of the TARP funds into the banking system,” Sorkin wrote. Norton contributed similarly to the government takeover of Fannie and Freddie. “It was a difficult decision, the secretary didn’t want to be here, to go into the firms,” Norton [told C-SPAN in 2008. But, he concluded, “this action was necessary to prevent systemic risk that would harm the broader economy.”
Norton still might encounter some objections from the right, as both TARP and the government conservatorship of Fannie and Freddie have come under growing fire from the tea party wing of the GOP. What’s more, the Congressional Budget Office recently raised the cost of TARP in 2012, and the government control of Fannie and Freddie has extended well beyond the 15-month “timeout” that Norton, Paulson and others had originally envisioned.
This is the second time that the White House has taken the Senate GOP leadership’s advice on FDIC leadership, having already followed Senate Minority Leader Mitch McConnell’s (R-KY) recommendation to pick Thomas Hoenig for another key FDIC post whose nomination brings ant- TBTF positions to the table:
Hoenig is a vocal critic of large banks, technically known as “systemically important financial institutions,” or SIFI, under the recent Dodd-Frank regulatory reform of the financial system. Of course, they’re more popularly known as the “too big to fail” banks that are a focus of the Occupy Wall Street protests.
Under Dodd-Frank, the FDIC will be responsible for unwinding failing big banks.
In a June speech, Hoenig — who headed the Federal Reserve Bank of Kansas City — called those institutions “fundamentally inconsistent with capitalism.”
“They are inherently destabilizing to global markets and detrimental to world growth,” he said. “So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril.” [..]
Hoenig’s criticism of Fed policy made him a favorite among Congressional Republicans. Last fall, as Republicans prepared to assume control of the House after their midterm win, Hoenig was invited to speak to Republican members of Congress behind closed doors.
He also testified earlier this year before the House subcommittee on monetary policy chaired by Ron Paul, a noted Fed critic and presidential candidate, who would like to abolish the central bank altogether.
Republicans’ previous praise for Hoenig may make it difficult for them to block his confirmation, even if they oppose his views on the Volcker rule and bank regulation, said Boston University law professor Cornelius Hurley, a former counsel to the Fed Board of Governors.
“A brilliant political step, Hoenig’s nomination puts Senate Republicans in a very difficult spot in voting on his vice-chairmanship,” said Hurley. “His experience and point of view on systemic risk may foretell a pivot away from the failing policies of (Treasury Secretary)Timothy Geithner and (and former Obama adviser) Larry Summers toward more meaningful structural reform of our financial system.”
Obama keeps trying to make “deals with the devil” that will only continue toprotect the banks and harm the economy.