BARACK OBAMA adopted a strongly populist tone yesterday when he announced new curbs on the banking industry, a direct response to the Republicans’ stunning election win in Massachusetts.
The move had been planned for a month but the timing and language were a direct result of Massachusetts.
Mr Obama, who as president has prided himself on cool, moderate language, spoke about the banks who “took huge, reckless risks in pursuit of quick profits and massive bonuses” and promised to “rein in the excess and abuse”.
The Republicans immediately responded by saying that Mr Obama was making the banks the whipping boys for the Democratic party’s election defeat.
Scott Garrett, a Republican member of the House financial services committee, said: “This renewed focus on financial services reform by the Obama administration is clearly a transparent attempt at faux-populism, in light of the outcome of the Massachusetts Senate race.”
Mr Obama will make many more speeches and statements critical of the banks and Wall Street in the months ahead. It is almost certain there will be at least one such passage when he delivers his State of the Union address next Wednesday.
By turning on Wall Street and the banks, Obama is seeking to tap into widespread public anger that helped the Republicans in Massachusetts, where voters expressed hostility towards Mr Obama’s healthcare plans but also towards Wall Street.
Voters spoke of their outrage over the bonuses banks, which had benefited from federal bailouts, had awarded to senior staff.
In a poll published last November, voters were asked what issues made them most upset. Forty per cent chose “big banks and Wall Street getting handouts while nothing is done for working Americans”.
What Mr Obama and the Democrats want to do is persuade the public that it is the Republican party that is the friend of the banking industry. Mr Obama’s main White House adviser, David Axelrod, hinted at this in a recent interview with the National Journal. “[If the Republicans] want to stand with the insurance industry on healthcare and protect the status quo, let them defend that in an election,” he said.
“If they want to stand with the banks and the financial industries and protect the status quo, then let them explain that in an election.”
This reflects the emerging Democratic strategy, presenting the Republican as elitist, on the side of big business against the ordinary Joe, and obstructionist to reform. The loss of Massachusetts has curtailed Mr Obama’s legislative options.
He may or may not get his health Bill, but other plans for this year, primarily climate change and immigration legislation, have effectively been killed off.
The one Bill that is still alive is regulation of Wall Street: what Mr Obama described as “the most ambitious overhaul of the financial system since the Great Depression”.
The Republicans, as keen as the Democrats to swing discontented voters behind them, could back at least parts of that Bill and try to avoid the Democrats portraying them as the party of big business.
Chris Dodd, the Democratic chairman of the Senate banking committee, issued a double-edged statement yesterday, reaching out to the Republicans to back regulation while adopting similar populist language as Mr Obama’s.
“Companies that choose to take such risks should do so on their own dime,” Mr Dodd said.
– (Guardian service)