SOTU Fact Check: Obama Bailed Out Banks On The Backs Of The Middle Class

Conn Carroll
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Posted: Jan 20, 2015 9:24 PM
SOTU Fact Check: Obama Bailed Out Banks On The Backs Of The Middle Class

In his State of the Union address Tuesday night, President Obama claimed his administration has secured "new tools" to "stop taxpayer funded bailouts."

In reality, not only are the nation's biggest banks now bigger than ever, thanks in no small part to Obama's Dodd-Frank law, but consumers have seen almost none of the financial relief Obama promised them, and during the peak of the crisis Obama actually used middle-class homeowners to prop up Wall Street banks.

First, while Obama's Justice Department has announced multi-billion dollar settlements with JP Morgan and Bank of America for their actions before and during the financial crisis, the dollar amounts of those settlements have been greatly inflated, and the banks have been very slow to pay consumers any of the actual relief.  

Meanwhile, thanks to the "bigger moat" of regulation caused by Dodd- Frank, the nation’s largest banks now control an even larger percentage of the nation’s assets than when Dodd-Frank became law, making it even harder for the federal government to claim it won't bail them out.

Finally, when it did come time to bailout the banks last time, Obama used Troubled Asset Relief Program dollars to create the Home Affordable Modification Program, which Treasury Secretary Tim Geithner then used to help "foam the runway" for Wall Street at the expense of distressed homeowners.

Instead of pairing back government programs (like the FDIC) that allow big banks to only get bigger, Obama has chosen to try and micromanage those banks with government bureaucrats. It is only a matter of time before the bankers paid millions to outsmart their bureaucrat overseers manage to get a taxpayer bailout again.