_____________NEWS________________
‘Jimmy Carter’ tag has Obama wincing
Republicans are fighting back by branding the president as naive abroad and wasteful at home, like one of his party’s predecessors
February 1, 2009
LESS than two weeks into his administration, President Barack Obama is being portrayed by opponents as a new Jimmy Carter - weak at home and naive abroad - in an attempt to dim his post-election glow and ensure that he serves only one term.
The charge has stung because it was made privately by Hillary Clinton supporters during a hard-fought primary campaign and plays to fears about Obama’s inexperience.
He is engaged in early trials of strength with Republicans in Washington and critics of the United States around the world – not least Mahmoud Ahmadinejad, the Iranian president. Obama faces battles to talk Wall Street into giving up its addiction to large bonuses and US banks to start lending again.
“Barack Obama thinks he can charm his adversaries into changing their ways but his personality can’t change the dynamics,” said Tom Edmonds, a Republican consultant.
“Carter [president from 1977 to 1981] had the same belief in naive symbolism. Their styles are very different but the political similarities are there.”
The Republicans are in fighting mood after Obama failed to secure a single vote on their side for his $819 billion financial stimulus package in the House of Representatives, despite intensive wooing.
The bill came laden with spending on Democratic pet projects, including $50m for the arts and $400m for global warming research that critics said had little to do with boosting the economy. It also contains “buy American” protectionist provisions that have alarmed trading partners, including Britain.
Obama is striking back with an audacious bid to acquire a “liberal super-majority”, giving the Democrats untrammelled power in the White House, the Senate and House of Representatives. He hopes to appoint Judd Gregg, a Republican senator, as commerce secretary, leaving Gregg’s Senate seat at the disposal of the governor of New Hampshire, a Democrat.
If Gregg is appointed and Al Franken wins a disputed Senate recount battle in Minnesota, as seems likely, the Democrats will attain a filibuster-proof 60-seat majority in the Senate, allowing them to push through policies without obstruction.
“This is about as strong a power play as you can make in politics,” said Tad Devine, a Democratic consultant. “It would give Barack Obama the political dominance that Karl Rove talked about the Republicans achieving.”
A Diageo/Hotline poll last week found that 75% of voters are “confident” that Obama will bring “real change to the way things are done in Washington” - a rise of nine points since the election.
“He is no Jimmy Carter,” said Devine, who added that Clinton supporters had made the same mistake of underestimating Obama.
However, Republicans believe he could be ejected in four years if they can portray him as the creature of spendthrift Democrats, with an ineffectual plan for dragging the US economy out of recession.
“This is the Republicans’ way back. They have to return to their core values of cutting spending and taxes,” said Edmonds. “If the stimulus package doesn’t work, it is Obama’s failure. It’s got his name on it.”
Obama continued his charm offensive with Republicans this weekend by inviting a group of senators and congressmen from both parties to the White House to watch the Super Bowl - the biggest match in American football.
Sarah Palin, the Republican vice-presidential candidate last year, was due to share his spotlight last night at the Alfalfa dinner, a black-tie affair where business leaders and politicians exchange jokes and insults.
Palin said Obama’s presence had drawn her to the event: “How often will I have an opportunity to have dinner with the president? I will take up that offer to do so.”
Peggy Noonan, the conservative commentator, warned that Obama’s star power was being overplayed. “He is never not on the screen. I know what his people are thinking. Put his image on the age. Imprint the era with his face. But it’s already reaching saturation point,” she wrote in The Wall Street Journal.
Obama runs the risk that every rebuff is regarded as a personal setback. His first full week in power has been clouded by the farcical presence of Rod Blagojevich, the impeached former governor of Illinois, and revelations that Tom Daschle, his choice for health secretary, had failed to pay more than $128,000 in taxes.
The president’s foreign policy offensive also got off to an uncertain start. Critics claim there are too many czars and special envoys at the White House and State Department, who will end up fighting rather than problem solving.
George Mitchell’s first foray into the Middle East as special envoy last week was greeted by the Israeli bombing of tunnels on the Egypt-Gaza border.
America’s European allies, including Britain, have shown little interest in helping to close Guantanamo Bay by taking detainees, nor in stumping up the money and troops for a surge in Afghanistan. At home there has been an outbreak of nimbyism over the housing of Guantanamo detainees at US mainland prisons.
Obama’s offer of talks with Iran in his first interview as president on al-Arabiya, an Arab television station, prompted a demand from Ahmadinejad that America apologise for its “crimes”.
Michael Rubin, an expert on Iran at the neoconservative American Enterprise Institute in Washington, said Obama’s approach to Iran was similar to that of Carter, who wrote a personal letter to Ayatollah Kho-meini after a term of office marred by the storming of the US embassy in Tehran and a failed attempt to rescue 52 diplomatic staff held hostage.
“It is a little bit naive. The problem hasn’t been a lack of dialogue or the policies of George W Bush. It’s not all about us,” said Rubin.
A foreign policy expert who has advised Obama said the president was being challenged on “multiple fronts” - from Guantanamo Bay and Afghanistan to Iraq and Iran: “It is a test of his strength and wisdom. The Republicans found a way to posture against the stimulus bill and it’s even easier to posture against his foreign policy. There is pressure to craft his foreign policy so that it is not seen as weak.”
According to the adviser, the public offer to talk to Iran has given opponents such as Ahmadinejad the opportunity to grandstand. “It would be helpful to begin talks privately, as Henry Kissinger did with China before [President Rich-ard] Nixon’s visit,” he said.
