This morning's Politico features another piece ("Obama and Wall St.: Still Venus and Mars") in a continuing series that present Wall Street people whining about all those times White House higher-ups have ever-so-mildly allowed certain language to slip from their larynxes that makes the financial industry out to be some kind of villain for that time its over-leveraged, incompetent speculation led to the near-collapse of the entire economy and required taxpayers to shovel untold billions of dollars at too-big-to-fail banks so that they could survive. They are sad, you see, and the record-setting profits they have made are no comfort to them, because hey, maybe The Huffington Post will say something really mean! That is literally a thing that appeared in a newspaper, today!
But despite recent White House efforts to reach out to Wall Street, bankers believe Obama is much more worried about perceptions on the left.
As evidence, bankers point to recent White House meetings with labor leaders, Geithner's dinner with the heads of progressive groups, and Vice President Joe Biden's recent pledge to fight against the top-rate tax cuts again in two years.
And it is this, as much as anything, that gets under Wall Street's collective skin.
"All that people in this White House seem to worry about is what the Huffington Post is going to say if they do something, anything, remotely pro-business," one financial executive said. "They really don't care what we think at all."
Should I begin by assuaging their fears? Because if we define "pro-business" as "a policy that would allow investments to be made in an actual physical business, spurring economic growth and jobs development," and not "policies that allow Wall Street to return to a regime of creating non-productive casino games based upon the amount of moneydust that can be leveraged from rubbing two ten-dollar bills together to create an ornate daisy-chain of swaps," then we are never going to issue a discouraging word! Also, to the extent that we have criticized members of the White House for their fealty to the latter system of moneymaking, I can assure you, we have the more solid claim to make in the field of "They really don't care what we think at all."
At any rate, so many people share so many feelings! And if those feelings were generically critical of the White House, those people received a gift from Politico:
In an effort to understand such animus POLITICO interviewed a dozen senior Wall Street denizens, including C-suite executives, investment bankers, traders and financial lobbyists, who were promised anonymity in return.
Right at the outset, you meet some guy who is miffed that he wasn't invited to some dumb meeting:
On the mental list of slights and outrages that just about every major figure on Wall Street is believed to keep on President Barack Obama, add this one: When he met recently with a group of CEOs at Blair House, there was no representative from any of the six biggest banks in America.
Not one!
"If they don't hate us anymore, why weren't any of us there?" a senior executive at one of the Big Six banks said recently in trying to explain his hostility toward the president.
Oddly, that same anonymous executive immediately walks this back ("Who cares about one event?") and allows that "it makes political sense for the White House to stiff-arm Wall Street." It makes you wonder, then, why this makes top-billing in this piece, until you remember that this is Politico and it's written for an audience of people who truly do consider not being invited to some powwow at Blair House to be the most cutting social slight of the century.
Here is some more mansplaining:
A senior Wall Street lobbyist explained his feelings: "This president came into office in the midst of an economic crisis and started off by demonizing insurance companies and then going after Wall Street banks. Never did he try to bring together CEOs and say, 'We are in this together, we are Team America and we are going to go out and get things done.' That's the power you have as president. Instead this White House pushed people away and they did it consciously and they are still doing it."
I really must recommend that this Wall Street lobbyist read Too Big To Fail maybe? Because Hank Paulson most definitely held those meetings of "Team America" in the halls of the New York Federal Reserve, where Timothy Geithner collected the private phone numbers of all the major players, who he calls on the regular to this very day. As far as "pushing people away," while it's certainly true that the president has occasionally taken up some populist rhetoric to allay the anger of taxpayers (remember, it "makes political sense to stiff-arm Wall Street"), they also have very famously dispatched emissaries to soften the blow in advance.
Basically, the complaints from Wall Street boil down to a bunch of hurt feelings. No one has anything negative to say about any specific policy that's been deployed to tame Wall Street. And how could they? Apart from the possibility that Elizabeth Warren might fight a lonely war to get credit card companies to be less obtuse in the language they use to enshrine all of their consumer traps, no such policy exists.
