Wall Street is widely despised by an American public that lives with the consequences of bank behavior every day. The president and the party were once widely trusted by the public to rein in the banks and save the economy, but that reputation's been tarnished by the fact that they're now seen as overly cozy with the big financial players. And who can forget those visitor logs that showed just how entwined the administration and big business have always been?
With all the traffic between this administration and Wall Street, maybe this week's presidential appointees should be sworn in on a round -- trip ticket for the Acela Express.
The choice of a JPMorgan Chase exec to run the White House operation seems like a bad move under the circumstances, and it probably is. But if Bill Daley took three simple words to heart, and had the president's blessing to act on them, it could change everything.
Wall Street White House
If the president had taken a tougher and more populist stand against the banks in his first two years he would have won more independents, his base wouldn't have been as apathetic, and the election results could have been very different. And President Obama squandered a lot of his reputation as a reformer by stacking his White House with Wall Street-friendly advisors, which only compounded the Democrats' difficulties in an unemployment-wracked election year.
Only in Washington, a city whose perceptual and social bubble provides reality-proof insulation, could anyone believe that the solution is to appoint more presidential advisors from the banking industry.
There's a good argument to be made that the White House officially became a branch office of Wall Street this week. It's not just the appointment of Chase exec Bill Daley as the extremely powerful Chief of Staff. Gene Sperling, the latest in a string of Robert Rubin disciples in the administration, is about to be appointed to replace Larry Summers. Sperling took $800,000 from Goldman Sachs to run a charity for poor women trying to start businesses in Third World countries, and has accepted as many bloated speaking fees from Wall Street as his predecessor had. (There's the awkward matter of that "$11,000 per op-ed" writing deal with Bloomberg, too. Some of us appreciate Sperling's impact on market valuations for editorial writing.)
Sperling's returning to the job he held under Bill Clinton, which leads Ezra Klein to make the argument that Obama's "running the government like a business," where "having done the job well before is the best predictor of being able to do it well now." But the Rubin/Summers/Sperling team didn't do the job well. They helped deregulate Wall Street, and that led to disaster. No business on earth would hire people whose past performance had been so weak -- much less ones who could hurt the organization's image with its customers (who in this case are the voters.)
And let's not forget one other personnel move this week: Paul Volcker, who valiantly and vainly tried to end rampant speculation by the megabanks, officially left the president's service. (He had un-officially been given the boot almost from the beginning, when Larry Summers began denying him presidential access.)
All in all, the White House hasn't had a very sterling record of independence from the corrosive influence of big bank money, and this week brought back some bad memories. It reminded many people about Larry Summers, and those fat Wall Street checks. And it brought to mind OMB Director Peter Orszag, who left for a cushy job at Citigroup and was replaced by another Citigroup exec. And Tim Geithner, who to his personal credit has never cashed in on a fat Wall Street job (although he probably will), but was seen as far too close to Wall Street after his stewardship of the New York Fed and his supervision of the Goldman Sachs "backdoor bailout," which funneled taxpayer money to Goldman through AIG (Disclosure: I used to work at AIG).
This week's appointments are shaping up as a public relations disaster for the administration. Alex Pareene at Salon is probably right: This appointment won't really please anybody but Washington pundits. The left, except for the few leaders who have personal relationships with Daley, is dismayed. The center is increasingly convinced that the White House isn't interested in helping Main Street. And this move plays right into the hands of the right, who'll play it up for all it's worth. (On Twitter, from @michellemalkin: Bill Daley's "centrist"/"business" bio = greasing Fannie Mae patronage factory gears, serving TARP recipient JP Morgan.)
Who's happy? Jamie Dimon, the Chamber of Commerce, and the lobbyist for Patton Boggs -- but they'll still make their campaign checks out to Republicans. Mitch McConnell and some other Republicans said nice things, too, but that won't stop them from trying to undermine everything the president tries to do.
That leaves only voters. And whether they're on the the left, the right, or the center, this one's gonna hurt 'em.