In the months to come, this may be the course that Obama takes as he switches out of campaign mode and begins governing. The first lesson will be that he cannot please all the people all the time.
Drug arrest
The half-brother of Barack Obama has been arrested in Kenya for possession of marijuana and resisting arrest, writes Sarah Baxter. George Obama, 26, will appear in court in Nairobi tomorrow. Police claim he was found with one joint.
Obama told CNN from behind bars that he was innocent. “They took me from my home. I don’t know why they are charging me,” he said.
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Regulators Close Three More Banks
Philip van Doorn
Regulators in the U.S. shuttered two banks and one savings and loan Friday, bringing the tally of failed institutions in 2009 to six.
The Federal Deposit Insurance Corporation was named receiver all three companies.
The Utah Department of Financial Institutions shut down Magnet Bank of Salt Lake City. Unable to find a buyer for the bank's deposits, the FDIC is liquidating the bank and will mail checks to retail depositors on Monday morning.
Meanwhile, the Office of the Comptroller of the Currency closed Ocala National Bank of Ocala, Fla., and the FDIC arranged for all deposits to be assumed by CenterState Banks of Florida(CSFL Quote - Cramer on CSFL - Stock Picks)), based in Winter Haven, Fla.
And the Office of Thrift Supervision shuttered Suburban Federal Savings Bank of Crofton, Md., with the Bank of Essex of Tappahannock, Va. assuming all deposits.
Magnet Bank
As of Dec. 2, Magnet Bank had total assets of $292.9 million and total deposits of $282.8 million. Most of the deposits were brokered CDs, making the bank unattractive to potential acquirers.
TheStreet.com Ratings had assigned Magnet Bank an E- (Very Weak) financial strength rating back in June, downgrading the institution from a D- (Weak) because of a rapid increase in losses from nonperforming construction and development loans.
Loan charge offs peaked in the third quarter, when a net loss of $24 million caused the bank's ratios to slip so far that it was considered undercapitalized per regulatory guidelines, with leverage and risk-based capital ratios of 4.94% and 6.76%, respectively. These ratios need to be at least 5% and 10%, respectively, for a bank or thrift to be considered well-capitalized.
The FDIC estimated that Magnet Bank had no uninsured deposits, although the final determination could not be made until brokers provided the FDIC with customer information.
When a bank or savings and loan institution with brokered deposits fails, the FDIC asks the brokers to list their customers and deposit amounts. Since brokered CDs are registered with a bank or S&L only in the name of the broker, the FDIC needs the brokers to provide detailed customer account information for the agency to cross-check with other broker lists and the bank's retail deposits to make sure that a customer's total deposits with the failed institution don't exceed insurance limits. It can take customers with brokered deposits a few weeks to get their money back.
FDIC spokesman David Barr said that the last time the agency was unable to find a buyer for (at least) the insured deposits of a failed institution was on Feb. 14, 2004, when Dollar Savings of Newark, N.J. failed.
The liquidation of Magnet Bank's deposits will be relatively simple, since the institution had no transaction accounts when it failed. If it had, the FDIC would have processed all checks presented for collection on the evening following the closing. Any checks that didn't clear would be returned with a notice saying the bank was closed, not that there were insufficient funds. Accounts would then be balanced so the FDIC could send customers checks for their insured balances promptly.
Mr. Barr confirmed that the FDIC had done this before and was well-prepared to handle such a scenario.
Ocala National Bank
In September, TheStreet.com Ratings assigned Ocala National Bank an E- financial strength rating, a downgrade from the previous rating of E in June. The bank had total assets of $223.5 million and total deposits of $205.2 million as of Dec. 31.
All retail deposits, including any uninsured balances, were acquired by CenterState Bank of Florida, with Ocala National's four offices scheduled to reopen on Monday as branches of CenterState.
Ocala's $17 million in brokered deposits were not part of the transactions. Customers with brokered CDs need to contact their brokers, who will pursue payment from the FDIC.
When announcing the institution's closing, the OCC cited "unsafe and unsound practices," and said the bank's losses had burned through its capital.
Like so many Florida Banks, Ocala National made huge bets on residential construction and development loans, with loan quality sliding late in 2007 and hitting critical levels in the first quarter of 2008 when nonperforming assets (including loans past due 90 days or more and repossessed real estate) made up 21.84% of total assets.
At the end of the third quarter, the nonperforming assets ratio had climbed to 31.56%, even after the bank had charged off $8 million in loans. The bank had not been well-capitalized since December 2007.
The FDIC estimated that the loss to its deposit insurance fund from Ocala National Bank's closing would be $99.6 million.
Suburban Federal Savings Bank
The OTS announced Suburban Federal Savings Bank's failure late Friday, saying the institution was "critically undercapitalized and in unsound condition."
All of Suburban Federal's deposits were acquired by Bank of Essex of Tappahannock, Virginia, with the failed thrift's branches set to reopen Saturday under the Bank of Essex name.
Suburban Federal had total assets of $360 million and deposits of $302 million as of Sept. 30. The institution had been assigned an E- financial strength rating by TheStreet.com Ratings in January, a downgrade from the D- rating assigned in March 2007.
With a continued slide in residential and construction loan quality through the first three quarters of 2008, the institution reported losses exceeding $10 million and was considered critically undercapitalized as of Sept. 30, with leverage and risk-based capital ratios of 1.33% and 3.09%, respectively.
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