Wall Street and Washington insiders like Larry Summers and Tim Geithner have spent the last few weeks telling America there's supposedly nothing that can be done to stop bailed out banks from using our taxpayer money to subsidize executive bonuses. As the New York Times reported this morning, Summers specifically "suggested that there was little if anything the government could do to stop [AIG's bonuses], seconding the conclusion of Treasury Secretary Timothy F. Geithner." Now, President Obama has publicly contradicted them, signaling a major schism in the new administration:
Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses
By HELENE COOPER
Published: March 16, 2009
WASHINGTON -- President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama's economic recovery agenda.
The differing messages from the Obama administration suggests the potential for a major economic credibility gap whereby lower-tier functionaries like Summers and Geithner are saying one thing while the president is saying something entirely different. It raises a very serious question: Who is in charge - the president or the Washington and Wall Street insiders he put around himself?
I don't think we really have an answer.* Though it is certainly good news that the president is taking the more rational and populist line in this divide, it's a huge problem that he's allowing people to speak for his administration who seem to be directly undermining his wishes - in this case, his wishes to stop banks and insurance companies from ripping off taxpayers. That's not "team of rivals" - that's the Team of Zombies creating mixed messages, which reinforce the idea that this administration still refuses to answer the fundamental question: Which friggin' side are you on?
*By the way, I once thought this all might be a super secret pony plan whereby Obama is good cop and Summers/Geithner are bad cop/stupid cop. Now, I don't think that at all. When the Summers/Geithner insist that nothing can be done, and Obama insists that they better do something, that's not good or smart messaging, and therefore likely not pre-planned strategy - it's just having no message at all, and that's bad.