Daley, as everybody now knows, is the son of the late Chicago mayor and the brother of the current mayor. His political perceptions are likely to be an even bigger liability than his resume. He's a Board member of Third Way, which is one of many signs that he thinks "centrism" represents what wealthy and powerful people in Washington agree on, rather than what people in the country agree. Most people in both parties (and the Tea Party) want to protect Social Security and Medicare, tax the rich, and crack down on the banks.
So why was he chosen? Democratic leaders, including Al Gore and Howard Dean, speak extremely highly of him. His appointment will soothe executive egos -- temporarily. And there may be a little bit of Chicago horsetrading involved, too. Think about it: Rahm Emanuel wanted to run for mayor, and suddenly Dick Daley announced he wouldn't seek reelection. I said at the time that Dick's probably going to be rewarded with a cabinet appointment, and I still wouldn't rule that out. And while Dick has said he won't endorse a candidate this year, the third Daley brother will issue an endorsement. It all could've been coincidence, but it seemed choreographed: Rahm says he wants to run, Daley steps aside, Rahm says he's "surprised," etc. etc.)
Then there are those discontented executives we keep hearing about. Although I doubted it at first, I was wrong: There's no question anymore that business leaders genuinely feel slighted by this administration. My apologies, Fareed Zakaria: I still think those CEOs were playing you for tactical reasons, too, but it's now clear their egos are also bruised. I should've known better: I've known enough highly successful business executives to know how vain, petty, and sensitive they can be. That's one reason for this latest wave of appointments -- but it won't placate these execs, and the voter blowback is likely to shock the president's team.
They say that Bill Daley's a likable, energetic guy who gets things done. He probably is. But his appointment sends a cynical message to the base and independents, and his political instincts could drive the administration in exactly the wrong direction. But not necessarily: There's still a way to save this thing.
How Bill Daley Can Be Your Next Hero
Here's a suggestion for Bill Daley, three simple words that could turn everything around for the president and his party: Be Joe Kennedy.
Progressives were appalled when FDR appointed that noted stock market manipulator Joe Kennedy to be the first head of the Securities and Exchange Commission. Kennedy had a reputation as a ruthless and unscrupulous master of insider trading. He was a master of the reckless and speculative financial instruments of his day, the early 20th Century equivalents of CDOs and mortage-backed securities. But Kennedy took his job seriously, went after the sharks ferociously, and help stabilize the capitalist system so effectively that it remained sound for another seven decades.
Bill Daley hasn't been personally implicated in JPMorgan Chase's misdeeds, so he certainly doesn't have Joe Kennedy's pre-SEC reputation. By all accounts he's a decent, ethical guy. But his bank's reputation isn't so unsullied. Despite Jamie Dimon's massive PR initiative on behalf of his own reputation, the problems are significant: Sloppy and probably illegal foreclosure management, for which the bank has set aside more than $2 billion for repurchases and litigation costs; millions in cash that got spread around Alabama in pursuit of some deals for municipal bond derivatives (it cost three-quarters of a billion in fines for the bank to be able to say it "neither admitted nor denied wrongdoing"); and a few other little odds and ends, too (more here.) Daley's certainly heard a lot about these problems, and he can put that knowledge to good use in his new job.
Daley isn't being appointed to SEC, of course. He's been chosen to be the president's gatekeeper and right-hand man. But he can play a Joe Kennedy-like role for the president, in everything from managing his schedule to communicating with senior aides... and in speaking with the business community. He has business credibility, and when executives come complaining to the White House he'd be the perfect guy to tell them to "cut the sh*t and cooperate." He certainly knows something about tough Irish political dynasties. If Daley's willing to use his industry knowledge and experience to force the White House into a tougher, smarter reform approach, he could wind up becoming everybody's hero.
Do I think that's the likeliest scenario? Frankly, no. The mindset these days seems to be that today's business executives, who can match their Roosevelt-era brethren in greed and vanity, can be cajoled and placated by a few more compromises. But that's not going to happen. The White House and other Democrats will probably continue to backtrack and plead for quite some time, but they'll never be able to outbid Republicans as Wall Street lackeys. So the day may yet come when they realize that compromise isn't going to work.
When that day comes, we can only hope that Bill Daley from Chicago remembers the legacy of Joseph P. Kennedy from Massachusetts.
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.
He can be reached at "firstname.lastname@example.org."
Website: Eskow and Associates