Back in the earl 00s I used to play this game with my friends where we’d pick a random member of President Bush’s inner circle and see how many degrees they were from the Oil and Energy Industries. Condoleezza Rice, the African-American female professor of political science at Stanford; that dorky professor shouldn’t be connected? Sure enough, she sat on the board at Chevron Corporation. She even had an oil tanker named after her.
I found it interesting not because I thought Bush was a puppet or taking marching orders from lobbyists or any other dark conspiracy. What I did think is that working in an industry changes some of your habits towards how that industry functions, what are acceptable critiques and what are real problems that would need to be addressed by the public. The lobbyist doesn’t need to bribe you if you believe in his cause.
So with that in mind, Matt Taibbi has an article all about Obama’s economic team’s connection to Wall Street, particularly the connection between former Clinton Treasury Secretary and former Citigroup and Goldman Sachs chairman Bob Rubin. Tim Fernholz found it counter-productive, Felix, Digby, and Kevin Drum have more.
I’ve long since thought Bush:Oil::Obama:Wall Street, so I really liked the article. Outside of using the “$23.7 trillion” figure which is annoying and bad maths, I thought it gave a good sense of the coziness between key Democratic opinion makers and the largest Too Big To Fail Wall Street enterprises. The article starts from a place that Obama was a fairly progressive figure in 2008, something that I assume the average reader of Rolling Stone believes, and then walks through the people and their connection to the nation’s third largest bank. The narrative helps to have flesh-and-blood people connected to it.
Taibbi’s piece is focused on the current financial reform package and the various ways it is getting watered down by Congress. That’s more a Congress problem than an Obama problem. The smarter move may have been to set the “now” time in the spring, where the decision wasn’t that the financial system has gotten too large and too top-heavy and too connected with regulators and lawmakers, but instead was suffering from a crisis that is more of a random accident of history, a rare event that we just need to get through. The real ugliness of this connection isn’t vanilla loans being tossed from the CFPA, but instead garbage like the PPIP (the taxpayer-sponsored put option given away to the financial community called ‘The Geithner Plan’) and trying our best to restore the financial sector back to 2005. That the financial reform package looks unworkable is in part because it’s trying to put a shattered Humpty-Dumpty back together again.
This isn’t a new head-butting conflict on the left, especially for people excited by Obama; I remember when Krugman first addressed, in June 2008, progressive concerns that Hamilton Project people were showing up in key jobs: “Maybe I’m wrong, but my sense is that Jason Furman has become a proxy target for some Obama supporters who, now that the Great Satanness has been defeated, are suddenly starting to have the queasy feeling that their hero might be a bit of a …. centrist. I’m tempted to say I told you so; in fact, I guess I just did. But that’s all in the past now.” Heh. Indeed.
And this Wall Street friendliness extends beyond this crisis. I’ll put money next year the Democratic Party proposes a ‘value-added’ tax without also proposing a financial transaction tax, showing you who gets priority when it comes for having to pitch in to pay off the structural deficit.