The "Populists" Are Right About Wall Street
How has a popular Democratic president with a convincing electoral mandate failed to translate the opportunities of recent events into the "change" for which voters clamored? What kind of miscalculation allowed his administration to stir up such a wave of populist fury in such a short time?
The short answer, of course, is AIG. Why did the Treasury Department allow the payout of many millions in bonuses to executives of the unit that sank the company? Every answer the president's brain trust offered made them look more feckless, at the very moment they were rolling out a bank plan designed to spare stakeholders of our troubled financial institutions the haircut they so richly deserve.
This lapse of common sense arises from a deeper problem: the reflexive contempt for populism that is felt by the dominant faction of the Democratic Party -- the faction that regards itself as the responsible guardian of financial civilization, and that thinks of populism as crackpot economics and senseless proletarian rage.
I was reminded of the party's long-simmering debate over populism a little while ago when I read an essay by Al From, the founder of the centrist Democratic Leadership Council (DLC), announcing his retirement as that group's "CEO" and recounting his many successes over the years in building a "political brand." A short while later I read in Roll Call an account of Mr. From's career as "one of the 20th century's most successful political entrepreneurs," a man whose adventures in shifting the Democratic Party to the right formed a neat analogy to Mr. From's father's accomplishments in the suburban garage-building biz.
In Washington, where the need to treat government like a business is a no-brainer, thinking about politics in this way -- as though it were a matter of branding, entrepreneurship and CEOs -- is thought to be highly advanced stuff.
But I don't agree. Surely we have learned the hazards of turning business models loose on the state, after all our experiences with the "MBA president" and his "market-based" government, all the "K Street Projects" and "superlobbyists" of the last 20 years, all the regulatory agencies that understood the regulated as their "customers," all the bailouts engineered by friends of the bailed-out, all the faith placed in "voluntary compliance" on the grounds that business would naturally self-regulate.
Still, none can doubt the DLC's success at pushing "third way" humbug in elite Democratic circles. Many of the rhetorical gestures we associate with centrism -- for example, the habit of dismissing liberal policies as "industrial age" relics -- got their start in Mr. From's shop.
The theme that matters most these days, though, is the DLC's war with populism, a term that is supposed to summarize everything that is wrong with class-based discontent. Not only is populism mulishly wrong-headed, according to the DLC, but it is a sure-fire electoral loser -- a whiff of populism, the group once concluded, is what cost Al Gore the 2000 election.
The group's attacks on populism resonate in D.C., I suspect, because the commentariat has always thought "populism" to be faintly ridiculous, a thing of mobs and pitchforks and windbag leaders more demagogue than CEO. (For an illustration of what I mean, look at the cover of the latest issue of Newsweek.)
This way of thinking has not served the Obama administration well in recent weeks. Think of Larry Summers repeating, on program after program, his outrage with the AIG bonuses, but then immediately moving, as you would with a naughty child, into a discussion of the rule of law -- which I guess is what you call the years of de facto de-supervision that allowed this disaster.
One of these days it may dawn on our leaders that the public, in this case, is right; that this time the mountebanks and charlatans are not the populists but the responsible-looking CEOs who ran the country's financial institutions into the ground -- and who the administration apparently wants to leave in charge of many of those institutions. The public outrage about performance bonuses isn't just mindless resentment; it is directed at exactly the instruments that steered the economy into the ditch and the executives who built the system -- and who will demand to do business the old way as long as they have breath to bellow.
What's more, it is only thanks to populist members of Congress that we know our bailout of AIG sluiced billions to foreign banks, and it's only thanks to public outrage that the administration feels any pressure at all to exert a firmer hand on the institutions it has rescued from bankruptcy.
There are many, I am sure, who wish that this whole bailout business could be settled as an affair between political entrepreneurs and the interests that fund them, as in days of yore. But I hope President Obama has a better strategy than that planned for the time when his Treasury Department has to ask Congress for another helping of TARP.
