I urge all of you to join me, to join those who are seeking to pass these commonsense reforms. And for those of you in the financial industry, I urge you to join me not only because it is in the interest of your industry, but also because it's in the interest of your country.while Roosevelt, in 1936, sounded a bit more belligerent:
We had to struggle with the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering . . . . They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today.We already know that it is just not Obama's style to be confrontational. We saw that repeatedly during the presidential campaign. He truly seems to believe in consensus-building. And that frustrates people who would rather see the President act more like a fighter.
They are unanimous in their hate for me — and I welcome their hatred.
But aside from questions of personal style, the more important question is whether it would be more helpful to the cause of financial reform for the president to attack Wall Street as if it were the enemy of the people. Perhaps that kind of speech would make a lot of people feel better, as if the president were rallying the people against a common enemy--Wall Street profiteers. But would making an enemy of Wall Street serve a larger purpose? Did Roosevelt even treat Wall Street as an enemy? Let's look at some historical comparisons.
When Roosevelt came to office in 1933, the country was already stuck in the worst depression in its history, for more than three years. Roosevelt had an overwhelming mandate to make change, and overwhelming majorities in Congress. Most people would probably have accepted it if he had assumed emergency, dictatorial powers, and there was a lot of talk of the possible need to do that. Both fascism and socialism were massive, popular forces around the world. Nevertheless, despite his mandate, the first thing Roosevelt did on entering office, just like Obama, was to save the banks. He saved the tough talk from the speech quoted above for closer to re-election time three years later. At the beginning of his first term, Roosevelt was more interested in reassuring the people and the financial system, that we would weather the crisis. So Roosevelt did not actually have to go on a rampage against Wall Street to get the Securities Acts of 1933 and 1934 passed. Neither should Obama.
Unlike Roosevelt, however, Obama does not have overwhelming majorities in Congress. Instead, he must deal with virtually united Republican opposition to his plans. He must also deal with a fairly noisy, seemingly grassroots movement of people who still have faith in the market, and who still think government is the enemy--even after watching the market collapse in 2008, and even after watching the government rescue the economy from that collapse. These forces may represent a much more powerful opposition than the opposition to Roosevelt's plans. To deal with that kind of opposition, President Obama does not need to create enemies, or welcome anybody's hatred. There is already more than enough hatred to go around. Also, Wall Street executives may be (I emphasize may be) more supportive of reform than they were in the 1930's. We have been living with the SEC since the 1930's, and nobody would suggest that we abolish regulation of the stock market. The value of the SEC is pretty universally accepted. The more thoughtful players on Wall Street should recognize that we need similar regulation of newer financial markets.
Before suggesting that the President adopt a more belligerent tone, let's also remember that the President's approach has been working so far in other areas. While a lot of people would have liked to see him push for a larger stimulus and more comprehensive health care reform, the fact of the matter is that his conciliatory, middle of the road, consensus-building approach got both these programs enacted, and nobody can say for sure that a more aggressive approach would have had more success.
So it makes logical sense to reach out to the forces of rationality on Wall Street and urge them to support reform. It does not make sense for President Obama to be welcoming anybody's hatred. Financial regulation looks like it is on track to pass, and the latest news suggests that it will pass with some Republican support. It will not go as far as a lot of people would wish, but the bill now making its way through the Senate should still stand as yet another landmark accomplishment.