Tuesday, July 5, 2011


Here's the latest in Obama-bashing from the left: Frank Rich's article in this week's New York magazine. Rich takes the president to task for the sin of failing to take stronger action against the Wall Street bankers who caused the financial crash of 2008. I guess Frank must get up in the morning and decide that it's just not worth his time to go after the people who are right now engaged in a concerted effort to destroy any chance of meaningful financial reform: namely, the legislators who are trying to water down Dodd-Frank as much as possible. Why waste time on that real, ongoing battle when you can beat up the president again for failing to pass stronger legislation?

First we have to wade through some hyperbole about how there has been absolutely "no legal, moral or financial reckoning" for the most powerful Wall Street interests whose misdeeds got us into the financial mess from which we are still trying to extricate ourselves. Curiously, in the very next paragraph, Rich lets slip that Bank of America is paying $8.5 billion (that's billion with a B) to settle investor claims arising out of that crash. I guess that doesn't count as any sort of legal reckoning. In addition to no reckoning, Rich states that there have been no "meaningful reforms" of the system to prevent another crash. I guess that means we are pronouncing the whole financial reform legislation a failure before it has even been implemented. And maybe it will be a failure if everyone takes their eye off the ball while the responsible agencies are engaged in drafting the regulations to implement it. Maybe it's just too much hard work to follow up on making sure this reform works. Maybe those big, bad lobbyists and Republican legislators are just too powerful and scary. Better to blame President Obama for not just making all those opponents of financial regulation disappear. I guess it is President Obama's fault that he did not have a powerful enough magic wand, or that he did not try hard enough to wield all of its powers.

So what were the president's great crimes then? First, according to this article, President Obama should not have become so enamored of all the Ivy League experts he appointed to deal with the financial crisis. It seems to be another case of the best and the brightest leading us into the quagmire, and a president foolish enough to be dazzled into the delusion that he should appoint the smartest people he can find to fix some pretty difficult problems.

Obama's other great mistake: failing to satisfy the great populist rage to punish the villains that caused the financial disaster. Rich advances this criticism while at the same time admitting that if Obama "had given full voice to the public mood, he would have been pilloried as an 'angry black man.'' Which means that according to Rich's own reckoning, the president was in a no-win situation. Fail to take strong enough action, and you have not cleansed the system of the crimes that led to the recession. But give in to rage and you will be seen as an enemy of the people. It seemed to me that President Obama walked that tightrope about as well as anyone could have. But he can't walk it well enough for critics like Frank Rich, the former butcher of Broadway, who has taken all his former skill at destroying the efforts of theatre actors and directors and turned it toward politicians who just can't seem to measure up to Frank Rich's heroic ideal.

But let's talk some more about the value of retribution. Before we get too worked up in demanding that more of that would have helped purge the nation of its wounds, we need to think harder about why it is so important to someone like Frank Rich, and to millions of Obama critics from both left and right, that we punish those responsible for the crash of 2008. It seems like everyone would feel better if we had rounded up a few hundred Wall Street bankers and hauled them off to jail. And maybe they would deserve it. But my question is still, what is it in us that makes it so important that we desire this kind of vengeance? It's not as if punishing a bunch of bankers would change the ethics of Wall Street. Wall Street always has been, and always will be about making as much money as possible, in whatever ways are allowed. (and sometimes in ways that are not allowed) And it's not as if punishing a bunch of bankers would actually do anything to improve the economy. Purging the system of some rotten apples might send a message to other Wall Street types that they should be more careful to follow the straight and narrow in the future. But it doesn't do anything to grease the wheels of capitalism that need to be greased to get the economy up and running again.

Anyway, why would anyone who paid any attention to the campaign of 2008 have expected that President Obama would take a vindictive or punitive tone toward Wall Street? That was never the message of his campaign. In fact, that would have been the opposite of the campaign's promises. Obama's hero is Abraham Lincoln, who even after an armed rebellion against the government that cost millions of lives, promised to act "with malice toward none, with charity for all." How can we possibly be disappointed that we did not get vindictiveness and vengeance from someone who takes that motto to heart?

The Obama administration saved the credit markets from collapse, got the economy growing again, and put in place regulations that at least have the potential of reining in some of the practices that caused the last collapse. To me, those achievements seem remarkable enough, and to expect in addition that a few scapegoats would be rounded up and put in jail seems contrary to those goals. Not to mention that by directing our anger at those who are stilling trying to fix the problem, we are taking attention away from those who are right at this very moment trying to prevent financial reforms from becoming effective.


  1. Why do we punish murderers and rapists? We can't bring the dead back to life, nor can someone be "unraped."

    Justice, in the Aristotelian sense, is everyone getting what they deserve, good or bad. Humans feel indignant when they feel that justice has not been done, and they start to lose faith in the efficacy of the system.

    Justice is just as important as recovery, and the two might be inseparable.

  2. You're absolutely right, Jack. Justice is crucial to social harmony, and I probably should have acknowledged that in my post. At some point, though, justice turns into vengeance, which is not so healthy. And people should understand that tarring and feathering a few bankers would not really solve any problems, though it might make people feel that justice was served.

  3. Dodd and Frank were two of the people who hold the biggest responsibility for bad loans being handed out by Freddie and Fannie. Dodd himself was so immersed in financial scandal he decided not to run again.

  4. Good philosophical point Joe. The line between justice and vengeance often gets blurred, I think. That will have to be something that I contemplate for a while.