Dems Losing PR Wars on Banks, Too

06/06/2010 05:12 am ET | Updated May 25, 2011

--"Major Major's father was a sober god-fearing, freedom-loving, law-abiding rugged individualist [farmer] who held that federal aid to anyone but farmers was creeping socialism..and disapproved of loose women who turned him down." (Joseph Heller, Catch-22).

The big banks busted the country. Millions of people are out of work. Home values -- the major investment of the middle class -- have plummeted. The Republican Administration bailed out the big banks, and allowed them to pay outrageous bonuses as if it were a 'divine right.' The federal deficit swelled. The Federal Reserve supplies the big banks with interest-free loans that they put into treasuries, making a guaranteed spread -- benefits no one else in the country receives -- and none of the bankers who brought this upon us have been held accountable for their disastrous, and likely criminally fraudulent, actions.

Yet, the Democrats are losing the debate on the banks, and Republicans are getting away with the political fraud of pretending they are protecting "taxpayers."

How? Because the Democrats have bought the absurdity that "protecting the taxpayer" from future bailouts is the key measure of success, and that voters will understand that the taxpayer is not at risk if a fund, arising from banking fees, is created in advance to be available when a bank needs to be "resolved."

The PR problem is that Democrats appear as if they will bail-out the banks again and Republicans, who oppose the fund, would not. But, the fund is too-small-to-be-credible, and the distinctions to0 fine to argue politically. And, everyone but those writing the legislation knows with certainty that, if a big bank is going to fail, it will be bailed out, for the very same reason they were bailed out this time -- fear of a worldwide depression.

Republicans are lying. Democrats are afraid to tell the truth. And, Republicans are getting away with the greatest political fraud of our lifetime.

Democratic policies and the terms of the debate must be changed. Yes, we all lost some money as "taxpayers," but that pales in comparison to what we lost as participants in the economy. It is that economy that needs protection against "collateral damage" from big financial institution failure. The only way to insure against such an effect is to break up the big banks. (See

If there is any affiliation that defines what it means to be a Republican, it is as the friend, custodian, protector and recipient of campaign largess of the banks.

The devastating financial meltdown provided the Democrats with a once-in-a-century opportunity to make the clear, unambiguous distinction between themselves and the Republicans. Financial manipulation vs products/services that add real value. "God's work" defined by $4B paydays vs. economic security. Wall Street vs. Main Street. FDR's 'economic royalists' vs. the common man.

But, are the Democrats seizing that opportunity, making clear distinctions, and pouring it pn, forcing votes that shout above the verbal confusion to define where the Republicans truly stand?

Of course not. Why seize an opportunity! Instead, be defensive, address the fringe claims of socialism, wail, moan and call for campaign contributions because of what meanies and ogres on the other side are saying.

In the last two weeks Republicans have voted for insurance companies and banks, and against patients and students, against the unemployed and flood victims. Democrats have stood for patients and for students and for the unemployed and for flood victims.

The point is hardly subtle.

But, are the Democrats making it?

If the situation were reversed, can anyone imagine Republicans not making the point--over-and-over-and-over-and-over again?

Republicans have also blocked President Obama's appointee to head the Transportation Safety Administration -- the people charged with ensuring airport and airline security. That anti-terrorism stuff they claim to be worked up about. The President appointed one of the most qualified people in the country to run it, but Republicans blocked it. Today, no one is in charge -- even after the botched crotch-bomber.

Have you heard the Democrats going on-and-on-and-on-and-on about that? A few laments, perhaps, and that was about that. But, when then-Senator Max Cleland (D-GA), a triple amputee Vietnam War veteran, insisted the Department of Homeland Security personnel have certain union protections, Karl Rove and the Republicans ran TV-ads accusing him of favoring bin Laden.

Remember health care? It is something we all need, most of us can ill-afford, and we are all at the mercy of the insurance industry: will-they-cover/won't-they-cover, how much will they raise rates, what happens if I switch jobs, once I am ill I may never get coverage again, what happens to my life savings if I do get ill? And, oh, by the way, it will bankrupt the country as well.

Now, one might think that a party that actually did something about that after 60 years of obstruction just might, might, have the upper hand in the debate, especially when they controlled both houses of Congress and the Presidency and especially when its opposition provided no solution whatsoever to any of those

One would be wrong.

OK, one might say, health care is complex, the Democrats eked out an incredible 'win' anyhow, and learned some valuable lessons for the next big debate on financial reform.


Wrong, again.

Think of it. In one week, actually with one vote, Republicans sided with banks and insurance companies and against students and patients and families, and what occupies the news cycles? -- the Republicans'(!) idiotic statements about repeal, the polls, and lawsuits.