Rather, the White House has been on the forefront of cheerleading how successful the Troubled Asset Relief Program was, and how the taxpayers have nearly gotten all of their money back, so everyone should put away the pitchforks and calm down. That is to say, we've been repaid most of the amount that anyone was nominally keeping track of -- the billions that too-big-to-fail institutions received from the discount window at the Fed never show up in these calculations. (And yes, you can basically imagine the "Fed discount window" as some Lovecraftian Taco Bell drive-thru where Jamie Dimon waves a toxically-tranched derivative burrito at the cashier and is given billions of dollars in return.)
There is some attempt on the part of Politico to comport with reality: the fact that "big-time bonuses at bailed-out banks are back" and that "corporate America has turned in its most profitable quarter in history and the stock market is at a two-year high." But I think this article from Bloomberg today does a much better job at properly chronicling the current state of play:
Wall Street's biggest banks, whose missteps caused a global financial crisis and economic slowdown two years ago, were more agile when it came to countering the political and regulatory response.
The U.S. government, promising to make the system safer, buckled under many of the financial industry's protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery.
"We continue to listen to the same people whose errors in judgment were central to the problem," said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted. "I'm astounded because we basically dropped the world's biggest economy because of an error in bank management."
The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Goldman Sachs CEO Lloyd Blankfein, 56, and his top deputies are in line to collect more than $100 million in delayed 2007 bonuses -- six months after paying $550 million to settle a fraud lawsuit related to the firm's behavior that year. Citigroup, the bank that needed more taxpayer support than any other, has a balance sheet 14 percent bigger than it was four years ago.
Here's a fun fact: that very story from Bloomberg was the top story in today's Politico Playbook. We must thus offer some praise and gratitude to Mike Allen, because it's much more informative than the piece that Politico's P.R. team was pimping to the nation's reporters (by which I mean, "Obama and Wall St.: Still Venus and Mars").
So, thank you, Bloomberg, for that dose of Real Talk. And in that light, let's go back to Politico's unnamed lobbyist, committing what I think qualifies as a "Kinsley gaffe:"
"It's true that markets aren't in the crapper and the tax-cut thing was very encouraging. The guy is not a socialist," the lobbyist acknowledged. "But there is still not a lot of capital investment. It is the exception. People are hoarding cash. And the profits are attributable to all that cash-hoarding and big spending cuts and employment cutbacks. It's not sustainable. The new track has got to be about inspiring growth and encouraging risk-taking, and this White House hasn't done much on that front."
What's the White House supposed to do about that, exactly? There isn't a lot of capital investment, no. And people are "hoarding cash." And that's because they are stocking up on capital for the moment when someone has to actually reveal the true value of assets that have thus far been allowed to be marked-to-fantasy. If that day comes and say ... CitiGroup isn't sitting on a mountain of wealth, we suddenly come face-to-face with The Walking Dead.
Let's be specific! This "new track," that "inspires growth" and "encourages risk-taking," is basically an explicit, signed-on-the-dotted-line promise to bail out the banks again -- no questions asked -- the next time they nearly cause the collapse of the economy. And what's at risk if the White House can't deliver on that promise?
The industry is a dominant campaign contributor and steered $15 million to Obama in 2008 compared to $8.7 million for McCain, breaking its traditional tilt to the GOP, which generally favors lower taxes and less regulation. And Obama enjoyed strong public support from the likes of Dimon, Mack and Goldman Sachs Chief Executive Officer Lloyd Blankfein.
Neither Mack nor Dimon is likely to support the president again. Blankfein, a lifelong Democrat, probably falls into the camp of Masters of the Universe who will quietly continue to support the president but won't make many public comments or host big fundraisers.
Ha, ha: yes. After that week of joking around about the White House's use of "hostage-taking" metaphors, we get to read a real live ransom note in the pages of Politico. Be nice to us, or we won't fund your re-election! For maximum effect, this whole article should be rendered on the page as if the words had all been cut out from magazines.
I'll leave you with the thoughts of "one executive at a top bank":
"You have to understand, it is very personal. He raised money from us," one executive at a top bank said. "Then he started calling us bad people. So forgive us for not wanting to buy him a drink after getting punched in the eye."
You know, I do not actually know what it feels like to be "punched in the eye" by a fist holding billions of dollars that I can keep for my very self after "Fight Club" is done for the night, so I'll allow: it might make me very, very sad!
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