Here is what Americans in 1933 heard from their populist President during FDR’s Fireside Chat on the Banking System:
Only a foolish optimist can deny the dark realities of the moment… Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men… This nation is asking for action, and action now… There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people’s money. And there must be provision for an adequate but sound currency....
And here is what in 2010 the American people heard from their “populist President” Obama not begrudging the $17 million bonus given to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million to Goldman Sachs Group Inc. CEO Lloyd Blankfein:
Well, look, first of all, I know both those guys. They’re very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That’s part of the free market system. [...} Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don’t get to the World Series either. So I’m shocked by that as well. ...
Oh. My. God. First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses. And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability. Don’t take it from me, take it from the rating agencies: The planned overhaul of US financial rules prompted Standard & Poor’s to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again.
Simon Johnson points to mistaken political expediency.
Being nice to the biggest banks will not save the midterm elections for the Democrats. The banks’ campaign contributions will flow increasingly to the Republicans and against any Democrats (and there are precious few) who have fought for real reform. The president’s only political chance is to take on the too big to fail banks directly and clearly. He needs to explain where they came from (answer: the Reagan Revolution, gone wrong), how the problem became much worse during the last administration, and how – in credible detail – he will end their reign. What we have now is not a free market. It is rather one of the most complete (and awful) instances ever of savvy businessmen capturing a state and the minds of the people who run it. Is this really what the president seeks to endorse?
Savvy bankers? Yup!
Free markets? Savvy populist President? I’m not sure whether we should be looking for Alice’s looking-glass, Dorothy’s ruby slippers or Mr. Peabody’s Wayback Machine…