Free Markets, Free People

Reaping, Sowing, etc.

Glad they finally noticed:

The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.

Of course the greatest stoker of this populist backlash has been the Obama administration. I’ll be the first to agree that some of the financial institutions, such as AIG recently, have played into the populist condemnation by the administration, but instead of being specific about the AIGs of the world, they have instead gone after an entire industry to the point that “banks and Wall Street” are synonymous with crooks, swindlers and liars. Having established that narrative, seemingly purposely, there’s now a huge backlash building which may, in fact, cripple the administration’s efforts pertaining to both.

“We’ve got enormous problems that need to be addressed,” David Axelrod, Mr. Obama’s senior adviser, said in an interview. “And it’s hard to address because there’s a lot of anger about the irresponsibility that led us to this point.”

“This has been welling up for a long time,” he said.

Mr. Obama’s aides said any surge of such a sentiment could complicate efforts to win Congressional approval for the additional bailout packages that Mr. Obama has signaled will be necessary to stabilize the banking system.

As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are receiving government help to survive.

Beyond that, a shifting political mood challenges Mr. Obama’s political skills, as he seeks to acknowledge the anger without becoming a target of it. A central question for Mr. Obama is whether his cool style — “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month — will prove effective when the country may be feeling more emotional.

And the country is feeling emotional because the administration has been making emotional arguments targeting the industry it wants to help. Not very smart politics. And they’ve now finally realized that.

“Never underestimate the capacity of angry populism in times of economic stress,” said Robert Reich, a professor of public policy at the University of California, Berkeley, and labor secretary under President Bill Clinton. “A big challenge for President Obama will be to maintain a rational and tactical public discussion in the midst of this severe downturn. The desire for culprits at times like this is strong.”

The “culprit” has been identified. In their desire to escape blame, government officials in Congress and elsewhere have almost unanimously used their access to the media to vilify banks and Wall Street while pretending they had no hand whatsoever in this debacle. Unfortunately they’ve been quite successful in the scapegoating. However, having established the narrative, they now have to attempt to reverse it because the public rage they’ve helped stoke may prevent them from doing what they think they need to do to turn the financial industry around.

The entire problem that the administration is now recognizing is one of their own making and another indication of their inexperience and lack of foresight. It’s one thing to demonize such industries when campaigning, it is, as they’re learning, an entirely different thing when you do it as the President of the United States. The administration now has to figure out how to reverse a narrative they helped build and establish. That should be interesting to watch.


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9 Responses to Reaping, Sowing, etc.

  • Of course, the Republicans have been hammering hard against banks, the bailout and the like.  But it’s all Obama’s fault, eh?  I sense a trend here (reminds me of back in the 80s, when Milo comes with some bit of bad news to his “news editor” who looks up and says “It’s Reagan’s fault!”)   Just blame everything on Obama!

    • And where does the “buck stop” in the Obama Administration?

    • Over the last 8 years it has been Bush’s fault. Turnabout is fair.

      Besides which, it was the Clinton Administration who bears the bulk of the blame for the financial crisis. Obama in fact played his part, as a lawyer working for ACORN, suing Citibank because they were not handing out enough bad loans.

  • So who’s the second-string scapegoat? Us, I suppose. 

    I’d argue, though, that people would be feeling emotional and angry at Wall Street regardless of who Our National Spokesmodel chooses to blame. Nevertheless, the cheap scapegoating we’ve seen from those in power is inexcusable. It’s a shame the tiny little men now scurrying around the White House aren’t bright enough to learn from Dubya’s example: After 9/11, the president went on TV and reminded the American people that scapegoating all Muslims would be wrong. He could easily have let it slide. 

    IIRC he got CAIR involved, which was a typically boneheaded move… But you can’t win ’em all. 

  • “worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.”

    Yeah heaven forbid  he worry about the economy getting back on track.  Oh no, he is worried that his socialist agenda and socialist enginerring could be complicated.

  • “The Republicans did it!” can be your new mantra Scott,  hey, what am I saying, it’s been your mantra all along, even after they lost control in 2006.   Just like “Iran rules!”.   Good lord but your easy.

  • The easy way out would be to let some banks fail, and FIRE the management.

  • It sounds like TAO is learning that “just words, just speeches”… ain’t… when the person saying them is the President of the United States.