Thomas Frank's column, The Tilting Yard, appears every Wednesday at OpinionJournal.com
Also in Opinion Journal:
Timothy Geithner: My Plan for Bad Bank Assets
Fred Krupp: Carbon Caps Are the Best Policy
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
I need only look at Pelosi and I have confirmation that democrats are as bad as republicans.
Bad, not nearly AS bad.
Of course, the populists are right! Geithner and Obama and Summers are working on behalf of the financial banking crime syndicate. Why else would the thieves be allowed to remain in place. Now, had the trillions invested in the financial network been spent, instead, to build our manufacturing sector from the bottom-up, allowing us to further reduce our trade deficit, strengthening the dollar and its function as the world's reserve currency, Americans would be working, homes would be purchased, and workers would be spending and borrowing. But no, this was not considered. Support for the financial crime syndicate was more important.
http://eye-on-washington.blogspot.com
This is not "rocket science" even though Wall Street wants us to think it is!
The only complexity is how the Banks are linked together!
We could isolate them like the cancer they are and build a Strong Credit Flow directly to the 99.9% of America outside the 8 Wall Street Banks and AIG!
With a little work and funding, like a Bypass Surgeon does everyday, we can go around Wall Street!
We have Credit Unions, Community Banks, and the Government can lend directly to consumers and businesses at much better rates if the funding was flowing to these sources.
Wall Street is not the "HEART OR BRAIN" of this Country and should be BYPASSED until its cleaned OUT and regulated!
$1 to Main Street does not equal $1,000 to Wall Street!
Fund Credit Unions, Community Banks, and OPEN up Credit FLOW from the Government to Consumers and Business on Main Street, the 99.9% of America that matters!
Print a Credit Currency against the Government's guarantee to reduce DEBTS instead of the Current FED Debt Currency!
Tom, good points like in your book, but where is the true hope for real change coming from?
This is not "populism." It's righteous anger against the Village mentality that controls US politics through shared culture, elitism, and, most importantly, legalized bribery disguised as campaign finance and lobbying. The Democrats took more money from the Street than the GOP this election cycle. The notion that President Obama was elected chiefly by grass roots small donations is just silly.
The current thinking is a variation of the old adage, "As goes General Motors, so goes America." That's been dead for some time now. The new variation is, "As goes Wall Street, so goes America."
President Obama was elected on a promise to bring change, and he has appointed the very people who caused this meltdown to fix it.
You wonder why people are mad and feel betrayed? Yes, I voted for the president, and I am very disappointed with developments so far.
Having listened to Dorgan ... who predicted this crisis and got irt right ... I'm wondering why congress isn't repealing the Gramm-Leach-Bliley act or beefing up the Glass-Stegle act.
Sure there's a lot of lip service going on ... and a lot of Obama watching ... but there's actual legislation that congress could be enacting.
They need to stop watching Obama and get to work.
"Why did the Treasury Department allow the payout of many millions in bonuses to executives of the unit that sank the company? "
Maybe because those retention bonuses went to people in a different part of the unit (Financial Products) that sank the company, a part that has been bringing gains, not losses, into AIG? Maybe because those people stayed around to help bail a sinking ship so that it *could* repay the government loans?
I tell you what. There's no way AIG could have functioned without the secretaries and janitors, so obviously they're guilty of having enabled AIG, and they must have heard *some* office gossip, which they didn't run to the press with about the financial products division's subdivision that was dealing with credit default swaps. Let's fire all of those people and take back everything they made last year.
The MSM "owns" the images and language.
Populist anger is pitchfork wielding nuts,
Toxic assets are Home loans unemployed because of derivatives sucking all the investment out of Main Street.
