Via TPM, a Wall Street Journal article that says, basically, that at first the Obama administration did not particularly seek out Wall Street’s advice:
“In late January, as Treasury Secretary Geithner prepared his proposal for handling the banking crisis, administration officials avoiding seeking input from Wall Street. “Those people are tainted,” said one aide at the time. “Why would we consult the very executives who got us into this mess?” (…)
The administration’s initial approach contrasted with those of the last two White Houses. Robert Rubin left Goldman Sachs Group to become one of Bill Clinton’s top economic advisers, and convinced the new president that what was good for Wall Street was good for America. Under President George W. Bush, the administration “looked up to and admired Wall Street,” says one banker. “The Obama folks don’t even like us.””
But then Obama decided that it was important to reach out more to Wall Street, and did. More Wall Street people were consulted; the administration worked harder to win them over.
Here are the passages from the article that really got to me. (Emphases added.) First:
“Meanwhile, Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. (…) Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun “slow-walking” the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions.”
“But as the furor intensified, Mr. Obama’s words to Congress — “we cannot govern out of anger” — seemed to take on less importance. Last week, he was asked by reporters on the White House South Lawn whether anger was getting in the way of pushing through banking reforms. “I don’t want to quell anger,” he replied. “I think people are right to be angry. I’m angry.”
Bankers were shell-shocked, especially when Congress moved to heavily tax bonuses. When administration officials began calling them to talk about the next phase of the bailout, the bankers turned the tables. They used the calls to lobby against the antibonus legislation, Wall Street executives say. Several big firms called Treasury and White House officials to urge a more reasonable approach, both sides say. The banks’ message: If you want our help to get credit flowing again to consumers and businesses, stop the rush to penalize our bonuses.”
I think it’s important to be really, really clear about what this article claims. Both the stress tests and the attempts to get credit flowing again are essential parts of our attempt to solve the enormous economic problems we now face, problems that these very firms are largely responsible for. If the banks are “slow-walking” the stress tests and threatening not to help get credit flowing, that just is threatening not to help get the country out of the economic crisis.
That would be an absolutely appalling thing to do under any circumstances. It would be doubly appalling since these very people bear a lot of responsibility for that crisis. But the fact that they are making these threats not over some large issue of principle, but over their bonuses — that’s just breathtaking.
I’m with Ezra:
“Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11. (…)
That we even need a new raft of compensation regulations strains the boundaries of credulity. It makes you question the values of your countrymen. They were the principle beneficiaries of a decade-long bubble that they inflated. These Ivy League bundles of privilege were given every possible advantage and then took yet more than that. They took the advantages of high school seniors applying to college this year or entering the workforce next year. They took the advantages of seniors who had saved for retirement and parents who had invested to build their own business. And now they’re refusing to help defuse the bomb at the center of our economy unless we pay them retention bonuses. Worse, they’re threatening to flee the scene of the crime and make money off the carnage. That, it’s been argued, is why we need to keep paying meeting their demands: Because we need them working for us rather than against us. It’s chutzpah as the Yiddish define it: A child who kills his parents and then begs for lenience because he’s a pitiable orphan. It’s shameful.”