Issue of the week: Is Obama too soft on Wall Street?

last updated 8 January 2015

It was the shrug heard ’round the world, said Jim Kuhnhenn in the Associated Press. In an interview with Bloomberg BusinessWeek last week, President Obama declared that he didn’t “begrudge” the multimillion-dollar bonuses paid to JP Morgan CEO Jamie Dimon and his counterpart at Goldman Sachs, Lloyd Blankfein. Dimon and Blankfein are “savvy businessmen,” Obama said, and besides, “there are some baseball players who are making more than that.” Was this the same president who just last month was calling bankers “fat cats” and their bonuses “obscene”? Critics pounced, and the White House quickly went into damage-control mode, complaining that BusinessWeek had quoted Obama out of context. But the damage was done. In this time of rising public anger, Obama must walk a tightrope between treating Wall Street like “a convenient populist target” and recognizing that it is “an essential component of an economic recovery.” In the interview, he seems to have lost his balance.

That’s putting it mildly, said Paul Krugman in NYTimes.com. On the subject of Wall Street’s excesses, Obama seems utterly “clueless.” Comparing bankers to baseball players not only was politically tone-deaf, it was absurd. “To my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of Americans their jobs.” More to the point, unlike baseball players, bankers aren’t “free agents” who earned their “big bucks in fair competition.” In this era of giant, taxpayer-funded bailouts, they are “wards of the state” and should be treated as such. It really does seem that Obama is not sure which side he’s on, said Dean Baker in the London Guardian. He must decide “whether he stands with Wall Street banks or whether he stands with the workers and businesses who actually create wealth.”

This is what happens when you occupy “the radical center,” said Albert Hunt in Bloomberg.com. For every lefty who sees Obama as a corporate sellout, there’s a pro-business type complaining that the administration is made up of a bunch of “free enterprise–hating radicals.” In fact, on economic matters, Obama happens to be a centrist. As he said in the BusinessWeek interview, he believes in a “dynamic free market,” but also that “there have to be some rules in place in the financial sector that will create an even playing field.” That’s hardly “an anti-business attitude,” though it’s a lot more nuanced than the business bashing his liberal base is lusting after. Critics jumped on a few stray comments. But Obama also demonstrated a true grasp of economic policies, speaking confidently about everything from “the Volcker rule to limit the activities of big banks” to “risky leverage.” He may not have all the answers, but at least we can be reasonably confident that he’s asking the right questions.