Has anyone heard a constant drumbeat of "they sided with banks and insurance companies" and "against patients and students and families" emanating from Congressional Democrats, from the DNC, from Robert Gibbs?

Have you heard it at all?

No. You have heard "expert" answers on whether Republicans can get a two-thirds majority in both houses to overturn a Presidential repeal veto (a random fifth-grader would do just as well), and "legal scholars" discussing the "merits" of the idiotic lawsuits.

That is, two weeks after passing a monumental bill, whose details are actually less important than its establishing the right of Americans to healthcare (roughly a half-century after our Western allies), and thereby meeting one of the Founders' objectives in the Constitution of "promoting the general welfare," Democrats have returned to their practice of answering Republican charges, no matter how ridiculous, and thereby reinforcing Republicans' frame-of-reference.

They think that people will "hear" the explanations. They don't. What they "hear" is that these Republicans fictions are somehow legitimate questions, and what the Democrats did to pass reform was something ungodly, and Blanche Lincoln reinforces that absurdity by basing her "no" vote on the "process" (whereas, in fact, Lincoln voted FOR the bad process bill--the one with the Cornhusker giveaways, and all that -- and against the bill to fix it and against freeing up $50B for student loans without spending an extra dime of federal money).

Indeed, the student loan victory should have been a beautiful segué into the banking reform debate: Republicans stood with the banks last week, and against students and taxpayers, trying to shovel $50B more to the banks at our expense. It could have been positioned as another "bailout."

But, it wasn't.

Instead, Democrats have allowed -- and that, my friends, is the only way it could happen -- the Republicans to appear as the champions of main street while raking in cash from their Wall Street banker supporters to scuttle financial reform, and allowed -- again, the only way it could happen -- themselves to be painted as the bankers' bailout buddies.

For a century no group has been more closely associated with the Republicans than the Wall Street banks. Yet, Republicans have positioned themselves as protecting "taxpayers" against the banks by opposing a "bailout" fund, an experience we "taxpayers" just had. Of course, they do not tell you that their policy, of just letting the banks fail, exposes the entire economy to enormous risk

Do Democrats point that out? Ever? Never.

Instead, what do we hear from the Democrats? Well, we need the fund as a stopgap when a big bank fails. Who the hell believes $50B, or $100B, will be sufficient the next time, when we required $700B this time, and we did not even save Lehman Brothers?

I don't believe it, you don't believe it, and the American people don't believe it.

Nor do I believe that any regulatory body is actually going to shut down a big bank. Do you?

Small banks, sure. But, a big, internationally entwined, politically powerful bank? There is not even a scintilla of evidence that that would ever be done, regardless of the authority granted, and regardless of which Party was in power.

So, here is the landscape: the Democrats propose a "too-small-to-be-credible" fund to "resolve" a big bank failure, that everyone knows will never happen, and the Republicans position the Democrats as willing to bail out the big banks. The Republicans oppose such a fund, asserting the big banks should just be allowed to fail, that everyone knows they will never do, and position themselves as protecting taxpayers against another bailout -- while leaving the economy exposed to a meltdown that will make 2008 seem like boom times, and the Democrats position the Republicans as, as, as...nothing!

Great work, huh?

The truth, of course, is that Republicans want to block all reform, oppose breaking up the big banks, i.e., they would virtually guarantee a repeat economic collapse. Paul Krugman has now provided himself as a "far-out' liberal ally in opposing breaking up the banks.

Moreover, what an incredible, lost political opportunity.

Instead of rallying -- yes, rallying! -- behind a mainstreet/mainstream mantra of re-establishing economic security by breaking up the big banks, Democrats have rallied behind...nothing. Instead of replowing the field, they are removing a few weeds.

Republicans have provided Democrats an extraordinary opportunity to galvanize main street behind them, and against the Republicans. To do so, they need to:

1) Break up the big banks. All talk of "bailout funds" then disappears, and Republicans can only defend the big banks to be big...against the regional banks, and against the American people.
2) Republicans are playing fast-and-loose with the economic future of Main Street. Reckless. Negligent. They are willing to let the economy collapse, and willing to let everyone lose all their savings, all their pensions, and explode the budget deficit, just to help their Wall Street friends.
3) Remember, Republicans voted for $50B bank giveaway, against students, against taxpayers, against education.
4) Ask, over-and-over-and-over, what they would do to prevent economic collapse in the future?

Most importantly, rally the country behind breaking up the big banks. It is easier to understand than healthcare reform. It is also the only policy that would work to prevent the greatest of calamities--another, and worse, economic meltdown.

Big banks are dangerous to our economic health.

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Your whole future depends on it.