In an appearance on Sixty Minutes President Obama lashed out at bankers. Today’s Wall Street Journal reported:
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Mr. Obama said in an interview on CBS’s “60 Minutes” program on Sunday.
“They’re still puzzled why is it that people are mad at the banks. Well, let’s see,” he said. “You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it’s gone through in — in decades, and you guys caused the problem. And we’ve got 10% unemployment.”
President Obama is calling bankers to a meeting at the White House to discuss their failure to lend to small businesses and consumers.
Bankers Acting Badly
I have written much about the anti democratic nature of the early and massive efforts of government to bolster the banks. These efforts have added to excessive risk taking, outsized bonuses and a reciprocal feeling on the part of the public that they can walk away from mortgages and credit card debt. We have institutionalized moral hazard.
Exercising Power
This essay is really about power and the lack thereof. As a long-time observer of corporate culture, there were obvious situations where executives in my company should have been terminated. But numerous times, I watched superiors decry their lack of power to take action. I would scratch my head and wonder, “if you don’t have the power to terminate this person, who does?” I call this behavior “faux powerlessness.” These executives had absolute power to terminate an employee (who often richly deserved it), but instead they feigned powerlessness. The executives would curse the fates, pound on their desks and look to the heavens to decry their plight. Frankly, they were too scared or too political to take the necessary action, and the organization suffered.
How much more unbecoming is it for the President of the United States to go on national television and decry the bankers? Isn’t the President the most powerful man in the free world? Absent the irony and cinematic quality of the line, this is a true statement. President Obama has multiple levers of power to affect banker behavior. He has the Treasury, the FDIC, the Comptroller of the Currency, the SEC and other executive branch agencies which can change and influence banker behavior. Further, if bonuses are excessive, propose a windfall tax on bankers’ bonuses. The French and the English were able to do so. The concept does not have to be foreign. See French Join Brits on Supertax on Bonuses.
Talk is Cheap. Do Something About It
Mr. President, if you truly believe the bankers have acted poorly, then do something about it. Stop pandering to the public and take some real action. These actions would go a long way toward stemming the growing public anger and sense of inequity of the banker bailouts that you and your administration sanctioned.
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