An interesting observation was made today by the pollster for Martha Coakley, the hapless Democratic candidate for the Massachusetts senate seat held almost forever by Ted Kennedy. It appears polls are showing that the voters, especially independents who would normally vote Democratic in a liberal blue state like Massachusetts, have instead run to support the Republican candidate as the agent of change. Wasn’t that supposed to be Barack Obama’s signature tune?
Massachusetts voters have given up on President Obama as an agent for anything but the status quo, and this is most evident in his willingness to dole out trillions of dollars in direct and indirect support to the banks. The Massachusetts polls show this issue to be foremost on the minds of the voters.
The White House was getting this message way too late to do any good. President Obama was in Massachusetts only in the last few days, trying to work his magic with crowds to revitalize a dying effort. He also announced last week a proposal to tax the banks on their profits, hoping to generate $90 billion dollars this decade in partial payment to the taxpayers for their bailout of the banking system. He promised that one way or another, the banks would pay back every dime of the money lent to them.
It is not clear that his oratory is working or that the public is listening to him; his actions this past year have been completely at variance with his rhetoric. He is, in fact, almost as completely addled as the bank executive cronies he appears to court and coddle. This past week also saw testimony from some of the top executives in the banking industry, including Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JP Morgan Chase, and John Mack of Morgan Stanley. They were all very skilled at accepting regret for what happened without accepting responsibility.
It was clear, though, that not one of them expected to change their way of business to any great degree. They acted almost as if it were their God-given right to be Too Big To Fail, and to have unlimited access to the taxpayers’ wallets when they wanted and needed it. The most astounding revelation came from Jamie Dimon of JP Morgan Chase, who said no one in his bank even contemplated the possibility that housing values might go down.
Were he to say otherwise might expose the bank to all sorts of lawsuits. Still, taking him at his word, we have to accept that none of the top executives at Jamie Dimon’s bank foresaw a housing crash or even a bubble in the making. These are men making millions of dollars a year, and they couldn’t see the housing bubble of the century in front of their eyes? If Jamie Dimon had a soupçon of personal honor he would have already resigned over this failure, and fired all his top management to boot. We are left to conclude that bankers are as much bereft of personal honor as they are lacking in a sense of personal responsibility for their failures.
These are the people Barack Obama has chosen to cozen up to in a vainglorious attempt to revive the economy. We have come to the point of no return for this administration – either it charts a drastically different course when it comes to dealing with the financial industry, or it carries on siding with clueless, inept, and in many cases immoral bankers. Maybe the electoral situation will force President Obama to see the light, but if so, he is going to have to take dramatically different action to do anything serious about reforming the banking industry. Many of the ideas afoot, like a tax on banking profits or a consumer regulatory watchdog, are helpful but don’t constitute real reform. Here, then, is an insider’s view of what really is necessary.