Obama and 'fat cat' bankers. It鈥檚 about more than lending.
At some point in 2009, a power shift occurred in US politics. Big financial institutions went from needing Washington鈥檚 help in avoiding an abyss to Washington seeking their help for economic recovery and job creation.听
This whipsaw of power was on display for all to see Monday when President Obama talked with 12 top bank executives at the White House.听
Just the day before he called them the 鈥渇at cats鈥� of Wall Street and reminded the bankers of taxpayer largess in saving their institutions in 2008-09. But then he pleaded with them to speed up lending to small businesses and to support proposed regulations aimed at preventing another financial meltdown.
This sort of hard bargaining with an organized interest group usually goes on behind closed doors in Washington. Just look at all the benefits quietly thrown at lobbies for doctors, pharmaceutical firms, AARP, and others to win support for Mr. Obama鈥檚 healthcare proposals.听
After 10 months in office, the president now sees K Street as a two-way street when he wants 鈥� or doesn鈥檛 want 鈥� something from powerful lobbies.
That鈥檚 why it is telling to see Obama鈥檚 tug-of-war with Wall Street playing out in public, most notably in Congress where lobbyists are swarming over financial-industry reform legislation that has passed the House and awaits action in the Senate.
On Sunday, Lawrence Summers, the director of Obama鈥檚 National Economic Council, labeled the industry鈥檚 effort to 鈥済ut鈥� reform as 鈥渁 bit rich鈥� after it took a taxpayer bailout. Obama then declared he will not let the banks 鈥渢hwart reforms.鈥�
Still, the president acted surprised when the bank executives told him of their support for certain reforms that their own lobbyists oppose. This 鈥渄isconnect鈥� is now supposedly being resolved.听
But the bigger disconnect is really in the president鈥檚 own party. Many top Democrats in Congress still take contributions from the financial services industry in what is called a 鈥渃ulture of deference鈥� toward Wall Street. For the 2010 legislative elections, campaign donations from the securities and investment sector are now more than $10 million, with most of that for Democrats, according to the Center for Responsive Politics.听
Obama needs to be willing to call out fellow Democrats who take money from the industry, otherwise the financial industry stands a good chance of weakening the reform bill, especially if a proposed new consumer agency is eliminated. The industry now has close to 2,000 lobbyists at work on Capitol Hill, or about five for every member of Congress.
Obama is now in open battle with Wall Street. 鈥淚f they wish to fight common sense consumer protections, that鈥檚 a fight I鈥檓 more than willing to have,鈥� he said after the bankers meeting.
But first, the president needs to do battle with Democratic lawmakers who have sticky fingers for campaign money from this huge lobby.