AIG AIU's credit default swap INSURANCE WITHOUT RESERVE scam is under reported as the true cause of this crash.
http://www.huffingtonpost.com/users/profile/research?action=profile
There's absolutely no doubt that the Obama White House and Congress look upon the working class American with total disdain, as much so as does the Republican party. When you see trillions handed to banks, while everyone trumpets a DOW increase, in the face of 600,000 layoffs per month, 75,000 foreclosures a month, and 5000 personal bankruptcies a month--you know the age we're living in---an extension of the BushCo regime, only under an Obama brand that is as against Americans as was BushCo. Obama is delivering to Wall Street, but not to Main Street, it's that simple, and the Democratic party could care less.
2010 and 2012 are just around the corner. We can sweep these traitor-Democrats out to sea in the coming elections.
More time to separate the wheat from the chaff, please?
signed
BHO
I had a dream last night of a ntionwide worker's strike -- en masse: teachers, police, firefighters, transportation workers, hospital workers, etc. We are the backbone and we can cripple and shutdown the country. I am quite tired of hearing from the Washington set that Wall Street is the sole base of our economy and needs to be catered to like a petulant child. Jeez the people were right about TARP!
I'm with you.
I'll be at the strike with you!
Can we wait a little bit before we lump Obama with the rest of the folks currently making the laws and taxation policy in this country...I have not seen where he has done anything in a less than populist way. He has no good choices with what he was handed to him in this banking situation. There is no great solution...we do need a bottoms up program no matter what, when it comes to toxic assests..he has made a start here but we do need more....just give him a chance as who else is there?
Just because you don't know the plan doesn't mean there isn't one.
Is it just me or does anybody else see how difficult this new transparency is to maintain?
Two months of the President trying to keep us as informed as he legally can just leads to more arm chair quaterbacking.
Personally, If I wereThe President, I'd just keep working and stop talking for a while.
The bailout from taxpayers to AIG went striaght to Goldman Sachs and other banks who were counterparties to derivatives contracts. Why should taxpayers be paying out gambling debts?
You don't think taxpayers have a right to complain when they being ripped off?
I am getting really tired of brain dead zombies who support Obama no matter what he does. Some people seem to think that ignorance is virtue. If you know anything about the history of political movements you know that working people's interests are only looked after when the working class forces the politicians to listen to them by being politically active. I'd rather be an armchair quarterback than an armchair coach potato who wonders why nothing ever changes.
Not being a North Dakotan, I have been impressed in the past with Senator Byron Dorgan mainly for his attention to waste, fraud and abuse by Iraqi contractors and only learned on last night's Rachel Maddow Show that he was one of only eight Senators to vote against the Gramm-Leach-Bliley Act, which allowed Citibank to acquire Nationwide (transforming into Citigroup) and allowed AIG to branch from the staid insurance business into gambling (hedge funds, derivatives, CDSes, etc.) by overturning the Glass-Steagall Act (or a section of it?), which prohibited banks and investment companies and insurers from doing one another's work. Cutting a long story short (too late) it occurs to me that Dorgan's prediction in 1999 of a massive government bailout 10 years later, of the systemic failure which Gramm-Leach-Bliley allowed Boards of Directors and CEOs to cast as "profit," is proof positive that the sentiments in opposition to rewarding failure are rational and objective, not hysterical collectivism as the corporate press attempts to portray all things "populist."
Great post!
A vision without a plan on how to make it work is delusion.
A vision with a plan is a strategy.
I will trust in Obama's strategy, thank you very much.
Blah blah blah blah blah.
You're absolutely right, of course; actions do speak louder than words. Billionaires need to be taxed more, at the rates they were taxed in the 1950s, when the United States became the world's #1 industrial producer. Those were the days!
http://www.truthandpolitics.org/top-rates.php
Washington uses the word "populist" as a smear to apply to people who feel outraged with what is happening with their country. The political classes in this country are completely taken over by thought processes totally alien to the majority of Americans. What word ought we use to smear them?
I'd offer up a few of my favorites, but they wouldn't make it past the thought police. heh
Why don't you try? ;-)
LOL...see what I mean?
Yes, I see what you mean. :-(
You must be logged in to comment. Log in or connect with
