Paul Krugman’s latest column links to a New York Magazine cover article by John Heilemann provocatively titled “Obama Is From Mars, Wall Street Is From Venus: Psychoanalyzing one of America’s most dysfunctional relationships”. As might be expected from Mark Halperin’s writing partner, it’s not hard to spot Heilemann’s best sources — I had not previously been given to understand that Timothy Geithner, for example, is not only President Obama’s “man crush”, but also a highly skilled political operative and practically a secular saint. Heilemann’s discussion of the sausage-making behind the Financial Reform Act does paint a vivid picture of our Wall Street masters as a bunch of WATBs:
… On May 20, the Senate passed its bill to reregulate Wall Street by a vote of 59-39, complete with a (watery) version of the Volcker Rule. The story of the legislation’s passage can be told in a number of ways: a tale of conflict or compromise, triumph or capitulation. But on any reading, that story is only the climactic chapter in a larger narrative: how the masters of the money game fell out of love with—and into a state of bitter, seething, hysterical fury toward—Obama.
The speed and severity of the swing from enchantment to enmity would be difficult to overstate. When Obama was sworn into office, Democrats on Wall Street rejoiced at the ascension of a president in whom they saw many qualities to admire: brains, composure, bi-partisan instincts, an aversion to class-based combat. And many Wall Street Republicans—after witnessing the horror show that constituted John McCain’s response to the financial crisis—quietly admitted relief that the other guy had prevailed.
Today, it’s hard to find anyone on Wall Street who doesn’t speak of Obama as if he were an unholy hybrid of Bernie Sanders and Eldridge Cleaver. One night not long ago, over dinner with ten executives in the finance industry, I heard the president described as “hostile to business,” “anti-wealth,” and “anti-capitalism”; as a “redistributionist,” a “vilifier,” and a “thug.”…
As summer turned to fall, Goldman, JPMorgan, and the rest began furiously lobbying against the White House’s financial-reform bill as it moved through the House, and in particular against Obama’s proposal for a new consumer-protection agency. (In the first three quarters of the year, the industry spent $344 million on its efforts to soften the legislation.) Dimon, despite his frequent invitations to the White House, began complaining about a lack of access. “If you don’t want us to lobby, give us a seat at the table” became his mantra, punctuated with complaints about the paucity of people inside the administration with a Wall Street background. In September, he and Blankfein were conspicuous no-shows when Obama delivered a major speech on financial reform at Federal Hall—an absence interpreted by the industry and the White House as a signal of their growing displeasure.
Considering the lengths to which the administration had just gone to rescue Wall Street from collapse, all this behavior might strike a (rational) person as ungrateful and even churlish. One explanation for it revolves around the industry’s endemic twin defects: short-termitis and amnesia. “Wall Street is focused on the next five minutes or the last five minutes,” says Roger Altman, a deputy Treasury secretary under Clinton and now chairman of the boutique investment bank Evercore Partners. “At the end of Obama’s speech at Federal Hall, he said that this community must remember the debt it owes to the taxpayers. But I’m not sure most of Wall Street does remember.”
Another, not inconsistent, theory is that the money changers aren’t merely forgetful but mildly deluded. “They’ve created a narrative where irrational actions by a few people plus the nature of government intervention forced them to do things inconsistent with their free-market philosophy and regular way of handling their business,” offers a Democratic financier. “So, yes, they took the TARP money, but only because they had to. None of them are sitting there saying to themselves, ‘You know, I was responsible for this crisis. Therefore, I’m really grateful to the government that it stepped in.’ This is not the narrative they have in their heads.”
But one of the city’s most successful hedge-fund hotshots offers a different surmise: “The majority of Wall Street thinks, ‘Hey, you lent us money. We did a trade. We paid you back. When you had me down, you could have crushed me, you could have done whatever you wanted. You didn’t do it! So stop your bitching and stop telling me I owe you, because I already paid you everything! The fact that I’m making money now is because I’m smarter than you!’ I think that’s where you’ve got this massive disconnect. In simple human terms, the government is saying, ‘I saved your life, and all you did was thank me once. You should be calling me every day… ’ The guy who saved the life expects more. And the guy whose life is saved says, ‘I already thanked you!’ ”
Obama could be forgiven for expecting greater reciprocity from the bankers—something more than the equivalent of a Hallmark card and a box of penny candy. He had, after all, done more than saved their lives directly by continuing the bailout policies formulated by Paulson and Geithner. He and his team could credibly claim to have kept the world economy from falling off a cliff. Yet with the unemployment rate still near double digits, Obama had (and still has) received scant credit from the public for what was arguably his signal accomplishment. At the same time, the one thing that almost every slice of the electorate would have applauded wildly—the sight of the president landing a few haymakers on Wall Street’s collective jaw—was an opportunity that the president had largely forsworn…
I think Mr. Krugman has the best advice for dealing with the Wall Street WATBs he labels “The Old Enemies” —
… So where does that leave the president and his party? Mr. Obama wanted to transcend partisanship. Instead, however, he finds himself very much in the position Franklin Roosevelt described in a famous 1936 speech, struggling with “the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.”
And that’s not necessarily a bad thing. Roosevelt turned corporate opposition into a badge of honor: “I welcome their hatred,” he declared. It’s time for President Obama to find his inner F.D.R., and do the same.