In the aftermath of the 2008 financial crisis, President Obama and the Democrats made a series of fateful decisions on how to deal with Wall Street. Or, more specifically, how not to deal with it.
Their party and country may now pay dearly for those choices. To see how, look no further than President-elect Donald Trump's newly minted chief strategist, Steve Bannon.
Bannon took over the task of running Trump's reeling campaign in August. Before that, he was executive chairman of the hard-right Breitbart News Network. Under Bannon's leadership, Breitbart became a staging ground and online hub for toxic anti-Semitism, anti-immigrant racism, misogyny, Islamophobia, and white supremacist nationalism that have crept out of the shadows and into the mainstream of American society. It's clear that the sudden boiling over of racist harassment and intimidation across the country in the wake of Trump's victory owes a lot to the cultural stew Bannon helped cook up. Indeed, David Duke, a former Klu Klux Klan leader, called Bannon's inclusion in Trump's inner circle "excellent."
But Bannon is something else too: An anti-Wall Street populist.
BuzzFeed dug up a talk Bannon gave in 2014 to a Vatican gathering of hard-right groups looking to discuss poverty. A lot of what Bannon offered was reactionary nationalism and furious downplaying of racism in the U.S. and in similar movements in Europe. But much of Bannon's talk actually turned its fire on a crooked financial industry that broke American capitalism; sucking up the gains from economic growth and leaving workers next to nothing, precipitating the 2008 financial crisis, and making out like bandits with the bank bailouts that followed. And not a single top executive was sent to jail over it all.
"The way that the people who ran the banks and ran the hedge funds have never really been held accountable for what they did, has fueled much of the anger in the Tea Party movement in the United States," Bannon said. "Even with the Democrats, right, in power, there's a sense between the law firms, and the accounting firms, and the investment banks, and their stooges on Capitol Hill, they looked the other way."
Bannon is right about that.
Now, the bailouts were engineered by top officials in the George W. Bush administration. And the voter revolt that drove Trump into the White House clearly included a revolt by the lower orders of the GOP against the higher orders. But at the time of the bailouts in 2008, Democrats held both the House and the Senate, and they wound up supplying the bulk of the votes to pass Bush's bailout of the banks.
In the Democrats' defense, this was no easy choice: Either sanction the grossly unjust bank bailouts on the table from Bush, or risk an even more catastrophic collapse while a possible alternative was (maybe) worked out. But that doesn't change the fact that Democrats did pass the bank bailouts. And when Obama took over and continued to play ball with the banks, he assured the bailouts would be forever politically tied around the Democrats' neck.
What the Democrats did next was even worse: The Obama administration's efforts to provide relief to homeowners through the 2009 stimulus were paltry and fell flat. Nor did Obama really push the Federal Housing Finance Agency to start rescuing underwater homeowners. The executive branch's law enforcers failed to use charges of rampant mortgage fraud to force the banks to write down homeowners' debt. And of course, they decided to forego prosecuting Wall Street executives.
Is it any wonder much of America thinks Democrats are in thrall to wealthy elites while ignoring the middle and working classes?
Bannon is right that the titans of finance who cratered the U.S. economy were never held accountable. He's right that regular Americans were largely ignored in the wake of the crash. He's right that much of this is Democrats' fault. And he's especially right that millions of Americans are still mad as hell about it.
This is precisely how semi-fascist movements like Trump's come to power. When elite failures and socioeconomic collapse lead to justified populist revolts, fascists can ride that wave to take over the government, carrying all their other poisons along the way. A 2015 paper looking at 20 different financial crises across the Western world, going all the way back to 1870, found the political aftershocks disproportionately benefited extremist right-wing parties. It doesn't take a genius to see the same dynamic playing out now in the aftermath of the Great Recession and the Eurozone disasters.
Trump effectively rode that anger all the way to the White House — even while Bannon and Co. continued to peddle this (otherwise correct) narrative through a white nationalist lens.