There was a great article in this weekend’s New York Magazine that echoed some of my earlier posts about Wall Street.
Obama is from Mars, Wall Street is from Venus
It’s rather long so I will put out a summary, quote most memorable passages and comment on it.
More under the cut
The author is trying to examine the light speed disintegration of friendship between Obama and Wall Street into the most toxic breakup. Now that the Financial overhaul Bill has passed, this contentious relationship seemed to have reached it’s nadir.
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.
You might opine that such extreme opinions reflect a certain insensitivity to the prevailing political climate—to the fact that millions of people on the left, on the right, and in the middle would like to see Obama throttle the bankers with his bare hands. Do the moneymen not get this? Or do they not care? (emphasis mine. BL) “It’s both,” says one of the city’s most politically savvy private-equity players. “The analogy is to a doctor who’s giving a shot. The fact that the child is screaming doesn’t mean he’s not doing the right thing. Financial markets are in fact essential to the healthy operation of our economy. So for a lot of these guys, the fact that people are screaming doesn’t mean they’re doing something wrong.
The irony is lost on that savvy private equity player. Because just as he casts Wall Street as the doctor and angry populace as the screaming child, we can also cast Obama as the doctor and Wall Street as the screaming child. Just because they are screaming doesn’t mean Obama is doing something wrong.
For Obama, Wall Street’s cluelessness is a source of intense frustration—“He’s like, ‘What the fuck, you guys?’ ” says a White House official—and its ire toward him one of the cruelest paradoxes of his presidency. Rather than bowing to bailout rage or indulging the yearning for what Geithner calls “Old Testament justice,” Obama believes, justifiably, that he has taken a moderate approach to dealing with the financial system. On arriving in office, he chose to shore up the banks, not nationalize them. The regulations he has advocated aren’t punitive or radical. Despite the occasional burst of opprobrium, his stance has been one he summed up pithily at a meeting with the heads of the largest banks: “My administration is the only thing between you and the pitchforks.
So why are they so increasingly angry with Obama?
I had an earlier post where I was wondering why Wall Street, instead of being angry with Obama, doesn’t play along, when I described a scene from the Star Wars, where the rebels dressed as Empire guards “arrest” Chewbacca and the crew and parade them around the ship. Wall Street is still more likely to receive sympathy, albeit behind closed doors, from Obama, rather than from the angry population. But instead of playing along they do this:
The issue that most sorely tested Obama’s restraint was that of Wall Street bonuses. Emanuel and Axelrod had reams of data showing that this was by far the hottest of populist hot buttons—and one that could inflict collateral damage on the White House. One day in the winter of 2009, Emanuel was meeting with a senior Goldman executive and offered some Rahmian advice. “You don’t fucking get it!” he said. “You’re making $600,000 a year and you think you’re a fucking saint—because you were making $50 million before. But as far as the guy across the street thinks, you’re still a fucking pig! Reduce it to zero and he’ll love you!”
Oh, how history might have been different if that dude, and the rest of his chums, had only listened. Instead, last October, news broke that Goldman was planning to award $23 billion in bonuses to its executives at year’s end. Suddenly, a story that had been simmering all year hit the boiling point—and it indeed proved to be a problem for Team Obama. By December, Axelrod’s polling gurus were seeing clear signs in their numbers that the president was perceived as being too close to the Wall Street greedheads.
As I was reading this I thought of a great movie scene from Goodfellas where De Niro goes furious at his teammates for spending money conspicuously right after the heist.
Some will be amused that I’m using a mob reference to describe what’s going on and they will be missing the point.
Obama’s hands are tied and he can’t be seen to be too friendly with you guys and under the circumstances that’s the best that can be done for Wall Street. But instead of taking a low profile and at least be greatful for not being nationalized the guys on Wall Street are publicly throwing feces at him, calling him anti-business and anti-capitalist, conveniently forgetting that just over a year ago they were standing on the edge of a precipice and it wasn’t free market capitalism that saved them. They also conveniently forget that Obama was, indeed, what was standing between them and the pitchforks. It is only after you fucked him up in public with your bonuses was he forced to say:
I did not run for office to be helping out a bunch of fat-cat bankers on Wall Street.” Railing against “massive profits and obscene bonuses” and demanding, “We want our money back,” he unveiled in January a tax on the 50 biggest banks that would raise $90 billion over ten years to cover bailout losses. And, finally, he rolled out the Volcker Rule.
I’m sure that if Wall Street CEOs at least took a low profile and laid low for a while, Obama would not have had to say and do the above. Now that he was forced to proclaim that he’s not your friend – you portray him as unfriendly to business. And you can’t put two and two together and figure out why he’s doing what he’s doing. It’s as if these smart, savvy, cutting edge leaders are blind to the tectonic shifts of the game, it’s as if they are not realizing there are no reliable allies for Wall Street these days – not on Main Street, not in the White House, but they insist on playing the game the old-fashioned way.
The only explanation I can find, because those guys aren’t stupid, is that they really do have a short attention span. It’s a typical trader’s ailment – you’re only as good as your last trade. You only remember the news that came out this morning and you tend to give more weight to the most recent piece of info. And right now they are seeing hostility from Obama and don’t seem to get the origin of it. Notice, that I’m not even talking about being remorseful or admitting some responsibility – that would be too much to ask of them. I’m only just questioning their analysis of the current situation, because their account of events goes something like this: I was just minding my own business, doing my job and suddenly Obama comes out of nowhere and kicks me in the balls for no reason!
Obama, on the other hand, seemed to have found his political sweet spot.
There are those who reckon that, what with the wailing and gnashing among both the plutocrats and the populists, Obama has actually found the political sweet spot. “Main Street is mad at the president because he’s too close to Wall Street, and Wall Street is mad at him because he’s too populist,” Altman says. “Therefore, almost by definition, he’s in the right place.
But Wall Street, despite claiming to be a place where smartest and savviest and most dedicated to reality people work, might take some time to get used to shifted landscape.
But Wall Street, too, is engaged in some seriously perilous (and mildly deranged) thinking, which reflects not just its political naïveté but its all-distorting insularity from … reality. The populism now stirring in America is bipartisan, ecumenical. No politician of any stripe can afford to ignore it. The Republicans running in 2012 will be contending with or catering to it, too; they’re unlikely to offer Wall Street any safer harbor than Obama has. Yet the best barricade against the pitchfork platoons is an improving economy. And if it comes, not only will Obama stand a good chance of reelection, Wall Street’s amnesia may well kick in—just in time to fall in love all over again.
Luckily, short attention span on Wall Street is a professional handicap.