In the HBO/Vice documentary Panic, Barack Obama showed just how difficult it is to defend the indefensible.  Particularly when he has to defend the response to the financial crisis by his Administration.  To escape any responsibility for the terrible choices his Administration made, he tries to shift the blame.

But I trusted Tim [Geithner}.  As someone who was a technician.  Who was not ideological.  He was my best bet. [hat tip to Nathan Tankus for quote]

Saying Geithner was his best bet appears to conflict with his statement he thought it was important to support Bush/Paulson’s policy response to the financial crisis as he thought not doing so like FDR would have made crisis worse.

We didn’t actually, I think, do what Franklin Delano Roosevelt did, which was basically wait for six months until the thing had gotten so bad that it became an easier sell politically because we thought that was irresponsible. We had to act quickly.

This quote is really remarkable.

Note how Obama focused on having to act quickly.  Why?  He was still campaigning and, even if he had won, an incoming president has NO power.  We had another administration already in place and it was leading the response to the financial crisis. That administration’s policies were lead by the Committee to Save the Banks (Paulson/Bernanke/Geithner).  These policies weren’t going to change if Obama didn’t approve of its handling of the crisis.

If elected, Obama had over two months to carefully study why the crisis occurred, what impact the current policies were having on the financial system/economy and review the options for policies so his administration could choose to pursue policies that were most likely to successfully end the crisis for the benefit of the 99%.

By acting quickly, he committed his Administration to pursuing a course of action months before he actually took office.  A course of action chosen not by his Administration after careful consideration, but by the previous Administration and the Wall Street friendly Committee to Save the Banks.

A course of action that was entirely inconsistent with the message of “Hope and Change” he ran on.  It wouldn’t have been unreasonable for voters to hope for a change in the bank friendly response to the financial crisis that saw the voters being asked to pick up the tab for the bankers’ losses.  After all, the voters instinctively knew the Committee to Save the Banks’ narrative was a con.

I don’t think I adequately gave Goldman’s former CEO Hank Paulson his due as a salesman.  While he couldn’t sell his con to the American people, he was able to sell his con to Obama.

“This crisis hit, full force, at the very worst possible time,” Paulson recently told Yahoo News. “It was right in the middle of a national election. Both of the presidential candidates, Barack Obama and John McCain, were essentially running against President Bush, who was very unpopular. If either one of those candidates had come out against what we were attempting to do, I think it would’ve been very difficult to get Congress to act. And then we would’ve had a disaster on our hands.”

He recognized Obama was open to the idea of supporting the Committee to Save the Banks’ policy response as Obama saw FDR waiting until he was president as harmful.  Being the extremely good salesman that he is, Paulson seized on this with a narrative of waiting would result in a disaster.  Getting from there to the close of the sale was easy.

What is important to realize here is Obama not signing on to the Committee’s policy response made no difference in the Committee’s choice of saving the banks/bankers rather than borrowers, the real economy and the social contract.

Paulson is right Obama not endorsing saving the banks/bankers would have made a big difference with Congress.  There is a substantial chance the Democrats would have said no to bailing out the banks and yes to saving homeowners from foreclosure.